An investigative sub-committee in the Nepali Federal Parliament adopted a report blaming Civil Aviation Minister Rabindra Adhikari, Nepal Airlines (RA, Kathmandu) Managing Director Sugat Ratna Kansakar, and a number of other officials for financial mismanagement during the acquisition of two A330-200s for the flag carrier, PTI newswire has reported.
While the initial report ordered the government to launch legal actions regarding the deal, the version adopted after a discussion assigned only "moral responsibility" to the sitting minister and his two predecessors.
Adhikari denied all charges at a press conference and said that the deal had already been approved and the payments had started when he assumed office, The Kathmandu Post has report.
The report said that wrongdoings during the acquisition of the two jets caused a loss of NPR4.35 billion rupees (USD39.2 million) to the Nepalese state.
The report also recommended the immediate suspension of Kansakar. Former aviation ministers Jivan Bahadur Shahi and Jitendra Dev were accused of negligence, while secretary of state Krishna Prasad Devkota and former secretary Shankar Prasad Adhikari were also named as involved in mismanagement.
According to the investigation led by the opposition Nepali Congress MP Rajan KC, Nepal Airlines broke the law by deciding to acquire two brand new jets via intermediaries. The company's bylaw explicitly bars it from such a move, forcing it to order new aircraft directly from the manufacturer. The use of intermediaries is only allowed by law when acquiring used aircraft.
Back in April 2017, Nepal Airlines publicly announced that from 11 bids received, it had selected a consortium of AAR, German Aviation Capital, and Hi Fly (5K, Lisbon) to provide the two A330-200s. Hi Fly then ordered the units from Airbus directly through its SPV Hi Fly Ireland X, ahead of the delivery of the two aircraft to Nepal Airlines in June and July 2018, respectively.
Rajan KC's report said that the former ministers were guilty of authorising payments to Hi Fly despite the fact that the carrier should have been dealing directly with the manufacturer only. The report further claimed that due to the procedure used, Nepal Airlines could have overpaid as much as USD23.6 million for the two aircraft.
The sub-committee said that its investigation was not exhaustive as Nepal Airlines did not provide all requested documents related to the acquisition of the two twinjets. According to another sub-committee member Chanda Chaudhary, quoted by The Himalayan Times, the MPs faced significant political pressure and had to remove some names of high-ranking officials from the report.
Nepal Airlines and Hi Fly have not responded to ch-aviation's requests for comment.