Democracy For Nepal

Friday, July 29, 2005

Protests

Gagan Thapa Feels Unsafe In Jail

With Gagan's Thapa's dramatic arrest, the ongoing movement has been jolted to a whole different level.

In a way Gagan Thapa symbolizes the movement like noone else. In some ways he is more symbolic than even Girija Koirala. Gagan Thapa does not have the baggage of the 1990s. He does not have the baggage of not having had a clear stance for months after 2/1.

The arrest has also brought into focus the intent of the autocratic regime. They intend to go all the way. The king's attitude is like, I said three years, damnit!

Deuba's jail sentence of two years is supposed to play to that timetable. He gets out when the king feels like he is ready to hand over power.

But then what if he gets creative then? What if he holds elections for city governments where the RPP and the Mandal Sadbhavana participate? First, it is not happening. Second, it is going to be one big, fat, international joke.

Gagan Thapa's safety and freedom is of universal concern. He also has brought all the remaining political prisoners into focus.

With every dumb move like this one on the part of the monarch, the republic sentiment is getting stoked. The abstract concept of a constitutional monarchy and the person and actions of this particular king might soon head towards a permanent detachment. It already has among the students and the youth. The rest of the population is not that in the dark either. Books were cooked to throw Deuba in jail for supposedly that "silent majority." There is no such majority, and it is not that silent.

Gaganji's sacrifice will not go in vain. The movement has been stoked. It will only snowball from here. I have been proven wrong. There is not going to be a monsoon break.

King For Prime Minister, Chief Justice For Prime Minister

This king is so out of the whack. I thought he himself became Prime Minister on 2/1. But now he is pushing the Chief Justice for the post. The concept of separation of powers long went out the window.

The next we will hear Tulsi Giri has a double role: he also is Chief Justice. The guy might even get announced a General. It never hurts to amass portfolios onto the lap of a loyalist.

The king's poor strategy paper in his mind reads something like this: the whole protest thing is to make me give democracy. But what if I don't budge! The movement then fails. I have the switch in my hand that I can refuse to turn. If things were that simple! The harder it is made for the movement to find a democratic outlet, less room there is going to be for the king in the aftermath. Less might mean no.

Key Events

The movement will get catapulted by key events. The king or the party leaders are not going to be able to steer the movement.

Acts of repression will fuel the fire.

