FNCCI president faces forgery charge

Chandi Raj Dhakal, president of the apex body of business chambers, FNCCI, has been summoned by the government for swindling Rs 8.6 million by forging documents, the Kathmandu Post daily reports.

Dhakal has so far ignored summons by the Revenue Investigation Department (RID).

According to the newspaper, the government is all set to use police, if he further delays in producing himself to RID. Once Dhakal presents himself at RID, he will have to deposit a bail amount of Rs 25.5 million to avoid detention.

RID has alleged that Dhakal owned Momento Apparels, the largest garment factory of the country, cheated Rs 8.6 million in customs duty by producing forged documents at the bonded warehouse.

On his part, Chandi Raj Dhakal has denied being involved in any such forgery. "Some error might have happened about a year-and-a-half ago when my factory was gutted by fire. I'm investigating the case, and will produce facts before the government soon," he said.

Dhakal said that the responsible person of Momento Apparels was out of the country now, so he was taking time to reply to the government summons.

Under the bonded warehouse facility, all export-oriented companies including readymade garments are allowed to import raw materials at zero percent duty. However, exporters are required to submit cash deposit or bank guarantee equivalent to customs duty applicable on the materials, plus VAT.

The duty paid is refunded after the importer exports the finished goods made from the imported raw materials. Momento Apparels did not export the garment products made from the imported consignment of fabrics, but only produced fake documents and got the duties refunded.

Sources told the newspaper that Dhakal's defiance has irritated the government. "The limit to tolerance has been exceeded, it is time to take action," said a high level source at the Ministry of Finance.

The source said that given his position as the president of the apex body of the private sector, Dhakal was given enough time to arrange a bail amount of Rs 25.5 million ever since the scam was detected about a month ago.
As per the Revenue Leakages (Investigation and Control) Act 2052, a defendant is required to submit a bail worth double the claimed amount to avoid detention.
 
According to the newspaper, Dhakal has been avoiding RID interrogation on the pretext of ill health. However, he was seen live on state-owned television as a judge of the Miss Nepal beauty pageant.

The RID issued the first summons on April 1, asking him to be present on April 3, but Dhakal did not bother. He was then contacted on phone by RID officials and gave assurances that he would submit himself on Thursday or Friday.

The Momento Apparel's forgery was first traced during an on-site audit inspection of Auditor General's office and put the amount as arrears in the name of Department of Customs. The Customs Department then handed-over the case to the RID given its complexities.

The arrears amount by Auditor General's office in the similar category is over Rs 120 million. So, it is likely that other garment industries might also come under investigation.

If indicted, Dhakal can face a jail term up to three years, and will have to pay Rs 25.5 million in fine.