A business group has made immense profit from a multi-story building that failed to comply with the agreement. The way the group got away with illegal acts not only shows how government agencies kowtow to business people, but also tears apart the state of rule of law in the country.
Sharad Ojha: Centre for Investigative Journalism-Nepal
On December 12, 2018, Prime Minister KP Sharma Oli announced at “Prime Minister with People,” a talk show on Nepal Television: “Tribhuvan International Airport will be transformed into a boutique airport that reflects modernity and originality of our country.” The five-story building in the airport, however, has made fun of Oli’s statement. That’s because an influential business group with political connections had flouted laws during the construction. In the words of a former Deputy Director General of Civil Aviation Authority of Nepal: “Instead of enhancing the beauty of the international airport, the building had turned into an eyesore.”
The controversial building in the premises of Tribhuvan International Airport. Photo: Bikram Rai
Constructed on right side of the airport entrance, the multi-story building has come to exemplify the deceit and forgery plaguing the sector. A trio of controversial businessmen Deepak Malhotra, Mohan Acharya, a contractor and Nepali Congress lawmaker from Rasuwa district and Bimal Poddar, who has been charged in the 33 kg gold scam, were behind the construction. These businessmen have influenced powerful people including then chief commissioner of the Commission for Investigation on Abuse of Authority (CIAA) and top government officials.
On October 18, 2012, the Civil Aviation Authority of Nepal (CAAN) signed a contract with Rasuwa KD JV to building various infrastructures including a parking, a modern park, a children’s playground, a waiting room and other infrastructure related to the airport at the TIA premises.
According to the agreement, Rasuwa KD leased around 6.60 acres of land for 30 years to build the infrastructure. However, aside from the parking and the building (both have flouted the agreement), the builders have not completed other construction work. “The (airport) management did nothing even as the builder flouted the agreement and built against the provision of the contract,” said Anil Gupta, who chairs the CAAN unit of Madhes Tarai Employees Union. Gupta made this remark publicly at the CAAN anniversary on December 31, 2018.
After the CAAN employees protested against the agreement as well as the interest group in March 2019, the CAAN formed a seven-member probe committee headed by director general Jagannath Niraula. The study report, which was submitted a month later, recommended CAAN to demolish the building after its potential impact on the air safety. Similarly, the Committee also suggested a review of arrangement of royalty sharing fixed earlier in case of decision to not demolish the building whose construction was mired in irregularities.
However, even a month after the report was submitted, implementation of the recommendations has far from begun. In mid-May, Sanjeev Gautam, the director general of CAAN directed the airport office to immediately implement the report and inform the CAAN about it. Rajan Pokharel, CAAN’s acting director general, said, “I have no information about the report being implemented.”
CAAN officials doubt that the recommendation of Niraula Committee will be implemented due to the access to Singhadarbar and Baluwatar enjoyed by the builders. Because of the pressure from Rasuwa KD JV, three members from engineering section didn’t accept the offer to be members in the Niraula committee. Chandra Mani Sapkota, the head of Civil Engineering Section of the airport, Civil Engineer Murari Bhandari and Mechanical Engineer Kul Prasad Simkhada refused to be part of the committee. They were fearful that they will face repercussion if they gave accurate technical report about the building. That’s why the report has been undersigned by four members including Thira Bahadur Khatri, Hem Dahal, Dwarika Bhattarai and Niraula.
“We know that irregularity has percolated the entire process from agreement to construction and operation,” said an engineer who refused to join the committee, “But the person who is supposed to be investigated is often found among the prime minister’s delegation during the foreign visits. How can he be investigated?” The man was referring to Deepak Malhotra, a partner of the company.
An edifice built on irregularity
The seed of the construction of the building at the Tribhuvan International Airport had been sown on December 8, 2009. At the time, the government of Madhav Kumar Nepal transferred the land ownership from Department of Civil Aviation to CAAN. A few days later, CAAN sought letter of intent from construction companies to build car park, exit routes, waiting rooms, canteen, parks and children’s playground. The CAAN asked three out of the five companies selected for bidding to submit financial and technical proposal. A proposal was rejected on the basis of being incomplete and another was deemed technically flawed. On July 16, 2010, the management committee directed the CAAN to prepare an agreement with Rasuwa KD JV, where Deepak Malhotra, Bimal Poddar and Mohan Acharya were partners.
Based on the directive, the CAAN struck a 30-point agreement with Rasuwa KD on August 16, 2010. And, on September 2, 2010, the airport office and the construction company signed an agreement. But the agreement wasn’t immediately implemented. It was delayed for two years. Later, the government led by Baburam Bhattarai on July 12, 2012 directed the CAAN to sign an agreement on the basis of the previous agreements. About three months later, the CAAN and Rasuwa KD signed an agreement.
Ratish Chandra Lal Suman, the General Manager of the TIA and Mohan Acharya of Rasuwa KD JV have signed the agreement while Deepak Malhotra, a partner of the construction company, served as a witness. A secretary, who has worked in the Ministry of Culture, Tourism and Civil Aviation, said, “We couldn’t believe that a company, whose partners have been accused of gold smuggling through the airport, was building the infrastructure at the airport. However, if you have political access, anything can happen in Nepal.”