In The News

I Am Not Safe In Jail: Gagan Thapa UWB Kiran Chapagain ..... the upcoming general convention of Nepal Students’ Union, the student wing of Nepali Congress Party, and possible victory of Gagan Kumar Thapa as the president of the student wing ..... his victory means massive student movement across the country against the present autocratic government. Our belief is that he is the only student leader who could drive a student movement across the country against the present autocratic government....... In 2003, he was arrested on charge of sedition, which raised his popularity ....... the present autocratic government of convicted criminals, corrupts and bank defaulters...... On Monday, I had met Gagan in the rally. As I was reporting, he was passing to Jamal on bike but stopped the bike at Ratnapark. He stopped for a while and asked his friend to go away dropping there. We greeted each other. He then said to me, “Kiranji, rally ma chhirnu paryo (Kiran, I am joining the agitation).” I followed him. I did not see him entering the restricted area during the rally as accused by the authorities. I was with him throughout the rally. With the charges against him known to me, I concluded that the government is conspiring against the most popular student leader of the country......... As a friend, I met him at Hanumandhoka Police Office where he has been detained with permission from a court. He talked to me from inside the detention cell for five minutes. I found him bolder, more determined and confident. The police did not allowed him to come out from the cell; and we talked from a distance. The police tried not to allow him to talk to me but he raised his finger and warned: “Hey, is this the way to treat a student leader!” ......... “I have been kept together with pickpockets, drug addicts and other criminals. I am insecure living with them,” the popular and influential student leader said from behind the bar. He has urged national and international human rights organizations to ensure his security in the detention..... .. authorities are not treating him as per the international humanitarian laws. Besides, he has to share an unventilated and small room with nine inmates....... charged the police of not allowing him to give his arrest warrant to his lawyers. “Even I have not been allowed to meet my family members and well-wishers easily,” he said........ He also announced that he is contested in the election during the general convention for the post of presidency from jail. He was commanding his friends and student leaders to “burn the country” with protests and topple this autocratic government of convicted criminals, corrupts and bank defaulters....... He was confident of the complete democracy and republic setup to come in Nepal as demanded by students....... I finally said, “All the best Gagan. The world is with you.” I told him that the students were taking your arrest to the street and the longer the government keeps you in the jail, the faster Nepali will turn into a republic state......
Constitution Amended UWB ... the king has “amended” the constitution through a decree early Friday morning. .... the king has, in accordance with the Article 127 of the Constitution, granted authority of a stitting prime minister to the chief justice. According to the amendement, the chief justice can now chair and call the meeting of the Constitutional Council (CC).
Photos Will Propel The Democracy Movement UWB Furious Nepali students today clashed with police at several locations, mostly in colleges, in Kathmandu protesting the arrest of prominent student leader Gagan Thapa on Wednesday...... Students threw bricks and stones to police personals and the guys in uniform fired back with bricks and lathis. Students blocked the roads, burnt the tires and chanted anti-government and anti-monarchy slogans. Many students threw stones from insides the colleges. The police have surrounded some of the colleges like ASCOLL, Shankar Dev and Tri Chandra....... many political movements have gained significant momentum by the help of the student protest. Student protests have propelled the mass movements at many occasions in the past, including in the 1990 Mass Movement and 1980 Referendum....... Has the time come? Will the apparently sluggish Mass Movement be propelled? ...... I, hanging my id card to ensure safety from both side, stood more than an hour watching the protest go on.... Students were on the top of the being-constructed building hurling bricks to police and chanting slogans. At one point, they declared the campus area a republic zone..... At around, 10:45am, the students themselves stopped the protest which allowed the policemen come and clean the area. I didn’t see anyone hurt or injured.
Kunda Dixit In New York UWB ..... it is clear that any international attempts to resolve Nepali crisis will be coordinated with India...... very clear that repressive measures that the government of King Gyanendra has introduced have mostly targeted the democratic institutions in the country (political parties, civil society, media, etc.) instead of the Maoists....... King’s official takeover on February 1st, 2005 was the ultimate result of careful planning to undermine the democratic process ..... harassment, imprisonment, and torture (of the journalists) by the security forces on district levels are still continuing....... government’s decision to relax it’s tightening on the media on some prominent national news outlets is only to allay international pressure ....... performing live broadcast of the news in market places, or by having conversation-style outlet of news items, or even broadcasting news in songs formats! ....... The security forces have killed “Maoists” mostly in defensive actions only, and their success in defense has been limited to district headquarters only. Both the security forces and the Maoists seem to avoid contact with each other, rather than taking action to defeat the other. This has resulted in a MILTARY STALEMATE in the field, and a POLITICAL PARALYSIS in the center....... cabinet full of individuals with notorious records of being corrupt and staunchly against democracy during the Panchayat times reflect upon King’s desire to quash democracy in the country for a long term....... seem to be trying to copy the Burmese model of not only militarizing the country, but their 40 years of successful apathy to international pressure....... the leak of information relating to Nepali Maoist leaders’ visit s to India came from the Indian intelligence themselves....... government seems to have taken a keen notice of this possible development ...... the moderates among the Maoists seem to be looking for a safe landing too...... the real danger of further lengthening this conflict, which would inevitably wipe out the entire three if prolonged much longer.......
Rising Voice Of Republicanism UWB It seems many in Nepal are republican. Everywhere, the voice of republicanism has been dominating: From the street to the Special sessions of the dissolved parliament...... “The present regime carries criminal trait,” Pahadi said....... Tula Dangol, who declared Patan a republican area in the 1990’s Mass Movement ..... “Journalists hold rally, members of civil society get arrested and parties release press statements. This is quite opposite. Engine of the movement is political party....... should clearly tell people their agendas. .... parties should reform themselves and become clear over their objectives.” ...... the root of all problems is monarchy ..... “We should abolish monarchy,” he said. “Change is imminent.” ....... associate the Bhumigat Giroha with the present his majesty ..... Now is the time to change the basic characteristic of the state ...... Maoists didn’t bring the talk of Constitutional Assembly and its election. It has been there for the last 50 years...... The regime is not serious about talks. It is looking for arms ..... The king shouldn’t be given any role now
An Interview With Deuba's Father UWB He is 91 .... He heard it on the radio .... It is like Rana Regime now, there is no justice .... He never took one paisa from anyone, ever .... The Supreme Court is scared of the king; this asks for international intervention .... I will only die after I have proven my son innocent ...... He spends three hours each morning doing puja ... then he reads all and sundry newspapers ..... The elder brother gave democracy, the younger took it away .... Everyone is scared of the king .... Sher spend nine years in jail for democracy, what is two years! ..... We did not accept royal slavery before, we will not do it now .... He came to Kathmandu 50 years back looking for a government job ... Sher came to the valley for his I.A. ..... Because he was vocal about democracy, the administration burnt his tongue with electricity ..... The panches offered to make him Zonal Commissioner several times, but he refused ...... He is a monk who never thought about tomorrow ...... When he was young, he used to give away his money to others, and I had to beat him up for that ...... He has 5 sons, and 3 daughters ...... I have experienced Rana rule and Panchayat rule, but I am not understanding this king's rule, why does he keep destabilizing governments? ..... Dr. Arju Rana: my husband thinks of the whole world as his "dera" ...... I have been able to build a house with help from my parents and earnings from my job ..... I have been able to get his salary only once .... "He gives his money away to people as soon as they start telling their sob stories." ...... When I married him, I did not know much about politics, I had only heard names like BP and Ganeshman .... I married him for his simplicity and his utter disregard for money .... For someone who does not care about money to get accused of corruption has got to be a joke.
Towards An Eight Party Alliance: Two Reports Kantipur Parties, Maoists hold talks in Humla .....A district-level meeting between the representatives of agitating political parties and Maoists began in Humla ..... after Prachanda expressed his willingness for maximum flexibility to unite with the political parties to restore democracy in the country..... Although the seven-party alliance at the central level is yet to decide on whether to initiate dialogue with the Maoists, the participants of the talks that began in the Maoist stronghold in the Midwest Nepal are planning to broaden the talk process.
ADHRN Press Release On Gagan Thapa INSN Alliance has been advocating about rule of law, human rights and democracy in Nepal since 1989 ..... If the government has substantial credible evidence(s) against them, they should be tried through the constitutionally-created Commission for the Investigation of the Abuse of the Authority (CIAA)...... Sanjaya Parajuli, President .... Mridula Koirala, Chairperson, www.alliancenepal.org

