Kathmandu: The Kathmandu District Government Attorney’s Office is poised to trigger a significant legal upheaval in Nepal’s financial sector this week as it prepares to file a formal indictment against 40 individuals involved in a colossal insurance fraud and embezzlement scheme.
This landmark case, which is expected to be registered at the Kathmandu District Court as early as Monday, represents one of the most complex and high-stakes white-collar crime prosecutions in the country’s history. The litigation follows a gruelling and exhaustive investigation by the Central Investigation Bureau (CIB) of the Nepal Police, which has spent months untangling a web of organized economic crime that reaches into the boardrooms of some of the nation’s most prominent insurance and re-insurance institutions.
According to the findings of the CIB, the scandal is not merely a collection of administrative errors but a deliberate, organized effort to siphon off billions of rupees from public-facing insurance companies for the private enrichment of a select group of powerful business magnates. The investigation report, which was recently handed over to the government attorney, specifically names high-profile figures such as Sulabh Agrawal, Deepak Bhatt, and Shekhar Golchha as central actors in a plot that has shaken the foundations of the Nepalese insurance market.
The scale of the alleged crime is staggering, involving the systematic misappropriation of funds from Himalayan Re-Insurance, Nepal Micro Insurance, and Himalayan Life Insurance, along with their various specialized subsidiaries.
The core of the prosecution’s argument rests on the discovery that these individuals treated corporate capital, monies that legally belonged to policyholders and shareholders, as their personal piggy banks. The CIB’s documentation reveals that billions were diverted through clandestine channels to influence the stock market and build massive private portfolios. Central to this operation was Bhrikuti Stock Broking Company (Broker No. 55), managed by Sandeep Chachan.
The brokerage allegedly acted as a conduit, receiving massive “advance payments” from the insurance firms under the guise of corporate investments. However, instead of being used for institutional growth, these funds were funnelled directly into the private accounts of the defendants to settle their personal share market debts and facilitate aggressive stock purchases.
The systematic nature of the fraud becomes evident when examining the figures involved. The investigation found that approximately Rs 2.73 billion was diverted from Himalayan Re-Insurance alone to clear the personal share purchase settlements of a few individuals, including Deepak Bhatt, Raj Bahadur Shah, and the Agrawal family.
When accounting for the entire scope of the operation, including the involvement of subsidiaries and other insurance entities, the total misappropriated amount exceeds a staggering Rs 3.73 billion. This suggests a level of institutional capture where the regulatory safeguards intended to protect public money were completely bypassed by those in charge of the institutions.
Furthermore, the CIB report highlights a blatant disregard for the legal and regulatory framework governing insurance investments in Nepal. The Nepal Insurance Authority’s Investment Directive of 2082 explicitly mandates that re-insurance companies can invest a maximum of 15 percent of their total capital in the securities market and no more than 15 percent in any single company.
Moreover, all such investments require prior regulatory approval. The defendants are accused of intentionally violating these limits, even after they had already been breached, by continuing to channel funds through Bhrikuti Stock Broking. This was allegedly done with “malicious intent” to bypass the law and create artificial movements in the stock market, essentially engaging in large-scale insider trading and market manipulation.
One of the most damning aspects of the CIB’s findings is the location and manner in which these illegal decisions were made. The investigation notes that the suspects did not rely on the independent investment committees or official boardrooms of the insurance companies. Instead, they allegedly used the private offices of Saurya Cement and Jagdamba Steel as a “shadow cabinet” to coordinate their trades and settlement strategies.
By centralizing decision-making in these private venues, the defendants were able to bypass corporate governance protocols, ensuring that the insurance companies’ funds were moved according to the personal whims and financial needs of Sulabh Agrawal and Deepak Bhatt rather than the best interests of the institutions they served.
The fallout from this investigation extends deep into the subsidiary structures of the involved firms. The CIB has recommended individual prosecutions for the mismanagement and embezzlement of funds within several specialized entities, including Himalayan Securities Banker Limited, Himalayan Capserve Limited, and the Himalayan Large Cap Fund.
In each of these cases, the pattern remained the same: the management and directors allegedly allowed millions in receivables to remain uncollected from the broker while simultaneously providing fresh “advances” from the corporate treasury. This “see-no-evil” approach from the directors is being characterized by the prosecution as a criminal failure of fiduciary duty, which directly put the parent companies’ stability at risk.
In terms of specific legal demands, the CIB is advocating for the maximum possible penalties under the Insurance Act of 2079. For the primary mastermind, Sulabh Agrawal, the authorities are seeking the recovery of the full Rs 3.73 billion. For Deepak Bhatt, the claim stands at nearly Rs 2.89 billion.
Other major beneficiaries of the illegal share purchases, such as Raj Bahadur Shah and Shubi Agrawal, face claims for hundreds of millions of rupees in restitution. The prosecution is asking the court to not only ensure the total forfeiture of these misappropriated sums but also to impose stiff prison sentences on all 40 defendants to serve as a deterrent against future corporate malfeasance.
The role of the brokerage firm in this scheme cannot be overstated. Sandeep Chachan, the executive director of Bhrikuti Stock Broking, is being positioned as a primary enabler who allowed his firm to be used as a laundromat for insurance funds. By facilitating the movement of capital into personal accounts under the guise of “advance payments,” he allegedly helped the syndicate bypass the mandatory T+2 settlement rules of the Nepal Stock Exchange.
Consequently, the CIB has recommended that he be held liable for the entire misappropriated sum of Rs 3.73 billion, alongside criminal charges for his role in the conspiracy.
As the Kathmandu District Attorney’s Office finalizes the indictment, the entire financial community in Nepal is watching with bated breath. This case represents a critical test for the country’s judicial and regulatory systems. It challenges the long-standing perception that high-profile corporate leaders are “too big to jail” and could set a powerful precedent for transparency and accountability in the financial sector.
If the court moves forward with the CIB’s recommendations, it will signal a new era of zero tolerance for organized economic crime, potentially restoring faith among small-scale investors who have long felt that the stock market is rigged against them by powerful syndicates. The filing of this case marks the beginning of what promises to be a protracted and historically significant legal battle for the soul of Nepal’s corporate integrity.
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