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Kathmandu city govt spends millions of taxpayers’ money to aid political party units

On September 22, 2019, Kathmandu Mayor Bidya Sundar Shakya gave Fashion Home Pvt Ltd Rs 100,000 as aid. According to the metropolitan city’s rule, such aid cannot be handed out to private companies. The company had asked for aid to help them in their ‘Student of the Year’ programme.

After an agreement was signed, the company received the funds in less than a week. But, how the fund was used is unclear as there is little to no transparency. When approached, the city government failed to provide any contact information of representatives from the organisation.

On December 16, 2019, Shakya gave another Rs 100,000 to its ward 31’s ladies’ group for a Teej programme. The programme happened without an agreement being signed with the KMC.

These are just two examples. The capital city government, in the name of support and aid, distributes millions of rupees collected from taxpayers to various organisations. Elected representatives, since 2017, have provided aid to the organisations owned by political leaders and their close aides.

KMC, the country’s richest local body, in the past two-and-a-half years has handed out over Rs 40 million in financial aid.

Lawlessness at the helm

The city government’s financial assistance regulation 2013 has a provision that no more than Rs 5,000 could be given to organisations without reaching an agreement. Until 2017, in absence of the elected officials, the employees of the KMC adhered to it the best they could.

But, that regulation has been amended now as the mayor or people appointed by him can hand out around Rs 1 million with relative ease. Since the amendment, the number of incidents of such aid handed out by the KMC has risen significantly.

Onlinekhabar, using right to information, found out that the KMC, the country’s richest local body, in the past two-and-a-half years has handed out over Rs 40 million in financial aid. There has been no effort to look at how the funds it has distributed are being used.

The KMC, which is known for setting a budget aside for development in the banks, has become a cash cow for political parties, their leaders and cadres. The new directive does not state how much money can be given to an organisation. As a result, both the mayor and the deputy mayor have been handing out aid at will.

According to the directive, the KMC provides four types of financial assistance: programme assistance, grant assistance, underprivileged assistance, and treatment assistance. Government organisations can be given up to Rs 1 million whereas other organisations can get up to Rs 100,000.

If any organisation wants more than that, the directive has given the right to the municipality’s executive body to make the decision. There also needs to be an agreement with the organisation getting the money. But, a process like this is hardly followed.

Too much training, too many seminars

R-L: Mayor Bidya Sundar Shakya and Deputy Mayor Hari Prabha Khadgi

According to the KMC’s records, the money has mostly been used in training programmes and sporting events. Training programmes were held for crystal bead making and cushion making. A leadership building training event was also held along with one for public speaking and entrepreneurship development. The money has also been used to conduct various seminars. According to documents obtained by Onlinekhabar, the municipality sets money aside for similar types of programmes.

For example, Deputy Mayor Hari Prabha Khadgi Shrestha has handed out financial aid to Mangala Devi Foundation, close to her Nepali Congress party, for two years in a row. Around Rs 2 million has been handed out in aid, out of which only Rs1.74 million has been used.

Between 2018 and 2020, the KMC has provided financial aid exceeding Rs 43.5 million. Most of this aid has been handed out haphazardously by Mayor Shakya to entities ranging from social organisations to private companies.

During the fiscal year 2018/19, the municipality offered 23 units of financial assistance while in fiscal years 2019/20, it handed out financial aid 32 times. These supports were handed out without prior agreement which experts say is dangerous and there is no transparency and the funds can be misused.

Transparently intransparent

According to a high ranking government official, the KMC has been telling the federal government that it has given the aid without agreement as it is urgent. But, most of this ‘urgent’ aid has gone to people close to both the mayor and deputy mayor.

“There is no transparency,” says that official wanting to remain anonymous.  “They give out millions without any written document and don’t even bother checking how the money is used.  It’s bad governance from their part.”

Some of these financial aids have been handed out with relative ease. For example, one aid unit was given out in just three days. In the past two years, the municipality has handed out aid through 201 budget heads.

Efficiency of the programmes questioned

The aid is normally handed out to organisations affiliated with political parties.

When it comes to monitoring how the money is used, the KMC almost always turns a blind eye. To avoid being questioned, the municipal government asks for a report. But, many do not submit the report. The municipality takes no action against them.