Thursday, July 28, 2005

Keith Bloomfield

Terrorism – No Double Standards

By Keith Bloomfield

Since the terrible terrorist attacks in London, I have often been challenged to explain alleged British double standards on terrorism in relation to the Maoist insurgency in Nepal. How come we condemn the London terror attacks so strongly yet do not label the Maoists terrorists? How come we are even urging the Nepalese government to negotiate with terrorists?

Condemnation

First I want to make it clear that all terrorist acts without exception are to be condemned in the strongest possible terms. It is always unacceptable that innocent people are killed and maimed in furtherance of a political, religious or ideological agenda. The EU condemned the Chitwan bus attack in the same way as we now condemn the London bus and underground attacks. Those who carry out such acts should be identified, arrested and put behind bars. All terrorist acts are crimes, and particularly serious crimes at that.

The more difficult issue is how to stop terrorist acts happening again. Just asserting that terrorism is terrorism, as if the methods used to combat it are the same wherever it occurs, is to grossly over-simplify the problem. There is a world of difference between an armed insurrection involving thousands of a country’s own citizens in a classic guerrilla warfare environment, with political and socio-economic demands, many of which are shared by the mainstream political parties, and (b) Al Qaeda, which is a worldwide extremist network and involves only a tiny minority of a minority religious group in the UK, with no coherent negotiable demands or formal structure.

In the case of armed insurrections, there is a stark choice: to slog it out militarily at a huge cost in lives, resources, democracy and civil liberties, or to find a political solution through negotiation. Those who reject dialogue, on either side of the conflict, are condemning this country to years, maybe decades, of misery. And let us be quite clear: for hard-liners to reject dialogue in favour of continued violence on the grounds that the Maoists are terrorists, or on the basis that by definition they will never negotiate in good faith, is to do just that.

To a state committed to the restoration of peace and security it is surely self-evident that a political solution to an armed conflict of this type is impossible without talking to those who commit terrorist acts. Yet somehow this does not prevent advocates of a military “solution” from repeating the tired mantra that you cannot talk to terrorists.

It is not an adequate response to this argument to draw superficial comparisons between the Maoists and Al Qaeda. In the UK, we do not face an armed insurrection, which affects the whole country, nor do we face a structured enemy with a coherent set of demands. There are, however, some comparisons which perhaps hold lessons for Nepal:

* In both cases, terrorist violence poses a serious threat to the very fundamentals of our society, and the only effective response must spring from the people. In the UK, the government, the political parties and civil society have joined hands to face up to this threat, and have resisted the temptation to use terrorism as a means to pursue their own narrow agenda. I wish I could say the same for Nepal.

* In both cases, we are confronted with an unacceptable ideology. Prime Minister Blair’s reaction to the London bombings was to call in leaders of Britain’s Muslim community to discuss ways of working together to combat the terrorists on the level of ideas. I see no parallel attempts by the state in Nepal to consult the democratic political forces about ways of working together to confront Maoist ideology.

* Both cases underline the need for international co-operation against terrorism. Britain recognised that it needed the support of its international partners to deal with the problem. Nepal has steadfastly maintained that it can solve its own problems without “interference” from outside, and is pursuing policies which are not only misguided but which are alienating the international community.

