Investigation unveils fraudulent buying, selling of telecom giant Ncell’s stake

Investigation by Centre for Investigative Journalism-Nepal revealed that a British journalism organisation — Finance Uncovered — has found that a handful of Nepali investors have made fortunes by transacting shares of mobile service provider Ncell.

The joint investigation report made public on Tuesday has a detailed account about use of funds that appear to have flowed covertly to them via tax havens from the Malaysian telecom giant, Axiata and Sweden’s Telia.
“The primary Nepali beneficiaries from these deals appear to be leading businessman Upendra Mahato, his associate Niraj Govinda Shrestha, and businesswoman Bhavana Singh Shrestha along with her company Sunivera Capital Venture,” the report released on Tuesday afternoon stated.

The investigation has unveiled that Axiata paid USD 90 million to a secretive offshore company with a link to Bhavana Singh Shrestha, months before her company Sunivera bought 20 per cent of Ncell’s shares and became Axiata’s partner in the telecom company.

Telia’s sale of 80 per cent of Ncell’s share to Axiata in 2016 has caused great controversy in the Himalayan Nation. The latest investigation report claimed that it found Axiata has paid USD 90 million to a secretive offshore company with a link to Bhavana Singh Shrestha, months before her company Sunivera bought 20 per cent of Ncell’s shares and became Axiata’s partner in the telecom company.

Alongside, the Swedish telecom company Telia lent Niraj Govinda Shrestha USD 230 million through a tax haven in 2012 to buy the Ncell stake from Mahato. The report stated that Shrestha claimed to have only paid Mahato USD 3 million and it is not possible to see what the money from Telia’s loan was used for.

“Our findings suggest overseas telecom giants provided money to Nepali investors to buy shares in Ncell in opaque ways, which appear to test Nepali’s foreign investment rules. But Axiata denied to us that it had covertly financed the Ncell share purchase by paying money to an offshore company, called Southern Coast Ventures. Axiata stated it did not know what this company had done with the money after receiving it,” report stated.

Upendra Mahato, a Nepali business tycoon has been mentioned in the report of replying that the information about the deal was “proprietary and confidential” when contacted on July 2020 but later in November of 2020, Mahato replied to CIJ saying, “As far as the question of wrongdoing in the transaction of 20 per cent share is concerned, if Telia bought the share illegally, it should not be legalised by letting the company pay the taxes. It should be confiscated. An illegal act should not be legalised by taxing it. That’s all I have to say.”

Issue of second-largest telecommunication giant, Ncell, in Nepali market has been a grave concern for taxpayers. Ncell entered Nepali telecommunication market as first privately-owned company where at least 20 per cent of Ncell shares was owned by a local investor.

At start of 2012, the 20 per cent stake was owned by Synergy Nepal, a company chaired by Mahato who was a long-standing investor in Ncell. The other 80 per cent was controlled by Telia of Sweden (then called TeliaSonera).

In March 2012 Synergy Nepal sold the 20 per cent Ncell stake to Mahato himself, who promptly sold it to Niraj Govinda Shrestha. Both Mahato and Shrestha have separately declared to courts in Nepal that the value of this sale was about USD 3 million.

Nepal’s tax authority believed the true value of the shares was just under USD 42 million and stated that more capital gains tax was owed by Mahato. Mahato has challenged this tax assessment in court and the case is still ongoing.

However, the sums of money involved may have been much larger. Telia lent Shrestha USD 230 million in 2012 to buy the Ncell stake via one of its subsidiaries in the tax haven of the Netherlands. This loan was “reduced to zero” by Telia, so never repaid. ANI