Naznin Sultan

Nepal’s anti-corruption authorities have widened their investigation into alleged financial irregularities surrounding the construction of Pokhara International Airport, filing fresh corruption charges against former Finance Minister Gyanendra Bahadur Karki, several former senior bureaucrats, and representatives of a Chinese state-linked contractor. The case has become one of the country’s largest and most politically sensitive corruption investigations in recent years, deepening scrutiny of a flagship infrastructure project built under China’s Belt and Road Initiative (BRI).

The Commission for the Investigation of Abuse of Authority (CIAA), Nepal’s constitutional anti-graft agency, filed the latest case at the Special Court on May 7, accusing officials of illegally granting tax exemptions and facilitating improper financial benefits to China CAMC Engineering Co. Ltd. (CAMCE), the contractor responsible for building Pokhara International Airport. Prosecutors allege the actions caused losses of approximately Rs 3.62 billion, or nearly $24 million, to Nepal’s state treasury.

The newest charges mark the third major corruption case linked to the airport project and the second time a former finance minister has been implicated in the widening investigation. According to the CIAA, public officials and contractor representatives colluded to misuse state resources tied to loans used for the airport’s construction.

CIAA spokesperson Suresh Neupane said the latest case focuses primarily on “double benefits and illegal tax waivers” granted to the contractor during implementation of the airport project. Investigators claim the exemptions violated financial regulations and improperly reduced the contractor’s tax obligations, placing a substantial burden on Nepal’s public finances.

Former Finance Minister Karki has not publicly responded to the allegations. The anti-graft agency also charged multiple former government secretaries and officials who allegedly approved or facilitated the disputed financial arrangements.

The Pokhara Regional International Airport was envisioned as a transformative infrastructure project that would turn Nepal’s tourism city of Pokhara into a major international gateway. Constructed with Chinese financing and support under President Xi Jinping’s Belt and Road Initiative, the airport was promoted as a symbol of Nepal-China cooperation and national economic development.

However, the project has increasingly become a source of political controversy and public criticism. Since its inauguration, the airport has struggled to attract international airlines and passengers. Critics argue the project lacked a comprehensive business strategy from the outset and failed to address operational and aviation safety concerns that international carriers consider essential.

Although designed as an international airport, Pokhara has effectively been reduced to handling mostly domestic flights due to limited international demand and regulatory challenges. Several airlines reportedly declined to operate there, citing low passenger numbers and concerns related to Nepal’s aviation oversight standards.

The growing corruption investigation has further damaged the airport’s reputation and raised broader questions about transparency in major infrastructure projects financed through foreign loans.

The CIAA’s latest filing follows earlier investigations that uncovered what authorities describe as systemic financial misconduct in the airport’s planning and execution phases. In December last year, the anti-graft agency filed corruption charges against 55 individuals, including former Finance Minister Ram Sharan Mahat and Chinese corporate representatives, accusing them of embezzling millions of dollars connected to the airport project.

In that earlier case, prosecutors alleged officials intentionally inflated the airport’s approved construction cost from approximately $145 million to nearly $216 million. According to investigators, the increase was carried out “with malicious intent” and resulted in the misuse of more than 8.36 billion Nepalese rupees, equivalent to roughly $74 million.

The accusations suggested a coordinated effort among government officials, consultants, and contractor representatives to manipulate procurement procedures, financial approvals, and project estimates for private gain.

In March, the CIAA launched another related prosecution against 21 individuals, including former Tourism Secretary Kedar Bahadur Adhikari and two Chinese officials. That case focused on allegations of consultancy-related embezzlement and irregular payments linked to the airport project.

Together, the three cases represent one of the most extensive anti-corruption drives in Nepal’s recent history and signal a broader effort by authorities to address longstanding allegations of misconduct involving political elites and foreign-backed infrastructure ventures.

The investigation has also intensified political tensions inside Nepal. The country’s current government came to power after a wave of anti-establishment demonstrations led largely by younger activists and reform-oriented groups. The protests, often described as “Gen Z protests” by local observers, reflected growing frustration over corruption, economic instability, unemployment, and political patronage.

The movement contributed to the collapse of the previous administration and fueled demands for accountability among senior political figures. Since taking office, the new government has overseen several high-profile arrests and investigations targeting influential politicians and former officials.

Among those facing scrutiny is former Prime Minister K.P. Sharma Oli, whose administration had strongly promoted closer infrastructure and economic ties with China. While the Pokhara airport project predates some of the current political turmoil, it has become a focal point in the broader debate over governance, debt, and foreign influence in Nepal.

The parliamentary Public Accounts Committee played a significant role in advancing the airport investigation. After conducting its own inquiry into the project, the committee identified widespread irregularities and alleged misuse of billions of rupees during construction and procurement processes. Lawmakers subsequently forwarded their findings to the CIAA and urged prosecutors to pursue criminal charges.

Special Court spokesperson Krishna Sharan Lamsal confirmed that the first two airport-related corruption cases are already under judicial review. The court is expected to hear arguments on the newest charges in the coming months.

Meanwhile, CAMCE has strongly denied any wrongdoing. In a statement issued in May 2025, the Chinese engineering firm insisted it complied fully with Nepalese laws and contractual requirements throughout the airport’s development.

“As a professional and responsible international engineering contractor, we strictly complied with all legal and regulatory requirements of the Nepalese government throughout the bidding, contracting, and implementation phases of the Pokhara Regional International Airport Project,” the company said.

The controversy surrounding Pokhara International Airport has drawn regional attention because of its connection to China’s Belt and Road Initiative, Beijing’s massive global infrastructure and investment program. Supporters argue BRI projects help developing countries modernize transportation and stimulate economic growth. Critics, however, have raised concerns about debt sustainability, lack of transparency, inflated costs, and corruption risks in several participating nations.

For Nepal, the airport investigation now represents more than a domestic corruption scandal. Analysts say it has become a test of whether the country’s institutions can hold powerful political and corporate actors accountable, regardless of international influence or political affiliation.

The outcome of the court proceedings could have lasting implications for Nepal’s governance reforms, relations with China, and future infrastructure planning. It may also shape public confidence in the government’s anti-corruption campaign at a time when citizens are increasingly demanding transparency and accountability from political leaders.

As judicial proceedings continue, Pokhara International Airport remains both a symbol of Nepal’s modernization ambitions and a reminder of the political and financial risks that can accompany large-scale infrastructure development.