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  The Industrial Park alone spends around Rs 70 lakh on corporate social responsibility. A year ago, we gave financial assistance of Rs 34 lakh to Samata Siksha Niketan, a school established in Kathmandu in 2001, in order to provide quality education to underprivileged children. Every year, I go to Dumkauli to hand over the Wai Wai Gyan Uday scholarships to underprivileged school students. We gave scholarships to sixty-nine students in 2010 and to 111 students in 2011. Last year, I presented a scholarship to Sita, a baby girl born to one of my employees, Harimaya Thapa, while she was at work. I said at the time that I wanted to see Sita rise to the post of chief executive of CG Industrial Park.

  Offering the Wai Wai Gyan Uday scholarships is my humble effort to see dreams like that come true.

  Entrepreneurs in Nepal generally complain that economic development is not possible without resolving the ongoing political problems that dog the country. Even our political leaders say the decade-long Maoist insurgency caused immeasurable harm to Nepal’s economic development. This is true to a certain extent. Nonetheless, development is possible even in the midst of armed conflict and political instability if there exists the will to make it happen. CG Industrial Park is a shining example of how development is possible even in the midst of conflict.

  5

  Encounters with Politics

  Before the restoration of multiparty democracy in Nepal in 1990, entrepreneurs like us were under double taxation. The first tax was directly and openly levied by the state, while the second was extorted from behind closed doors by those who held the reins of power.

  I would like to tell a true story. An Indian industrialist wanted to set up a factory to produce hydrogenated vegetable cooking oil in Nepal. He received an appointment with a very powerful aide of Prince Dhirendra; he told the aide that his company wanted a licence to establish the factory.

  ‘No problem,’ the aide replied. ‘But His Highness wants partnership in the enterprise.’

  The industrialist agreed.

  ‘Fine,’ said the aide, ‘then start the process.’

  ‘But what are the terms of the partnership?’

  ‘Do you think you’re entering into partnership with some trader?’ the aide scoffed. ‘We’re talking about His Highness.’

  ‘So, how do we work out the partnership arrangements then?’

  ‘Brother,’ the aide said, ‘you set up the plant, start production, and then His Highness will decide on your share.’

  The industrialist went back to India, thoroughly intimidated.

  I was not personally acquainted with that Indian industrialist and I do not know whether his factory ever opened in Nepal or not. However, this anecdote demonstrates the degree of power the royal family and their cronies exercised over Nepal’s industrial and commercial sectors in those days. We would invest the capital and do all the work, and the royal palace would stake a claim for a majority of the shares. They would fix their share ratio themselves and ‘grant’ the remaining share to us. The prevalent ratio was 49:51—49 per cent for the real investor and 51 per cent for the Palace. Anyone who would not accept such a deal was better off packing up his bags and leaving the country. Nobody could afford to displease the Palace. You do not annoy the tiger if you want to survive in the jungle.

  Whether we wanted a loan against collateral from a bank, a licence from the department of industry to import raw materials, a licence from the department of commerce to start a business or to clear goods through customs, we were subjected to a ‘license raj’. I would visit all those offices every day to grease the right palms and move things along. However, the bureaucracy then was relatively honest and helpful compared with the civil service today, and was marked by an atmosphere of respect and discipline. The royal palace and those blessed by it had a huge influence on the bureaucracy. Once one had made a deal with the Palace, one did not need to worry about bureaucratic processes at the lower levels. The industrial and commercial sectors operated entirely under that system.

  I later forged a long working relationship with Prince Dhirendra.

  As industrial entrepreneurs, we should not oppose or support any regime on the basis of our personal biases. We need cooperation from anybody who holds the reins of power, be they royals, democrats or Maoists. Regardless of our personal ideological beliefs, we have to work in tandem with whichever regime holds power. The same applies to the bureaucracy.

  In the developed world, those in the regime provide a separate space for professionals. They do not exploit them for their vested political interests, but rather create an environment conducive to professionals. For them, industrial entrepreneurs and professional manpower are crucial actors in sustaining the state. In our case, however, they are even exploited for political advantage.

  We have always followed the order established by the regimes here.

  1979–80

  When Bishweshor Prasad Koirala returned home with the message of national reconciliation, I was busy with Copper Floor. When voices against the party-less Panchayat regime rose across the country, I was trying to pull our businesses together in the wake of my father’s heart attack. During those critical times in Nepal’s history, I had no involvement in politics whatsoever.

  However, I found myself stuck in the web of politics and the regime after a national referendum was held in 1980 to choose between the Panchayat system and multiparty democracy.

  I was only twenty-three at the time.

  Prime Minister Surya Bahadur Thapa had summoned my father to meet him. Father and I went to the prime minister’s residence together.

  ‘His Majesty has declared a referendum,’ the prime minister said. ‘I have to ensure victory for the reformed Panchayat system at any cost.’ We had a close relationship with Surya Bahadurjee. Both grandfather and father had been tenants on his land in Biratnagar since the days of Juddha Shumsher.

  ‘What you like us to do, Mr. Prime Minister?’ father asked.

  ‘You need to support us with funding.’

  We were just traders. We did not understand grand political designs and did not realize we were being used in a subtle game of regime change. We merely thought that serving a regime would open up unlimited opportunities for industrial enterprise. In any case, father could not have declined any proposal made by Surya Bahadurjee, given their long relationship. Surya Bahadurjee sought similar assistance from four or five other businessmen. Around Rs 1.5 crore was collected to fund the campaign for retention of the Panchayat regime. Some of the decisions taken by that government had been controversial and corrupt. Our motives related purely to business.