Solution

Is it not time to face the facts? There is no military “solution” in Nepal. Maoism is an outdated and discredited ideology but one which cannot be defeated with guns and bullets, only with ideas and dialogue. Democracy, human rights and the rule of law are part of the solution to the conflict not part of the problem. You cannot reintegrate the Maoists into the democratic mainstream without ensuring that the democratic mainstream is strong and vigorous. Nepal needs all the help it can get from its foreign friends, but must first help itself by pursuing policies which have been tried and tested elsewhere and which can actually restore peace rather than exacerbate the conflict.

(H.E. Keith Bloomfield is British Ambassador to Nepal and former head of the Counter-Terrorism Policy in the British Foreign Office. The article reflects the personal views of the author.)

Source: The Rising Nepal

To: Koirala, Nepal, KC, Pokharel, Tripathy, Mahto And The Rest

To: Girija Koirala, Madhav Nepal, Arjun Narsingh KC, Bimalendra Nidhi, Lilamani Pokharel, Hridayesh Tripathy, Rajendra Mahto And The Rest Of The Democratic Leadership.
From: Paramendra Bhagat, New York City.
Subject: Proposed Constitution

My high school classmate and friend, the Kathmandu based radio journalist Madhu Acharya today sent me the email addresses of Madhav Nepal, Arjun Narsingh KC, and Lilamani Pokharel. That has opened a new door in my efforts to meaningfully participate in the peace process in Nepal. In this era of globalization and the internet, we Nepalis living abroad do not feel that far from the ground. We get news in real time on our computer screens, for one.

I have followed closely the developments since 2/1. And I am very glad for the seven party agenda that culminates with a Constituent Assembly. I would like to further add it is high time the democrats seized the initiative from both the Maoists and the Monarchists.

The road to a possible Constituent Assembly is not an easy one, but even once we get there, it is not going to be easy. Our many political differences on several sensitive issues will come to the fore, and there will be a lot of work that will need to be done in the form of relentless, tiring dialogue. The South African experience can be our role model, but our experience will be our own, with local peculiarities.

I think the very road to such an Assembly can be eased if the seven parties and the Maoists were to start working on a possible successor constitution to the 1990 document right away. I suggest an eight-member permanent committee involving the top names in the eight parties be formed for this purpose. And I suggest that committee meet on a regular basis and take this Proposed Constitution as a starting point. This document is not set in stone. Changes are possible. But there would be no secret talks. All differences will have to be aired publicly in the spirit of transparent democracy.

The goal would be to make a list of all the items from this Proposed Constitution that the eight parties can agree on. And if there are items on which consensus may not be reached, they are to be set aside to be decided through a Constituent Assembly.

I feel this constitution, if adopted, will put Nepal on the very cutting edge and will make double digit economic growth rates possible. This document also takes into account some of the criticisms that have been levelled upon the democratic parties for their performance in the 1990s. This document answers to the worst fears of both the extremes, the Maoists and the Monarchists, and brings both into the political mainstream. It also responds to the DaMaJaMa concerns.

This Proposed Constitution might be the quickest way to peace, democracy and progress.

And so I request you to take a look at it, and treat it as a starting point for meaningful dialogue among all three factions as a solution to the ongoing civil war, and political and military paralysis. Time is of essence. Achieving peace and democracy in two years or in six months are not one and the same. A sense of urgency has to be felt, especially by the democrats. Ultimately the fate of democracy in Nepal depends more on the democrats' willingness to do homework, and less on what the Maoists and the Monarchists might or might not do.

I hope you will take the initiative.

Thank you and all the best.

Let me know if I can be of any assistance.

Gagan Thapa Case Taken To The United Nations

Gagan Thapa : Urgent action filed at UN

Working Group on Arbitrary Detention
c/o. Office of the UN High Commissioner for Human Rights
United Nations Office at Geneva
CH-1211, Geneva 10 , Switzerland

Subject: Urgent Action

Dear Madam/ Sir

I, Goviinda Prasad Sharma, on his behalf of Gagan Thapa, request the Working Group on Arbitrary Detention to issue an urgent action against His Majesty the King of Nepal under its special procedures.

1. Mr. Gagan Thapa, 30, student leader and former general secretary of Nepal Student Union, was re arrested by plain cloth security personnel on 27th July 2005 at about 9.30 am from Anamnagar Kathmandu. Mr. Thapa was arrested while he and other his colleagues Mr. Ajaya Shivakoti and Mr. Subodh Acharya had gone to meet Mr. Pradeep Poudyal, vice-chairman of Nepal Students’ Union who has been detained at Ward Police Office in Singh Durbar Kathmandu. Mr. Poudyal and five other student leaders have been detained under Public Offence Act. According to Mr. Ajaya Siwakoti, an eyewitness, “The plainclothes policemen claiming themselves to be from inquiry branch took him in a police van and taken to the Tinkune Police post Kathmandu.

