On Thursday, the Special Court convicted 11 individuals, including four top Nepali officials, in a corruption case involving the purchase of two Airbus A330s in 2017 for the national flag carrier, Nepal Airlines.

However, Special Court officials say the case is still wide open. More people could be involved in the dubious deal, as cases and investigations in other countries are ongoing.

This follows an investigation transcript document on Nepali-born British citizen Deepak Sharma, the former executive of AAR, a US-based aviation services provider, who was the plane supplier. Sharma admitted to the US Department of Justice that he had bribed Nepali officials.

In July, guilty pleas were publicly revealed, five years after AAR disclosed the possibility of Sharma’s violation of the Foreign Corrupt Practices Act’s anti-bribery provisions.

Sharma pleaded guilty and agreed to forfeit around $130,000. His sentencing in the US court is yet to be determined, so this case is ongoing.

“The Special Court has ordered the Commission for Investigation of Abuse of Authority, the anti-graft body, to launch a separate investigation into Sharma,” said Gyanendra Raj Regmi, spokesperson for the Special Court. “The case is still ongoing and open.”

The Special Court bench, with Tek Narayan Kunwar as chair and Tej Narayan Singh Rai and Ritendra Thapa as members, convicted 11 individuals. It concluded that procurement of the two wide-body Airbus jets caused the government a loss of Rs1.47 billion ($13.38 million). The loss was computed based on the exchange rate at the time of the payment of the last instalment in 2018.

The court has sentenced Sugat Ratna Kansakar, the former managing director of Nepal Airlines, to two years and nine months in prison and ordered the recovery of Rs122.59 million from him. However, since he is 74, he will receive a 50 percent waiver of sentence under the Senior Citizens Act.

The court has sentenced former tourism secretary Shankar Adhikari, who acted as the chairman of the Nepal Airlines board, to a year and 9 months in prison and asked him to forfeit Rs122.59 million.

Likewise, the court has sentenced former finance secretary Shishir Kumar Dhungana and tourism joint secretary Buddhi Sagar Lamichhane, who were on the Nepal Airlines board, to a year and six months in jail each, and asked them to forfeit Rs122.59 million each.

The bench, however, acquitted the then tourism minister Jeevan Bahadur Shahi, among others, who had been named as defendants by the anti-corruption body.

The court has also sentenced former AAR executive Sharma; Christian Nuehlen, a German citizen and former director of Hi Fly X Ireland Limited, Dublin; and Oleg Calistru, a citizen of Romania and Moldova and former finance director of German Aviation Capital; to a year and six months in prison and asked them to forfeit Rs122.59 million each.

Similarly, the court has sentenced John M Holmes, president and chief executive officer of AAR International; Ana Topa, managing director of German Aviation Capital; Paulo Mirpuri, president of Hi Fly Airlines Portugal; and Gerald Thornton, director of Hifly X Ireland Limited a year and six months in prison and asked them to forfeit Rs122.59 million each.

The court’s verdict, however, highlights jurisdictional complexities.

Regmi, the special court’s spokesperson, said the Prevention of Corruption Act, 2002 mandates investigations into bribery involving foreign officials could be conducted by Nepali authorities like the Commission for Investigation of Abuse of Authority.

Trials, if any, would also fall under Nepal’s jurisdiction.

“If both the countries in question are signatories to mutual legal assistance treaties, they can cooperate in evidence-sharing and issue a formal extradition request to bring the accused to Nepal for a trial,” he said.

“In this case, the judgment execution body will begin the trial in absentia and issue lookout notices to the defendants if they do not present themselves in a defined period set by a jury at the time of trial.”

However, if neither country is a signatory to mutual legal assistance treaties or extradition treaties, there is also an option. Lawyers say the sentence execution body can send ‘letters rogatory’ to obtain judicial assistance from countries where the people charged with crime live.

According to Regmi, if they have an agent, office, or assets in Nepal, they will be seized to recover the financial penalty. “Financial penalty can be recovered if Nepal has a treaty or other agreement with the countries. In the absence of a treaty or other agreement, it is difficult to do so.”

In the case of Sharma, the former executive of US-based AAR, it’s unclear how Nepal’s court verdict will be implemented as his case [sentencing] is ongoing in the US, too. Sharma pleaded guilty in the US court and agreed to forfeit around $130,000.

Regmi said Nepal can issue international arrest warrants against Sharma and other defendants. In the event of a lookout notice or international warrant, they could be arrested outside Nepal through Interpol.

According to the charge sheet filed by the anti-graft body in August, the government officials violated the procurement law by accepting the supplier’s escalation condition to purchase second-hand aircraft, which amounted to $6.78 million (Rs745.8 million) of the $209.6 million valuation.

Escalation condition is a rule in a contract that says if certain things change, like prices, the contract terms can also change. Investigators suspect the condition was included in the $209.6 million deal to covertly generate kickbacks for the officials involved.

The charge sheet states that while finalising the major technical specifications, the aircraft's maximum takeoff mass (MTOM) was decreased from 242 tonnes to 230 tonnes. Investigators suspect financial embezzlement here.

The maximum takeoff mass (weight) affects an aircraft’s takeoff distance, rate of climb, payload capacity, and range.

The probe found that the Nepali officials made payment for 242 tonnes but ordered aircraft with a capacity of only 230 tonnes, with a cost difference of $6.6 million (Rs72.5 million).

Kansakar has been named the mastermind of the scam.

In August 2015, under the leadership of Kansakar, Nepal Airlines began the process of acquiring two wide-body aircraft from the European plane maker. On September 11, 2016, the Finance Ministry agreed to act as a guarantor on a loan Nepal Airlines took to procure the two wide-body jets.

On September 24, 2016, the Nepal Airlines’ board unanimously approved its management’s plan to procure two Airbus A330-200 wide-body jets.

Subsequently, on September 26, 2016, the national flag carrier invited sealed requests for proposal (RFP) from aircraft manufacturing companies, airlines, aircraft leasing companies, and bankers to purchase two A330-200 jets.

Separately, the documents made public by the US court show that Sharma had a close connection with a top Nepal Airlines official.

A month before the national flag carrier invited sealed requests for proposals (RFP), or on September 1, 2016, a top Nepal Airlines official sent an email to Sharma, writing, “What I have in mind is that we will specify the MOU signing date, purchase agreement date, and delivery date in such a way that [a competitor] cannot meet delivery dates.

“Following are tentative dates, and I want your feedback on whether you can meet delivery dates… Tentative dates I fixed but not yet shared with other Nepal Airlines executives…”

On October 30, 2016, the Nepal Airlines official texted Sharma, “[N]o need to worry at all. Almost all higher-ups are in our pocket.”

When everything was moving swiftly, Kansakar held a press conference in Kathmandu to say they had found cheaper planes, resulting in considerable savings, which raised many eyebrows.

Later, the bid documents said the minimum age of the proposed aircraft cannot be more than 1,000 flight hours, and the date of manufacture should not be before January 2014.

In the verdict text, the court argued that Airbus could not sell used planes and that the motive for the dubious deal was evident right from the start.

It was informed that the board’s decision to allow Nepal Airlines to buy the jets from the European aviation giant followed the management’s recommendation to switch from Boeing to Airbus, as a one-family aircraft strategy would reduce maintenance and crew training costs.