How was Rs 5 billion collected from Malaysia-bound Nepali workers in the involvement of government agencies? Revelation of the strange collaboration of the government agencies of Nepal and Malaysia to fleece poor Nepalis.
-Ramu Sapkota in Kathmandu and Alyaa Alhadjri in Malaysia : Centre for Investigative Journalism-Nepal
Malaysia—One of the major foreign job destinations for Nepalis lately. Even as the departure arrangement is touted as “free visa free ticket”, Nepali workers reach Malaysia by paying recruitment agents Rs 100,000 borrowing it from loan sharks. They have dreams—of earning Rs 30,000 to 35,000 monthly, repaying the loan, and paying for the family expenses with the remaining amount. Lacking a high level of formal education and skills, they mostly take up jobs requiring hard physical labour.
What many of such migrant workers do not know is that 609,879 people leaving for Malaysia in the past five years had to pay extra charges. Several rules were imposed for the purpose. Rs 3,200 for visa processing and Rs 4,500 for biometric tests were burdened on each worker. Additionally, scan of passport and all 10 fingerprints was made mandatory at an additional cost of Rs 3,200 per worker.
Fees were charged under other headings too. According to details made available by workers, Rs 3,500 was collected from each individual. On top of that, charges were levied—Rs 3,200 per worker—also in the name of collecting passports and sending them to the Malaysian embassy. The secret of the additional charges did not come out long. When they were told that they had to pay the charges, poor Nepalis paid the cash by borrowing it with much difficulty. The additional charges paid by all the Nepalis in the past five years amount to Rs 5,003,500,000.
Workers were not subjected to the charges before 2013. Along with the health report prepared by a recognized institution, a worker had to pay Rs 700 at the Malaysian embassy in Nepal as visa fee. All of a sudden, provisions were made to levy charges under different headings. New companies came into existence surprisingly. Government agencies of both Nepal and Malaysia collaborated in fleecing sons and daughters of poor Nepalis compelled to go abroad in search of work.
Series of unauthorized charges
It all began on September 9, 2013. Registered with the Company Registrar’s Office, the ‘Malaysia VLN Nepal Pvt Ltd’ started collecting ‘visa processing’ charges from migrant workers in the name of ‘Visa Luar Negara- VLN’. VLN is the Nepali agent company outsourced by the Malaysian government under the control of the private company ‘Ultra Kirana Sdn Bhd’. Ultra Kirana identifies itself as an international company working in the field of technology. Until three months ago, VLN had collected a total of Rs 1.95 billion from Nepalis for visa processing at the rate of Rs 3,200 (excluding value added tax) per migrant worker.
With VLN began the series of levying various charges on people leaving for Malaysian jobs. As a “six-month pilot project” in medical test, the biometric system was made compulsory on July 8, 2015. The Bestinet Sdn Bhd that entered Nepal for the purpose ‘partnered’ with 39 health institutions through the Nepal Health Professional Federation. Then state minister for labour Tek Bahadur Gurung permitted Bestinet, registered with the Companies Commission of Malaysia on 17 November, 2008 to work in the fields of information technology and manpower, to implement the biometric system as a pilot project.
Earlier, Bestinet Group CEO Mohd Amin Bin Abdul Nor, a Bangladeshi national, and Nepal Health Professional Federation Chairman Kailash Khadka reached an agreement on June 20, 2013 to ‘run the IT system called Foreign Workers Centralized Management System with permission from the Malaysian government’.
At a seminar held in Hotel Annapurna, Kathmandu, on July 27, 2013, Khadka, Labour Ministry joint-secretary Buddhi Bahadur Khadka, Charge d’Affaires of Malaysia to Nepal Fadli Adilah and Amin were among the participants. The same evening at Hotel Yak and Yeti, Khadka and Amin reached an agreement to launch the biometric system to implement the June 20 deal. The project went ahead smoothly even after the six month period without renewed permission. Since the biometric system was imposed, 222,280 workers have been fleeced a total of Rs 1,000,260,000.
Since May 1, 2016, another company called GSG Nepal Pvt Ltd started charging additional fees in the name of ‘Immigration Security Clearance (ISC)’. Under the GSG Nepal, which is owned by Bestinet and headed by executive director Govinda Thapaliya, scanning of the worker’s passport and 10 fingerprints was made compulsory. Since implementation of the ISC, a total of Rs 663,700,000 has been collected from 207,414 workers at the rate of Rs 3,200.