2. After the royal takeover on 1st of the February, Mr. Thapa was arrested on 22th April, 2005, early morning at 3:30 from the residence of Sandesh Adhikari, a human rights activist. The Supreme Court of Nepal had ordered his immediate release on May 5th 2005. But he was re-arrested immediately after he was made to sign the release note from District Police Office, Kathmandu, Hanumandhoka. The UN representatives, journalists, National and international human right activists were present when police rearrested him. Following that, he was taken to detention centre at Kharipati, Bhaktapur in the same night. And the district administration gave him a 90 days detention order under Public Security act. The government, despite its commitment in international forums to protect the human rights of Nepali people has directly and blatantly disobeyed the order of Supreme Court in the presence of the UN human rights Monitors.

3. 24 May 2005, the Supreme Court justices Min Bahadur Rayamajhi and Arjun Prasad Singh again ordered the government to release Mr. Thapa by producing him before the Bhaktapur District Court. Next day he was release as per the strict order of the Supreme Court.

According his family member and eyewitness, he has not been informed about the reason of his arrest. His arrest and detention is illegal and is against the provision of the international instruments which Nepal is party to. After the 1st of the February, the National protection system remains no longer independent and his previous case is a prominent example of non compliance of Courts Order by state agencies. In such a sudation there is strong fear of torture and false accusation to Mr., Thapa. Therefore I would like to urge to Working Group to intervene by issuing an Urgent Action against His Majesty the King, since he is the executive officer of the kingdom.

Govinda Prasad Sharma.

Advocate

Supreme Court of Nepal.

Govinda Sharma “Bandi”
Advocate, Supreme Court of Nepal
Research Partner
DCISM, Copenhagen-DK
Telephone- +45 3269883 (office),+45 38384936 (Residence)+45 24472265(Mobile)

Source: INSN

In The News

Maoists Press Statement
Gagan Thapa arrested; in 7-day remand Himalayan Times, Nepal The police had produced video footage of the rally before the bench to justify the charge against Thapa..... After hearing the Special Court order, he said there was no alternative than launching a movement against autocratic rule....... Human rights activists Krishna Pahadi and Dr Devendra Raj Pandey, who had gone to the Special Court to meet Thapa, also voiced their anger against the establishment. “This is not the action taken against Gagan Thapa alone; it is an injustice done to all the Nepalis,” Pahadi said. Thapa’s supporters had chanted slogans demanding his release on the court premises.
ADB `keen’ to study RCCC ruling NepalNews At this stage, ADB does not know if the RCCC’s ruling relates to specific Government procedures, which may be outside the scope of the investigation that was recently carried out by the Integrity Division of the Office of the Auditor General (OAGI), an independent unit of ADB..... keen to clarify whether the RCCC has additional information unknown to ADB that might be of relevance in determining possible violations of ADB’s policies or procedures, the Bank said....... ADB will request a copy of the RCCC ruling, through authorities in the Government of Nepal, so that this matter may be further considered as appropriate..... Interestingly, the RCCC rejected the report by the ADB, the main financer of the MWSP, in hearings on alleged corruption in the project. During the trial early this week, an RCCC member, Raghu Chandra Bahadur Singh—a former Army officer-- ordered defence attorneys not to cite the Bank’s report in defence of the accused....... Deuba, among others, was responsible for inflating the cost of the project component to Rs 970 million (from Rs 640 million) while awarding the contract...... “In this 21st century, the king has made the world laugh by constituting such type of Commission,” said Prakash Man Singh, former minister who was convicted by the Commission on Tuesday.
Student organisations announce fresh protests NepalNews fresh protests beginning Friday ...... delegation to the Vice Chancellor of Tribhuvan University on July 29, protest rallies with black flags across the country on July 31, raising black flags in all the educational institutions in the country on August 1 and burning the effigies of what they call ‘authoritarian regime’ on August 5...... Gagan Thapa from Kathmandu and Sabbir Ajam and Sammir Jha from Saptari ......
Ex-PM Chand for early political dialogue NepalNews ..... only solution to the present political crisis, including the Maoist conflict, is in dialogue...... could be started from any political side. “The state will be wise if takes the initiative.” ..... “The idea is good. Why should anybody have objection if they [Maoists] come to the political mainstream after talks?” ..... His party, RPP, has been opposing the royal move of Feb 1
NC (D) discusses future moves NepalNews
Gagan Thapa sent to seven-day custody NepalNews Police also produced the tape of Thapa’s speech in a program a few days earlier in which he allegedly spoke against the institution of monarchy...... Talking to reporters at the Special Court premises, Thapa said, “These developments are indications that the autocratic system in place is rupturing from inside.” ..... “I call upon all the youths of the country to rise up against the autocratic system in a decisive way,” the firebrand leader said while being flanked towards the police vehicle after the court ruling.......
Students protest RCCC verdict, demand release of their leaders NepalNews .... students demonstrated against the verdict in most of the government colleges in capital including the Tribhuwan University (TU) central college...... demonstrations were carried out in TU central college, Shankardev, PK, Bishwao Bhasa and Baneswor campuses, among others....
Empowering The People Of Nepal: Sociopolitical And Economic Devolution Dr. Pramod Aryal, Dr. Surendra Devkota INSN ..... the parties must focus and elaborate the concept of full democracy to empower people for strengthening democratic institutions...... political and economic devolution with sovereignty of nationalities...... Feeling of alienation of local population, minorities, women, Dalits and Janjatis in decision making and implementation of programs has created a lack of trust in government....... there should be peoples’ participation from the conception to the implementation phase thus election of constituent assembly, writing and promulgation of new progressive constitution through this assembly with clearly stating devolution .

