Nepal’s Department of Money Laundering Investigation has recommended the formal prosecution of 29 individuals, including high-profile corporate figures, in connection with a massive financial fraud network involving artificial stock market manipulation and the illegal diversion of public funds totaling nearly Rs20 billion.
The extensive file, which is currently undergoing final review at the Kathmandu District Government Attorney’s Office, targets prominent business leaders, including Deepak Bhatta (Chairman of Infinity Holdings), Sulav Agrawal (Vice-Chairman of Shanker Group and Chairman of Jagdamba Holdings), and former Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Shekhar Golchha.
The Alleged Mechanism of Fraud
According to investigators, the core of the scam involved structural violations under the Money Laundering Prevention Act, 2008, the Securities Act, and the Insurance Act, 2022. Authorities allege that the network operated an illicit fund pooling system to manipulate capital markets for short-term profit and corporate dominance.
The investigation uncovered a multi-layered scheme focused primarily on artificial trading within Nepal Reinsurance Company and other public corporate entities:
Illegal Diversion of Capital: Funds totaling Rs3.73 billion were allegedly drawn unlawfully from public-listed companies—including Himalayan Reinsurance, Himalayan Capserve, Nepal Micro Insurance, and the HLI Large Cap Fund—to facilitate private trading.
Price Rigging & Market Distortion: Selected individuals allegedly received high trading limits from specific brokerages without advance payments, allowing them to settle massive transactions artificially. This created a false impression of market volume, driving up stock prices and misleading everyday public investors.
Targeting Corporate Dominance: Investigators revealed that a primary objective of the coordinated buying was to artificially capture a dominant shareholding position in Nepal Reinsurance Company ahead of its highly anticipated rights share issuance, aiming to weaken competitive market forces.
Status of the Accused
The multi-agency probe gathered transactional data and electronic logs from the Nepal Stock Exchange (NEPSE), the Securities Board of Nepal (SEBON), Nepal Rastra Bank, and the Nepal Insurance Authority to map out the financial flow.