According to police, Bimal Poddar, a partner at Rasuwa KD JV, has been arrested and charged on the smuggling of 33 kg gold. Malhotra is a controversial trader. The case has been filed in the court against Malhotra, who has a history of a decade of gold smuggling, faces a fake VAT bill case at the Supreme Court.
Rasuwa KD was awarded the contract after a setting, in which powerful people in politics and government were influenced. The agreement was made against the cabinet’s approval Ministers, the agreement with CAAN and the TIA. On July 10, 2012, the Ministry of the Law, Justice, Constituent Assembly and Parliamentary Affairs recommended the CAAN to raise the issues of design and duration of the construction. Two days later, the cabinet issued a directive to implement the ministerial recommendations. But it wasn’t followed through.
Instead, the agreement was revised in order to favour Rasuwa KD JV. While the agreement had clearly mentioned that the company should pay the rent from the day of agreement, it was changed requiring it to pay only after the completion of construction. Initially, the project duration was 21 months, but was amended to 39 months. According to the agreement, a three-month extension would be allowed if it wasn’t completed on time. As a result of this, TIA has lost 2.5 billion rupees that it would have received from land rental. When asked about why the TIA went against the agreement, Ratish Chandra Lal Suman, who served as General Manager at the TIA, said, “I cannot say anything because I do not have any documents.”
So much so that timeline for rent payment was changed from before the agreement to a month before the end of fiscal year. Similarly, the provision that the agreement should be implemented from the day of signing has been changed to ‘this agreement has been made to be implemented automatically after the period mentioned in the mandate given to build infrastructure.’ The mandate doesn’t specify the duration. The provision that required the company to provide details on design, map and planning within 30 days of various agreements has also been removed. In sum, all these changes have been designed to make things easier for Rasuwa KD and incur huge loss to the CAAN.
Sanjeev Gautam, the Director General of CAAN, also acknowledges that the agreement had failed to comply with the government directives. “All the decisions related to this were done by the TIA office. No one can go against the agreement approved by the government,” he said.
Height of negligence
Rasuwa KD has not even followed the agreements that were contrary to the original contract. According to the agreement, Rasuwa KD had to complete construction of all structures by August, 2014. But after getting hold of the land, Malhotra group focused on how to get more profit from it. As a result, in 8 years, it has only built the building and parking.
According to the agreement, in the first 10 years of business, Rasuwa KD should hand 5 % revenue to the airport. Similarly, 15% in the second 10 years of the business and 25% in the remaining period msut be handed to the airport. Revenue should be paid in the next month of business within the 25th day. Though the company started to operate the building and parking lot in December 2018, even the 5 % revenue remains unpaid. According to the financial regulations, the company should pay Rs.15.56 million every year. But it hasn’t cleared its dues. Similarly, it hasn’t fulfilled the condition in the agreement for the installation of computer software to record the transaction. Even so, according to the agreement, the airport office and authorities could have asked for clarification from the company on the delay on rent payment and late fine. The TIA and CAAN could have terminated the contract if the company failed to furnish the clarification within 21 days. Deepak Malhotra, one of the partners, accused the TIA and CAAN for putting pressure on him.
How could have Rasuwa KD dared to violate the agreement to upgrade Nepal’s only international airport? According to a top official at CAAN, after the inauguration of Lokman Singh Karki as the chief commissioner of CIAA in May 2014, the clique led by Malhotra began to exercise power, which was beyond its means. Anyone who raised questions on their work was summoned to the CIAA for questioning. According to a Deputy Director General of CAAN, “If one raised the issue, the CIAA would send letter accusing him or her of corruption, irregularity and unaccounted property. No one could point finger at the corruption involving the group led by Malhotra.”
At the behest of Karki, Rasuwa KD made profit from work that was not part of the agreement. The company extracted sand and clay from the land and sold it. Prem Nath Thakur, then corporate department head of the airport office and coordinator of the agreement monitoring committee, turned a blind eye. Rasuwa KD extracted the soil and built an underground parking there. The design for the two-story building, which was proposed initially, didn’t mention an underground parking. The ground floor was planned as the parking, according to the design.
The Monitoring Committee, which was supposed to be formed immediately, was only announced 23 months later. The committee, however, did not monitor anything. As a result, instead of a 37-feet two-story commercial building, the contractors built a 52-feet five-story building with an underground parking. While contractors sought design changes, the airport officials allowed them to proceed ahead without the changes, according to Malhotra.
With backing from Lokman Singh Karki, Rasuwa KD started building without an approval for the structural design. It is yet to receive permission from the Kathmandu Metropolitan City (KMC) for construction of the building. Suraj Shakya, the head of building permission section at KMC, said his office hasn’t received any information about the building. “Structures that lack permit have until the end of the fiscal year to apply. Failure to do so will lead to prosecution according to law,” said Shakya.