Immigration Security Clearance process of Malaysian job applicants underway at the GSG Nepal Pvt Ltd that collects fees in the name of ISC.
Making registration of workers’ details and photo online on the MIGRAMS software compulsory on May 1, 2016, Rs 3,500 was collected from each worker. This was initiated by the Malaysian company Bestinet which later gave the responsibility to Health Professional Federation Chairman Khadka. Since workers’ medical examination is not possible before their registration with MIGRAMS, all the manpower agents in Nepal take aspiring workers’ details to the Bestinet in Malaysia. The government mechanism that facilitated Amin in the biometric system aided ISC and MIGRAMS too. Under MIGRAMS, a total of Rs 725,900,000 has been taken away from 207,414 workers so far.
Also on May 1, 2016 was adopted the ‘One Stop Center (OSC)’ system for collecting workers’ passports to be sent to Malaysia. The Malaysian company ‘Bukti Mgah Sdn Bhd’ and ‘Diamond Palace Cooperative Limited’ started the OSC system through the Malaysia VLN Nepal Pvt Ltd.
This series of charging each Malaysia-bound worker a total of Rs 17,600 in extra fees continued unhindered. But neither there has been an agreement between Nepal and Malaysia to levy such charges nor has any government agency in Nepal permitted this loot of poor Nepalis compelled to go abroad for employment. A close look at the series of events and documents revealed a curious support of Nepal’s government mechanism to the illegal business.
‘Setting’ in Parliament
Nepali workers who reach Malaysia after paying through so many gates are medically examined by the Fomema Sdn Bhd ‘outsourced’ by the Malaysian government. Workers found ‘unfit’ there are returned to Nepal. Saroj Karki of Chitwan flew to Malaysia on January 15 by completing visa processing, MIGRAMS, Biometric, ISC and OSC through the Pulchowk-based ‘Malaysia Gorkha Human Resource Pvt Ltd’. Having paid the manpower company Rs 120,000, Fomema found Saroj ‘unfit’.
Then state minister for labour Tek Bahadur Gurung, who reached Malaysia on August 25, 2015 “to study the situation of Nepali migrant workers there”, with Home Minister Datuk Seri Ahmad Zahid Hamidi.
After returning to the country four months ago, he approached the manpower agency to ask for the money he had paid. When the agent ignored his demand, Karki filed a case at the Metropolitan Police Circle Kathmandu two months ago demanding the payment and action against the agency. According to the Labour and Employment Ministry, Nepalis declared medically ‘unfit’ in Malaysia having passed the test in Nepal number around 9,000 annually. This is a visible example of the shameless loot of poor Nepalis.
There is a more serious ploy. In the nine months since September 14, 2014 workers who were returned after being declared medically ‘unfit’ in Malaysia, even as 39 health facilities in Nepal had passed them, filed 221 cases at the Labour Ministry. The charges were against Riza Polytechnic and Diagnostic Centre, HR Diagnostic Centre, Jalbinayak Polyclinic and Medical Centre, Reliance Healthcare Centre, Basundhara Polyclinic and Siddhakali Medical Centre and so on. But the ministry brushed the complaints aside.
A complaint was filed in the International Relation and Labour Committee of Legislature-Parliament four years ago against the biometric system introduced without the government’s permission. On January 28, 2015, the committee decided to allow continuation of the biometric system only after meeting six conditions. They included simultaneous implementation of the biometric system in Nepal and 13 other countries sending workers to Malaysia, free access to the biometric software and inclusion of all the health institutions recognized by the Nepal government in workers’ medical examination.
Then labour minister Dipak Bohara talking to Abdul Hakim Hamidi at Hotel Mandarin Oriental Kuala Lumpur on June 30, 2016. Having investments in the Bestinet company that initiated the biometric process, Hakim Hamidi is the brother of then home minister Datuk Seri Ahmad Zahid Hamidi.
The following day, the Labour Ministry wrote to the Nepal Health Professional Organisation (NHPO) to halt Biometric works in the context of the Malaysian government not accepting all the conditions. Shortly afterwards the ministry formed a taskforce led by a joint-secretary to study the 39 health institutions facilitating the Biometric process. The team submitted its report three months later stating that Malaysia had imposed the system on Nepal unilaterally. It also recommended that the health details of Malaysia-bound workers be ‘within the software system of the Department of Foreign Employment and that the two countries reach an agreement for private details of individuals stored by Bestinet in Malaysia not to be misused and shared with others.”