Wednesday, July 27, 2005

The Asian Development Bank Report

ASIAN DEVELOPMENT BANK (The Report)

MELAMCHI WATER SUPPLY PROJECT, NEPAL
BRIEFING PAPER
ON
INTEGRITY DIVISION INVESTIGATION

The Asian Development Bank's preparation or distribution of this document
does not constitute a waiver of its privileges and immunities.
15 July 2005

ABBREVIATIONS
AAR - Adit Access Roads
BER - Bid Evaluation Report
CIAA - Commission for the Investigation of Abuse of Authority
JBIC - Japan Bank for International Cooperation
JV - Joint Venture
ITB - Instructions to Bidders
Lama - Lama Construction Company
MLD - Million Liters per Day
MPPW - Ministry for Physical Planning and Water Works
MWSDB - Melamchi Water Supply Development Board
MWSP - Melamchi Water Supply Project
NDF - Nordic Development fund
NPR - Nepal rupee
NVC - National Vigilance Center
OAGI - Integrity Division of the Office of the Auditor General
OPEC - Organization of Petroleum Exporting Countries
RCCC - Royal Commission for Corruption Control
Sida - Swedish International Development Cooperation Authority

Note
In this report, $ refers to United States dollars.

CONTENTS
Page
I. BACKGROUND 1
II. ALLEGATIONS 1
III. SCOPE OF INVESTIGATION 2
IV. RESULTS OF INVESTIGATION 2
A. Procurement Process / Financial Requirement Qualification 2
B. Engineer’s Estimate 4
V. CONCLUSION 5

I. BACKGROUND

1. The Melamchi Water Supply Project (MWSP) is designed to solve the chronic water supply shortage in the Kathmandu Valley with the diversion of 170 MLD water from the Melamchi River through a 26-km long tunnel. The Project comprises five parts: infrastructure development, social and environmental support, institutional reforms, project implementation support, and other studies.

2. The total cost estimate of the Project is $464 million. ADB approved a loan of $120 million in December 2000 and it became effective in November 2001. The Project is co-financed by Japan Bank for International Cooperation (JBIC), Swedish International Development Cooperation Authority (Sida), Nordic Development Fund (NDF), the Organization of Petroleum Exporting Countries (OPEC) fund, and the Government of Japan. Implementation progress has been slow and is behind the target. A majo

r and critical component of the Project is construction of a 26.6 km tunnel that will convey water from the Melamchi River into the Kathmandu Valley for urban water supplies. Work under this contract includes constructing the adit access roads (AAR) Sindhu and Gyalthum (total length 20 km) to provide access to the tunnel adits. Hence, this contract is on critical path to start and complete the construction of the tunnel and consequently for overall implementation of the Project. Although this contract is financed under the OPEC loan, responsibility for implementation is delegated to ADB and procurement shall be conducted in accordance with ADB’s procurement guidelines.

3. This contract was originally awarded to Hanil-Koneco Joint Venture in October 2002 but was terminated in May 2004 due to the contractor’s non-performance. In July 2004, the ADB Procurement Committee approved a recommendation for rebidding under postqualification procedures and a slight repackaging of the original contract, covering only Sindhu and Gyalthum AARs. On 13 January 2005, the Melamchi Water Supply Development Board (MWSDB) awarded contract MDS/AAR/02 to CCECC-Sharma-Lama JV, the lowest evaluated substantially responsive bidder.

II. ALLEGATIONS

4. In February 2005, the Royal Commission for Corruption Control (RCCC) began to investigate concerns that the project cost estimate may have been inflated to allow collusion and that the current contractor did not meet the financial qualification requirement, as defined in the Instruction to Bidders (ITB).

5. On 30 April 2005, OAGI received an anonymous email, alleging that the contract has been awarded at exorbitantly inflated cost allowing collusion.

6. In April and May 2005 a number of individuals associated with MWSP were arrested. Some of these individuals have been released, while others declined to post bail and, as far as we have been informed, remain in custody.

