Former Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Shekhar Golchha has been arrested by police in Kathmandu on April 23. This arrest follows a probe by the Securities Board of Nepal into alleged stock market manipulation involving collusion and securities offenses, according to the Central Investigation Bureau (CIB).
AIG Manoj KC, chief of the CIB, confirmed that Golchha was taken into custody based on the Securities Board’s investigation report. The Bureau is conducting its inquiries in accordance with the preliminary findings of the Board. The charges against Golchha and others fall under Sections 94, 95, 96(1), and 98 of the Securities Act 2063, which relate to securities offenses and market manipulation.
The Securities Board's probe suggests that funds from several insurance companies were used to inflate the value of particular company shares. The report details a scheme where shares were purportedly purchased at low prices, then inflated, and sold to insurance companies, which caused investors to lose money.
The investigation names controversial businessman Deepak Bhatta as a central figure, accused of purchasing low-priced shares and artificially inflating their value before selling them to insurance companies. The board's findings specifically implicate Bhatta and Sandip Chachan, the CEO of Bhirkuti Stock Broking Company, in offenses under Sections 96 and 98 of the Securities Act 2063, citing market manipulation and fraudulent transactions. Bhatta is already in custody.
Other entities and individuals mentioned in the report include the Himalayan Reinsurance Company Limited, Himalayan Capserv Limited, Nepal Micro Insurance Company, Himalayan Securities Banker Limited, HLI Large Cap Fund, along with Rohit Gupta and Shekhar Golchha. They are reportedly implicated for their roles in the fraudulent activities. Additionally, Shubhi Agrawal, wife of Sulabh Agrawal, chairman of Himalayan Life Insurance, Rishiraj Mor and Rajbahadur Shah are implicated in relation to inflating the share price of Nepal Reinsurance Company.
This news has significant implications for the Nepali diaspora, particularly those with investments or an interest in Nepal's financial market. The arrest of a former FNCCI president highlights the prevalence of corruption, indicating potential risks and vulnerabilities within the financial system. It serves as a reminder for Nepali communities abroad to exercise caution and conduct thorough due diligence when investing in the Nepali stock and financial markets.
The Securities Board's report and the subsequent arrests also underscore the importance of transparency and accountability in Nepal's financial sector. For the Nepali diaspora, maintaining awareness of such developments is crucial for making informed investment decisions and understanding the potential risks associated with the Nepali market and contributes to protecting their investments in Nepal.