But an NHPO team led by its chairman Kailash Khadka took Prabhu Sah, the parliamentary committee chairman, on a tour of Australia shortly afterwards. Bestinet operator Amin was in the team too. There was such a U-turn in the situation that the committee retreated on its own decision to “halt the biometric system at the moment”. Rather, the committee, citing the report of the subcommittee led by MP Jitendra Narayan Dev, on July 6, 2015 permitted the biometric system to operate “under the government’s regulation”.
Two years ago, the government formed a taskforce led by Labour Ministry Joint-secretary Govinda Mani Bhurtel to study issues related to the medical examination of workers leaving for foreign jobs. In its report, the team recommended a solution in consultation with the Malaysian Embassy in Kathmandu to remove the financial burden on Nepalis imposed by liabilities such as VLN, MIGRAMS, ISC and OSC. But the ministry, then led by Dipak Bohara, ignored the report.
Nepal Health Professional Federation Chairman Kailash Khadka, then Labour Ministry joint-secretary Buddhi Bahadur Khadka, then Charge d’Affaires of Malaysia to Nepal Fadli Adilah and Bestinet Group CEO Mohd Amin Bin Abdul Nor, among others, at a seminar held at Hotel Annapurna in Kathmandu on July 27, 2013, prior to enforcement of the biometric system. (Below) A memorandum of understanding reached between Khadka and Amin “to launch the biometric system in agreement with the Malaysian government”.
When the practice of illegally levying charges on Malaysia-bound workers started, the Labour Ministry was led by Minister Hari Prasad Neupane and Secretary Suresh Man Shrestha. Successive ministers Tek Bahadur Gurung, Dipak Bohara, Suryaman Gurung and Formullah Mansoor did not care to correct it. Incumbent minister Gorkarna Bista has halted the practice terming it “illegal”. After the ministry decided that the charges cannot be collected, migrant worker departures to Malaysia have been halted.
Govt protects loot
To see how the state apparatus has abetted this loot of workers, we looked into more documents. Facts revealed in that course show a more worrisome nexus behind this. A case was filed in the Department of Foreign Employment against fees levied by the Malaysia VLN Nepal Pvt Ltd in the name of visa processing and passport collection in violation of the Foreign Employment Act. But then director general of the department, Krishna Hari Pushkar dismissed the complaint on March 25, 2014 as the “fraud not falling within the scope of the Foreign Employment Act and Regulations”.
Government agencies protect loot: (From left) The decision of then director general of the Department of Foreign Employment Krishna Hari Pushkar to dismiss the complaint against Malaysia VLN Nepal Pvt Ltd for charging workers for visa processing and pass collection. The statement of the Company Registrar’s Office to the parliamentary labour committee expressing inability to cancel the registration of VLN Nepal. The Foreign Ministry’s opinion that it viewed positively the collection of fees by VLN from workers.
On May 22, 2014, the Finance Ministry wrote to the Foreign Ministry to enquire whether the collection of charges in the name of visa processing had been permitted or not. The Foreign Ministry on May 26, 2014 replied that it viewed positively the process and provisions relating to visa processing for Malaysian jobs and that “no permission of any agency is necessary regarding the processing fee levied on Malaysia-bound workers”. (See copy of the decision)
The International Relations and Labour Committee of the Legislature-Parliament on December 23, 2014 directed the Company Registrar’s Office to cancel the registration of the “illegally operated Malaysia VLN Nepal Pvt Ltd”. But Registrar Shankar Aryal on February 10, 2015 responded that “the process for registration cancellation had failed to be taken forward” (see letter). The Company Registrar’s Office had argued that it had failed to take action since the secretary-level decision of the Ministry of Industry suggested that “the VLN needed no action”.
A complaint was filed also with the Commission for Investigation of Abuse of Authority against illegal fee collection by the Malaysia Nepal VLN Pvt Ltd and the GSG Nepal Pvt Ltd from migrant workers. But the CIAA, then led by the all powerful Lokman Singh Karki who meddled everywhere, is found to have brushed it aside without investigation. CIAA investigation officer Bhawani Prasad Subedi wrote in a letter to the VLN on December 26 last year citing “the commission’s decision” that since the matter involved diplomacy between Nepal and Malaysia and the works were being carried out by a firm registered in Nepal according to the Company Act, the complaint is dismissed for being out of the CIAA’s jurisdiction”.