7. RCCC, based on calculations of its consulted experts, estimates the construction costs for AARs Sindhu and Gyalthum should be NPR 644,782,188, while the project engineering consultant (the consultant) projected costs of NPR 972,002,755. RCCC believes that t

his difference may have given room for collusion.

8. RCCC has questioned whether CCECC-Sharma-Lama JV’s bid was responsive, because Lama Construction Company (Lama) only met the required working capital of $625,000 after submitting new, consolidated balance sheets during clarification.

9. Neither OAGI’s anonymous complainant, with whom OAGI has been able to communicate with, nor RCCC have provided to this stage evidence of collusion or any other corrupt or fraudulent activity, nor have any parties alleged such activity has actually occurred.

III. SCOPE OF INVESTIGATION

10. OAGI fielded a mission to Nepal from 29 May to 2 June 2005 and met with government officials, officials of the implementing agency (MWSDB), consultants, ADB staff involved in the Project, bidders, the RCCC, the Commission for the Investigation of Abuse of Authority (CIAA), and the National Vigilance Center (NVC), and the complainants.

11. OAGI has reviewed the ITB, original bid documents submitted by the winning contractor including balance sheets submitted, the Bid Evaluation Report (BER) prepared by the consultant and MWSDB’s review, clarifications to bid, documents, correspondence and reports obtained from consultants, MWSDB, bidders, complainants, NRM and operations division, as well as ADB guidelines, including User’s Guide Prequalification of Bidders. OAGI has also taken note of the charges against individuals to the extent these have been made available to OAGI.

IV. RESULTS OF INVESTIGATION

12. We found no irregularities in the procurement process leading to the award of contract MDS/AAR/02, based on the documentation we have reviewed, and, in this context, noted that the award of the contract to the lowest evaluated substantially responsive bidder was in accordance with ADB’s guidelines for procurement and the loan documents. In particular, we have assessed that CCECC-Sharma-Lama JV, including joint venture partner Lama Construction, met the financial requirement as per Section 3.1, of Appendix 1 to the ITB. Also, OAGI has considered the relevance of the Engineer’s Estimate in the context of the procurement process leading to the contract in question, and has not identified any type of irregularity to indicate this particular component has led to any violation of ADB’s Anticorruption Policy.

A. Procurement Process / Financial Requirement Qualification

13. Paragraph 5.1 b) of the section Qualification of the Bidder in the ITB defines that “a bidder shall have the technical and financial capacity to undertake the contract”. Paragraph 5.1 c) states that “bidder shall meet all the minimum postqualifying criteria given in Appendix 1 to the ITB. The Compliance requirements are also given in the same Appendix. The criteria are all pass/fail criteria, and the bidder must pass all criteria to be determined postqualified.”

14. Section 3.1. of Appendix 1 to the ITB requires a working capital of minimum $2.5 million and defines that each joint venture partner must meet 25 percent of the requirement. It requires the submission of audited balance sheets or, if not required by the law of the bidder’s country, other financial statements acceptable to the Employer (MWSDB), for the last three years to demonstrate the current soundness of the applicant’s financial position and its prospective long-term profitability, but it does not define that a bidder must meet the working capital requirement in all three years.

15. ADB’s User’s Guide on Prequalification defines the working capital as “the difference between current assets and current liabilities, and measures the firm’s ability to generate cash in the short term. Current assets are cash and other assets suitable for conversion into cash within one year. Current liabilities are monetary obligations that must be paid out within the current year.” (Emphasis added.)

16. The working capital is that part of the capital of a business enterprise available for its operations. It measures how much in liquid assets a company has available to build its business and indicates the bidders financial ability to meet its short-term obligations and expenses related to a project. Thus the working capital only provides a short-term indication. While the working capital of the past may indicate a trend and financial soundness, previous working capital figures are of little value to indicate a bidders ability to meet its short-term (e.g., project-related) liabilities/expenses.

17. The working capital may include credit lines and overdraft facilities. Many companies try to optimize their cash management and minimize cash balances and liquid assets and, if necessary, prefer to use credit lines and overdraft facilities instead. The consultant, to whom MWSDB delegated bid evaluation, considered credit lines and overdraft facilities, if substantiated, as an integral part of the working capital. In 2004, according to bank guarantees provided in CCECC-Sharma-Lama JV’s original bid, Lama enjoyed credit lines of $385,000.

18. On 13 October 2004, CCECC-Sharma-Lama JV submitted its bid for the AARs Sindhu and Gyalthum and Form FIN 3.1. as per Appendix 1 of ITB, financial statements including those of its joint ventures over the last five years (1999 – 2003). In this summary (Form FIN 3.1.), however, it only included its own assets and liabilities.

