Kathmandu, December 24
The US based company AAR Corp has been fined $55 million (equivalent to Rs 7.42 billion) by the US government after being found guilty of bribing Nepali officials during the procurement of two widebody aircraft for Nepal Airlines Corporation (NAC). The company reportedly paid $2.5 million in bribes to secure an Airbus purchase agreement.
A statement from the US Department of Justice confirmed that AAR Corp violated anti-corruption laws, leading to the substantial penalty. It further revealed that an official from AAR admitted to bribing government officials in Nepal and South Africa and making $24 million in illegal profits.
Timeline of events
In December 2016, Nepal Airlines Corporation procured two widebody aircraft from AAR Corp to address the need for long-haul flight capabilities. With NAC’s existing fleet of narrow-body planes unable to handle long-distance routes, the decision to purchase widebody planes was made under the leadership of then-Prime Minister Pushpa Kamal Dahal. On January 26, 2017, NAC’s board approved the purchase of two Airbus A330 aircraft with a seating capacity of 274.
A public notice inviting bids was issued on September 26, 2016, and 10 companies submitted proposals. AAR Corp was ultimately selected. In February 2017, NAC paid AAR an advance of $1 million. However, during the contract finalization, German company Aviation Capital and Portugal’s Hi Fly merged with AAR as suppliers, forming a consortium that established a $1-capital company in Ireland to purchase the planes.
The consortium bought two Airbus planes from the manufacturer and sold them to NAC for Rs 24 billion. Despite the involvement of three companies, NAC transferred $79 million to a German company’s account, raising suspicions.
Investigations and scandal
The controversy surfaced when the payment details became public in mid-2017. After both planes arrived at Tribhuvan International Airport in 2018, public outcry and allegations of irregularities escalated. Subsequently, the government formed a commission led by former Chief Justice Govinda Prasad Parajuli to investigate, but the commission failed to proceed due to procedural delays.
The Public Accounts Committee of Parliament, under Congress MP Rajan KC, conducted a separate inquiry and reported irregularities amounting to Rs 4.36 billion in the aircraft procurement process. The Anti-Corruption Commission later filed charges against 32 individuals, including former Tourism Minister Jivan Bahadur Shahi, NAC’s former Managing Director Sugat Kansakar, and former Tourism Secretary Shankar Prasad Adhikari, at the Special Court in April 2023.
On December 6, 2024, the Special Court found 10 individuals guilty, including NAC’s then-chairperson Shankar Adhikari, Managing Director Sugat Kansakar, and board members Buddhi Sagar Lamichhane and Shishir Dhungana. However, former Tourism Minister Jivan Kumar Shahi and others were acquitted.
The widebody scandal underscores significant governance failures and corruption in Nepal’s aviation sector, raising calls for stricter oversight in public procurement.