Curiously on May 16, the Ministry of Labour and Employment, while deciding to close the illegal charging of Malaysia-bound workers by Biometric, MIGRAMS, OSC, ISC and the VLN system, wrote to the Home Ministry for implementation of the decision. The decision stated that “fees were charged illegally from Malaysia-bound workers by setting up a syndicate without permission from the government and that even if only 100,000 workers left for Malaysia the syndicate grossed nearly Rs 1.35 billion”. Implementing the decision, police on May 20 arrested Malaysia VLN Nepal Pvt Ltd operator Ram Prasad Shrestha and 39 others.
In a case seeking to recover Rs 2.46 billion from him and a jail sentence, the Lalitpur District Court released Shrestha on Rs 1.2 million bail. The 39 others have also been freed. Shrestha’s statement to the police makes clearer the nexus between the Nepali and Malaysian government mechanisms to support the loot. He said that the Rs 700 collected from each worker would go to the Malaysian Embassy in Nepal, Rs 3,200 to the Ultra Kirana Radiance Sdn Bhd and Rs 2,800 to the Malaysia-based Profound Radiance Sdn Bhd. In turn, the Ultra Kirana paid Rs 168 and Profound Radiance Rs 420 per worker in commission.
How did Shrestha send this amount to the Malaysian company? He told police that it was done with permission from the Nepal Rastra Bank. Malaysia VLN Nepal Pvt Ltd Finance Manager Dipak Giri also backed the claim. An NRB letter was found in this connection. Assistant Director Pitambar Pokhrel of the Foreign Exchange Management Department stated in a letter to the VLN on June 17, 2014: “Please request henceforth for foreign exchange facility for sending money to a foreign company with verification of the total number of visa applicants and the amount of money by the embassy along with related documents” (see letter). The letter was prepared in line with the directive of the Central Bank Management Committee issued on June 16 that year. Incumbent Finance Minister Yubaraj Khatiwada was the NRB governor then. Central Bank spokesperson Narayan Prasad Poudel said: “I don’t know the details but the company was given foreign exchange facility based on the reported permission from the Malaysian government.”
VLN was registered with the Company Registrar’s Office for software-related works. But it does not seem to have obtained permission from the Ministry of Science and Technology for software development and from the Commerce Ministry to sell it. Can an organization lacking permit for business and charging workers without the government’s permission be given foreign exchange facility? We asked this question to Executive Director Bhishmaraj Dhungana at the foreign exchange division.
“The money collected by a company without permission from the government cannot be sent abroad. While the government says the fees are illegal, the central bank is more bound not to grant transfer facility.”
On May 27, the Metropolitan Police Circle, Kathmandu wrote to the central bank seeking data of the amount permitted to be sent to Malaysia. In a response the following day, foreign exchange division Director Ishwari Prasad Neupane said only the “GSG Services Nepal Pvt Ltd and the Malaysia VLN Nepal Pvt Ltd had got permission for sending the visa processing fee to Malaysia”
VLN operator Shrestha told police that Rs 1.95 billion of visa processing had been sent to the Ultra Kirana and Rs 663.7 million of OSC charges had been transferred in the name of Profound Radiance. But the legal channel of this cash transfer has not been identified. A Labour Ministry official says: “Initial probe shows all the money has been transferred through Hundi with the involvement of the central bank and the company registrar’s office.”
Hundi transaction permitted
The Rs 725,949,000 charged for uploading the details and photos of Nepalis applying for Malaysian jobs in the 25 months until mid-May is seen to have been transferred to Malaysian through Hundi. According to a human resource professional, the 125 RM collected from each worker is sent to the account of Bestinet in Malaysia. The details of job applicants are registered with MIGRAMS only after the fees are deposited to the Bestinet account.
MONEY ROUTING NEXUS TO MALAYSIA (INFOGRAPHICS):
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According to the professional, Deepak Babu Ghimire, who runs a money transfer firm in Tangal, Kathmandu, does the job. The Prashant Organisation Pvt Ltd owned by Ghimire at Greenland Chowk in Tokha Municipality is also involved in money transfer. “When the Malaysian ringgit sells for Rs 27, we give Deepak Babu Rs 2 more per ringgit,” the entrepreneur said on condition of anonymity. “Since the money collected from migrant workers can’t be sent through the legal channel, nearly 500 professionals use Hundi. Several money transfers facilitate this.”
