Nepal’s insurance regulator is reviewing a 3.81 billion rupee ($25.6 million) share acquisition in Nepal Reinsurance Co. Ltd. tied to businessman Deepak Bhatta, following his arrest on money laundering charges.
The Department of Money Laundering Investigation (DMLI) last month asked the Nepal Insurance Authority to examine Bhatta’s secondary market purchase of shares in Nepal Reinsurance Co. Ltd. and other entities. Investigators allege that funds used for these transactions were misappropriated and routed through a local brokerage firm for personal stock acquisitions.
The review places attention on ownership and capital sources in Nepal’s reinsurance market, where Nepal Reinsurance Co. Ltd. and Himalayan Reinsurance Co. Ltd. are the only two domestic reinsurers. Nepal Re is a public-private entity established in 2014, with the government holding about 44% and insurers forming a significant portion of its shareholder base.
Bhatta is identified as a promoter of Himalayan Reinsurance Co. Ltd., adding another link between the investigation and the country’s reinsurance capacity.
Authorities are also examining a 450 million Nepalese rupee ($3.02 million) transfer identified in June 2021 by Nepal Rastra Bank. The amount moved from Jagadamba Steel to Bhatta’s personal account and was not recorded in the company’s audit report.
Investigators allege that the funds were later transferred through Infinity Holdings and directed into Himalayan Reinsurance Co. Ltd. Financial records tied to these movements and related entities are under review.
Nepalese police arrested Bhatta on Thursday in Kathmandu’s Naxal Gairidhara area. Additional Inspector General Manoj Kumar K.C., head of the Central Investigation Bureau, confirmed the arrest and transfer to the DMLI. He was sent to the Department of Money Laundering Investigation for further investigations.
The Kathmandu District Court granted a 10-day remand, allowing investigators to detain Bhatta while examining financial transactions, corporate links and asset records. Authorities said the investigation covers Bhatta, Infinity Holdings and other affiliated entities.
The case developed after immigration authorities restricted Bhatta from leaving the country earlier in the week, citing frequent travel to the United States, Thailand and the United Arab Emirates.
The investigation takes place during a period of increased regulatory activity in Nepal’s insurance sector. The Nepal Insurance Authority has taken enforcement action in recent months involving reinsurers and insurers, including fines tied to a Rs 6 billion ($40.2 million) claim involving the Hilton Hotel and the suspension of a broker for non-compliant reinsurance placement.
The regulator found attempts to shift liability to Nepal Reinsurance Co. Ltd. despite the original allocation of risk, leading to penalties against multiple entities. Data from the authority shows total claims linked to protest-related losses have reached Rs 23.19 billion ($155.37 million), placing additional focus on reinsurance structures and exposure management.
The review of Bhatta’s transactions coincides with governance concerns involving Nepal Reinsurance Co. Ltd. The Commission for the Investigation of Abuse of Authority filed a corruption case against the reinsurer’s chairman, Surendra Kumar Paudel, linked to alleged embezzlement during his tenure at a state-owned cement company.
The case involves claims of Rs124.72 million against Paudel and additional amounts against other officials. The allegations relate to discrepancies in clinker inventory during fiscal year 2017-18. Authorities have not indicated whether the case will affect his current role at the reinsurer.
Bhatta, who chairs Infinity Holdings, has faced prior scrutiny over alleged involvement in securing licenses and shareholdings across sectors including insurance, hydropower and microfinance, according to local reporting. Investigators are examining whether assets were acquired and routed through various entities and later invested in financial markets.
Police said the current probe focuses on potential violations related to money laundering laws, including the movement and transformation of funds through different sectors.
The case aligns with a directive from the Office of the Prime Minister and Council of Ministers instructing government agencies to address corruption and financial misconduct.
The recently formed government has placed high priority on ending policy-level, institutional and procedural corruption in public bodies, the directive read. It is necessary for all agencies to take the required initiative to end corruption.
Authorities have not provided a timeline for the completion of the investigation.