19. The consultant evaluated CCECC-Sharma-Lama JV as conditionally the lowest responsive bidder. During the clarification process, the consultant also requested Lama on 4 November 2004 to submit its latest balance sheets to confirm its continued soundness and prospective long-term profitability in 2004. This action was not to clarify the already submitted financial situation.

20. The consultant determined that Lama met the required working capital, because the company demonstrated current soundness of its financial position and its prospective long-term profitability through a positive trend in working capital, and that the bidder passed the criteria for the working capital in the last year (even though Lama failed to meet the criteria in the third and second year). As the working capital is short-term as outlined in paragraph 15 above, and without explicit ADB guidelines or instructions to the contrary, the consultant’s assessment is not incorrect.

21. On 8 November 2004, upon the consultant’s request, Lama submitted latest balance sheet, for 2003/2004, which had not been available at the time of bid submission. This time Lama submitted a consolidated balance sheet, including its joint venture participations and also submitted consolidated balance sheets for 2001/2002 and 2002/2003. Additionally, Lama provided a revised Form FIN 3.1, listing its consolidated assets, but it did not replace or alter the previously provided balance sheets.

22. Based on the consolidation of the originally submitted balance sheets, ADB’s guidelines on prequalification and its definition of working capital, the consultant’s bid evaluation
methodology and explanations and MWSDB’s endorsement, Lama met the required working capital in 2002/2003 as defined in Section 3.1. of Appendix 1 to the ITB. Including the guaranteed credit lines and overdraft facilities, Lama would even meet the requirement on its own.

B. Engineer’s Estimate

23. The Engineer’s Estimate primarily serves as a tool for budgeting purposes and as a tool for the Executing Agency together with the Consultant, to determine whether a bid is reasonable. If bids substantially defer from the Engineer’s Estimate it may be that either the estimate is inaccurate or that the bidding documents have not provided a sufficiently clear basis for the bidders to prepare the bids. According to the Guidelines for Procurement under Asian Development Bank Loans, paragraph 2.48, the borrower may reject all bids if there is evidence of lack of competition or where all bid prices substantially exceed the cost estimate.

24. In cases where the lowest bid is substantially lower than the Engineer’s Estimate, there is a good reason to seek clarifications from the bidder in question, and to carefully assess what the reasons for the difference between the Engineer’s Estimate and the bid price might be, and in particular to assess whether the bidder may have underestimated the resources required, and therefore risking that the works will not to be able to be completed in accordance with the contract.

25. A bid that is substantially lower than the Engineer’s Estimate, may be disqualified if the bid or subsequent clarifications by the bidder, explaining how the low bid price has been reached, does not meet the Executing Agency’s (and ADB’s) satisfaction. In some jurisdictions a bidder, whose bid is substantially lower than the Engineer’s Estimate, may be required to support the bid by additional performance security to compensate for the risk associated with allowing such financially uncertain bid to be awarded the contract.

26. An estimate “implies a judgment, considered or casual, that precedes or takes the place of actual measuring, counting or testing out.”1 Under the procedures of International Competitive Bidding (ICB), all eligible bidders have equal opportunities to submit their bids based on the actual bidding documents.

27. As such the Engineer’s Estimate is usually not part of the bidding documents, which was the case for the Sindhu and Gyalthum Adit Access Roads, and does not affect the bid prices other than as described above.

28. In the 1999 final design study carried out under the Project, the cost of the Sindhu and Gyalthum Adit Access Roads was estimated at NPR 672,000,0002. The original contract that included these two roads and other works was awarded in 2002 to Hanil Koneco JV for its bid price at NPR 456,182,1533, compared to the Engineer’s Estimate for the total package of NPR 888,767,550. As mentioned in paragraph 3, the original contractor did not complete the works, and the contract was terminated in May 2004.

1 Merriam-Webster’s Collegiate Dictionary.
2 Equal to USD 9.2 million in the final design study 1999, excluding contingencies and VAT.
3 Excluding NRP 10.8 million estimated cost of expected increase in transport and excavation; plus 10% for contingencies.

29. The Consultant prepared a third estimate in 2004 for rebidding purpose, estimating the costs of the two roads alone at NPR 972,000,000.

30. Based on the evolution of the Engineer’s Estimate over the five-year period from 1999 to 2004, and taking note of the first contractor’s inability to perform its obligations under the contract at a bid price that was substantially lower than the 1999 and 2001 Engineer’s Estimate, the latest estimate from 2004 does not seem to be inappropriate.

V. CONCLUSION

31. Based on the assessment of the documents in its position and the interviews carried out, OAGI has not found or received any evidence of collusion or other corrupt or fraudulent practice among those involved in the bidding process for the MDS/AAR/02 contract.

Other Sources

Pages

Friday, July 29, 2005

Thursday, July 28, 2005

Wednesday, July 27, 2005