The authorities have not even acquired the land deeds for the area. “On the one hand, Rasuwa KD has built structures that don’t comply with the agreement. There is a lack of interest because the issue has been embroiled in dispute. It has caused delay in getting the land deeds, on the other,” said a former deputy director general of CAAN. Malhotra said lack of support from CAAN and TIA office had caused the delay in approval of the design.
Most clients of Prabhu Bank, which has been operating in the building for the last two years, come from outside the airport. Similarly, the restaurants at the building also target diners from outside airport. Though the agreement required the builders to build a chain link fencing for the protection of the land, the wall in the western area has been removed so that business can be operated facing the Ring Road.
Karki’s reign of terror
Suman, who had signed a controversial agreement while serving as the general manager of TIA, did not show any interest in making the company follow the agreement while he served as CAAN’s director general. Dinesh Prasad Shrestha, who was the general manager of the TIA, couldn’t stop the work that was against the agreement. Rishikesh Sharma, who succeeded Shrestha as the General Manager, did not go against Malhotra’s interest. This happened due to the interest of Suman, who signed contract that defied the agreement and the reign of terror of Karki, the chief commissioner of the CIAA, according to insiders. However, Suman, who also served as a member of Nepal Tourism Board, was suspended over corruption in March 2014. He was later cleared of the corruption case.
After Suman left CAAN, TIA’s general manager, Debananda Upadhyay supported Rasuwa KD. It was an open secret that Upadhyay was appointed to the job in August 2016 under pressure from Malhotra and Karki. The TIA officials were so favorable to Malhotra group that even after the expiry of an extended deadline for the completion of the project in February 2016, neither Upadhyay nor Thakur, the coordinator of monitoring committee, bothered to terminate the contract. The project deadline expired three and a half years ago, but the work has not been completed yet.
The scandal came out only in August 2016 when Rasuwa KD applied for piped water connection and electricity to the newly constructed building. The airport officials found that the company had violated the agreement with the authorities. Ram Chandra Subedi, chief of TIA’s corporate section, informed the CAAN in writing about irregularities in the project. Upadhyay, the then general manager of TIA, has objected to Subedi’s letter of December 2016, according to CAAN sources.
After Subedi exposed about the irregularity by Rasuwa KD at the airport, he was summoned by CIAA, which accused him of ‘amassing unaccounted wealth.’ If Lokman Singh Karki hadn’t been dismissed from the CIAA two months later, the probe committee would not have been formed, said a Deputy Director General of CAAN. After Karki was dismissed from the CIAA, Sanjeev Gautam, Director General at CAAN, formed a five-member probe committee headed by Deputy Director General Narendra Thapa.
Report remains unimplemented
The probe team said it was TIA management’s fault to not have stopped construction even after it found that the design had not been approved. The Committee also recommended that the constructed structures should be brought into legal system.
Based on the recommendation of the committee, Gautam, the then Director General, issued a five-point directive in February 2017. The directive sought the following: “To get an approval for building design; payment of revenue since the building started its operation even before completion; a clarification with Rasuwa KD about nonpayment of rent and to complete works as per the agreement.” But the directive hasn’t been followed through. Raj Kumar Chhetri, the general manager of the airport, said, “Rasuwa KD hasn’t cooperated in this matter despite our repeated following up.”
It’s been eight and a half years since the ouster of Lokman Singh Karki, who operated unconstitutionally though threats and terror and ran a parallel power centre in the history of the country. But authorities have failed to take action against the Malhotra group, which took advantage of Karki’s power. Malhotra, who is close to top political leaders, still enjoys impunity. Malhotra said that he faces a loss of Rs. 900 million from the project at the airport.
‘No longer boutique airport’
Architect Arun Dev Panta said the terminal building of Tribhuvan International Airport was built to reflect the natural scenery of the valley. According to him, the building’s original design was indeed that of a boutique, but it started to lose its originality in recent years.
In 1990, Japanese contractor Shimizu Sitos Joint Venture Company completed the construction of the terminal of the international airport in an area of 10,000 square metres. The design was prepared by Canadian company called Across Nar Lee.
Inaugurated by King Birendra Shah on February 18, 1990, the terminal building was built to reflect the terraced fields of the mountains, with its interior inspired by wooden craftsmanship of the Kathmandu Valley. “Architects from the company studied various designs in Kathmandu, Lalitpur and Bhaktapur and collected them. That’s why the terminal’s interior reflects Nepaliness,” said Prem Lohani, an engineer who was involved in the project.
Additional structures have been added to the airport. “The additional construction has ruined its beauty. If we can return the terminal building to its old form, we will realize that it had already been a boutique airport,” said Panta.
The façade of the airport is made of Chinese bricks, Godavari marble on the floors and the walls are adorned with artistic designs. The exterior of the airport has now been covered with flex. Rasuwa KD, which is building a new arrival section for the airport, has damaged the beauty of the airport using substandard material, according to Panta.
Engineer Lohani also said that the five-storry building was an eyesore. “When I was at the airport, I was under pressure allow a commercial building,” he said, “At the time, it was rejected citing its impact on master plan.” Lahani, who retired in 2011, lamented that haphazard constructions designed to meet interest of controversial business people had turned the airport into an inelegant structure.