Deputy Mayor Khadgi herself is cautious about this. She says that the funds are given for important training programmes, but questions if these programmes are as effective as they should be.

“Training alone is not effective, we’ve learnt,” says Khadgi. “We realised that not having a place to practise the skills learnt during the training is problematic.”

She says she is aware that a lot of money is used in training programmes and adds the KMC needs to come up with a plan to use these people or provide them with space where they can use the skills they have learnt.

Khadgi says that opening a handicraft store to sell items made by women who get the training through aid provided by the municipality could be an option. She says that this is necessary as most who have received the training are stuck at home doing nothing.

Federal government using the KMC

As it is easy for the municipal government to distribute money, the central government is seen sending a lot of money to the KMC to distribute it to various organisations, leaders and other groups affiliated with the ruling party. As this is done through the municipality, the ruling party often avoids any criticism.

In the fiscal year 2018/19, the Tourism Ministry sent Rs 128 million to the KMC, out of which it was going to hand out Rs 107 million in aid to different organisations. Out of Rs 128 million, the KMC handed out Rs 105 million in financial aid. Other ministries like the Ministry of Women, Children and Social Welfare also send out aid to various organisations through the KMC.

An official at Tourism Ministry says the ministry sends money through the KMC because Mayor Shakya is cooperative.

The conditional grants that come to the KMC from the central government go to various organisations and offices owned by leaders from political parties. These funds are rarely used for social service or spent for the upliftment of society. Most of the times, the funds are used to buy land, repair buildings and in some cases add additional floors to a building. In short, the funds are wasted.

In the fiscal year 2018/19, the KMC handed out Rs 42.5 million to the Madan Bhandari Foundation that is close to the CPN-UML. The foundation used the money to buy land in Hetaunda. Nirmal Lama Smriti Foundation, taking a grant of Rs 10 million, has added floors at the foundation’s office.

GP Koirala Foundation for Democracy and Peace, close to the Nepali Congress, also received the a Rs 10 million grant which is being used to construct a building. BP Koirala Memorial Trust, which had received a grant of Rs 5 million, was going to use it to purchase a car, but it was not allowed to do so and now the trust is using the funds to improve the trust’s office building.

The KMC’s Chief Administrative Officer Rajeshwor Gyawali says that the aid has been given based on the directives set by the municipality. He says that all formal procedures were followed before handing out financial aid and adds that the municipal government also monitors how the funds are used.

“The funds that came in from the centre have stopped from the last fiscal year,” he says. “because us distributing the funds didn’t look nice.”

However, the Ministry of Women, Children and Senior Citizen still distributes aid through the KMC.

Who are the receivers

Even though ministries have stopped sending money to the KMC, it has not stopped handing out aid to organisations. In the fiscal year 2020/21, the KMC announced to give the Madan Bhandari Foundation a grant of Rs 4 million.

The foundation in the previous two fiscal years received a grant of Rs 1 million each. A Rs 2.5 million grant has also been set aside for Manmohan Adhikari Memorial Foundation.  Both are foundations named after former communist leaders. Other similar organisations, Pushpalal Memorial Centre and Mandan Bhandari Sports Academy, will also be getting Rs 400,000 and Rs 2.5 million respectively.

Nepali Congress-loyal organisations are also due to receive grants. Ganesh Man Singh Memorial Foundation and Girija Prasad Koirala Memorial Foundation will also be getting Rs 2 million and Rs 500,000 respectively. All the funds will be coming from the KMC and not from the central government.

In the fiscal year 2018/19, the municipality handed aid worth Rs 2.3 million out of its own pockets to organisations associated with political leaders. The following year, the amount almost doubled to Rs 4.23 million.

In the current fiscal year, the amount has increased again as it is due to hand out Rs 13.9 million to these organisations.

If one adds aid units given by the government, a total of Rs 100 million has been distributed to the organisations close to the ruling party in the past three years.

“We’ve set aside a handsome budget to foundations opened under the name of respected political leaders. I’m associated with Mangala Devi Memorial Foundation and it’s doing great work,” says Deputy Mayor Khadgi.

The money given to the organisation has been used to help stranded senior citizens. But, the rest has been spent on training, seminars, real estate and construction.

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Ghimire is a senior business journalist at Onlinekhabar.

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