According to the email records obtained by us, the slip for Rs 110,000 sent via Hundi for MIGRAMS by a manpower agent on December 11 last year was received by Muhamad Hisham Abdul Razak of the Bestinet’s accounts department. The money transfers engaged in Hundi business send receipts to manpower agents after depositing money to the Bestinet account. They email the slip to Bestinet for workers’ registration in the MIGRAMS system.
(From top) The letter sent by the foreign exchange management department of the Nepal Rastra Bank to the VLN. The permission granted by the International Relations and Labour Committee of the Legislature-Parliament without basis and relevance to proceed with the biometric system. The letter sent by the central bank’s foreign exchange department to the Metropolitan Police Circle Kathmandu.
According to Nepali law, Hundi is an illegal business. But the Company Registrar’s Office was found to have permitted GSG Services Nepal Pvt Ltd to do the Hundi business. The company registration regulation of the GSG has “opening the company’s bank accounts; preparing cheque, bill of exchange, promissory note and records; accept, verify, pay and issue” as its functions and responsibilities.
When the Labour Ministry asked the Company Registrar’s Office for the basis for such permission, the office is seen to have replied that “Hundi transaction was permitted at that time but it has been removed by amending the Articles of Association and regulations”. Not satisfied with the reply, the ministry on June 3 wrote to the Registrar’s Office to specify the officials who permitted Hundi transactions. Then it was revealed that the permission was granted by assistant registrar Himmat Jang Shahi and deputy registrar Saroj Prasad Guragain.
GSG is a company claiming in its statute to engage in the service sector but it has not got permission from the Labour Ministry to work in the sector of foreign employment. Registered in the Company Registrar’s Office as “S5 Service Nepal” on March 23, 2016 it was renamed “GSG Services Nepal Pvt Ltd”.
The central bank permitted this company to take money abroad. According to the documents available to us, the central bank is seen to have permitted the GSG eight months ago to send the RM 590,955 collected from Nepali workers to the Malaysian company ‘S Five Biotech’. On May 16, 2018, Nepal Rastra Bank permitted GSG to send an additional 1,228,601 ringgit to the same company.
Kathmandu-Kuala Lumpur nexus
In the exploitation of poor Nepalis, the government mechanism of Malaysia is also responsible, in a strange nexus with that of Nepal.
The then government of Malaysia has outsourced services related to immigration of foreign workers to companies including Bestinet, Ultra Kirana, Bukti Begha and Diamond Palace Cooperative Limited. Then Malysian Prime Minister Najib Razak and Home Minister Datuk Seri Ahmad Zahid Hamidi were dragged into a controversy for giving the Immigration responsibilities to the private companies. This “deal with their business partners” was heavily criticized in the Malaysian media.
Brother of the then home minister Hamidi, Abdul Hakim Hamidi, and former minister Azmi Khalid are suspected to have invested in Bestinet. Bestinet proprietor Aminul Islam Abdul Nor is the brother-in-law of former home minister Hamidi.
When pressure mounted to shut the Bestinet biometric system in Nepal, then labour minister Dipak Bohara reached Kuala Lumpur to “inquire about the condition of Nepali workers in Malaysia”. On June 30, 2016, he met with Abdul Hakim Hamidi through Bestinet promoter Amin at Hotel Oriental Mandarin in Kuala Lumpur. The objective of the meeting was to ensure that there are no glitches in implementation of the biometric system (see picture). No doubt, the biometric system went unhindered after Bohara’s return from Malaysia.
Then Charge d’Affaires of the Malaysian Embassy in Kathmandu Fadli Adilah was also active in the deal. Fadli is the official summoned to Kuala Lumpur for clarification after he sent unsigned letters to the foreign ministry in favour of the agent companies in Nepal.
After Mahathir bin Mohamad was elected the Malaysian prime minister in May, investigation has been launched into decisions and activities of then Prime Minister Razak. On June 20, the Consortium of Investigative Journalists (ICIJ) revealed that Mohamad Najib bin Abdul Razak siphoned funds illegally to a company set up in the British Virgin Islands. The money sent via Hundi from Nepal is suspected to have been parked there too.
Ex-PM Razak was held on July 3 on corruption charges. Will the Malaysian government help put an end to the loot of Nepali workers by investigating these scams? Ganesh Khatiwada, Malaysia coordinator of the Nepal Trade Union Federation (GFONT) says: “It can’t be said anything yet even as the government has stopped the biometric system among others since some agents are still charging fees for five systems.”