  After the victory of the reformed Panchayat system, I asked Surya Bahadurjee for three favours.

  The first related to National Panasonic. I told him, ‘I already have the National Panasonic dealership. Now, I want to import parts and manufacture radios here in Nepal. I would like a licence to do that.’

  Surya Bahadurjee agreed.

  My second request related to brewing. Star Beer had had a monopoly in Nepal for a long time. I was hoping to set up a rival brewery in collaboration with an Indian company, Mohan Meakin. During several rounds of talks, they had told me that if I could get permission to initially import their beer, they would open a factory in Nepal once their brand was established in this country.

  My second request was also granted. I got a licence to import beer.

  My third request was for approval to establish a paper factory. I had already located a suitable plot of land. The land where our farmhouse stands today was originally intended for the paper factory. We had already hired a Chinese technical team to conduct a feasibility study. We intended to import the plant from China, and had even given a name to our enterprise—Saraswoti Pulp and Paper Mill.

  Surya Bahadurjee agreed to that as well.

  None of the licences I had received related to sensitive items. Nor was a referendum required to obtain such licences. However, the brewery business never got off the ground. As it turned out, under the preva
iling Indian excise laws, no one could import beer from India. I tried to take the other two projects forward simultaneously but, despite some initial progress, both eventually collapsed.

  Immediately after the referendum, a group of influential people got together with the intention of undermining Surya Bahadurjee. Known as the ‘underground gang’, the group was reportedly led by Prince Gyanendra, and comprised political opponents of Surya Bahadur such as Lokendra Bahadur Chand, Dr Prakash Chandra Lohani, Pashupati Shumsher Rana, Padma Sunder Lawati and Narayan Dutta Bhatta. They had teamed up to topple Surya Bahadurjee’s government. And they used me as a pawn.

  Many other entrepreneurs had funded Surya Bahadurjee’s campaign in favour of the Panchayat system but only I had to pay the price for it. There was an onslaught of defamatory propaganda in the media, tying the Chaudhary Group to Surya Bahadurjee. To sustain his government, they alleged, the prime minister had given us a licence to make radios. He had sold us the paper mill licence, which was going to lead to rampant deforestation; we had bribed the Nepal Industrial Development Corporation (NIDC) to give us loans and sold the beer licence . . . on and on their allegations went. We became the subject of criticism in the Rastriya Panchayat, the Parliament of the time.

  All I had wanted to do was to create a joint venture with a reputable multinational company such as National Panasonic. But the proposed factory was called a ‘tinkering unit’. Holding up a sample of our radio in Parliament, supporters of the ‘underground gang’ belittled us: ‘The government is trying to promote a factory for making these?’—as if our radios were toys. I was planning to establish the first paper mill in the country by bringing in Chinese technology. They alleged I was involved in rampant deforestation and in the NIDC loan scandals. I had wanted to bring another beer into the market where one brand had had a monopoly for so long. They called that a licence scam. My projects were destroyed, one after another.

  What kind of system was this, I thought, where those benefiting from it the most, i.e. those in positions of power, could attempt to drag down someone who had supported the very system that gave them power? They were making me a victim of their infighting. Perhaps a bitter truth of politics is that innocent people sometimes get caught in the middle of a fight between heavyweights. I had become an easy target in the campaign to defame Surya Bahadurjee. Within just a very short span of my encounter with politics, I had been badly hurt.

  Surya Bahadurjee was facing tremendous pressure to resign as prime minister. Though he knew he was helpless in the face of the plot hatched by the ‘underground gang’ and that he was operating under the auspices of the royal palace, he decided to bravely face a no-confidence motion rather than step down. He was backed by nineteen parliamentarians (known as the ‘eighteen brothers’ in those days), among them Balaram Gharti Magar, Keshar Bahadur Bista and Arjun Narsingh K.C. But this did not help him out of the situation.

  Eventually, Surya Bahadurjee had to resign.

  The ‘underground gang’ had achieved its goal. They were now free to start pursuing their own vested interests. The Lokendra Bahadur Chand government was formed, with Narayan Dutta Bhatta as minister for industries, Padma Sunder Lawati as home minister, Dr Prakash Chandra Lohani as finance minister and Pashupati Shumsher Rana as water resources minister. Less than two years earlier, Surya Bahadurjee had managed to retain the Panchayat system through the referendum. Now the new regime had not only to prove itself but also to show that dumping him had been the right thing to do. Hence, they continued to target me.

  The new government allowed import of all kinds of radio sets and tape recorders under the jhiti gunta, or personal baggage system. Our dream of a joint venture with National Panasonic was shattered. We had to pay customs duty when importing raw materials for our factories, but the radio sets and recorders could be freely imported under the jhiti gunta. The contention that ‘assembling’ was nothing but ‘tinkering’ meant that for a long time nobody dared to run such an industry in the country. Even today, many sneer at the idea of an assembling industry. However, even in those days, many countries were fostering exactly such industries by making it cheaper to import component parts rather than finished products. This kind of industry was operating on a huge scale in neighbouring India; and many other Asian countries, including Singapore, Hong Kong, Thailand and Malaysia, had achieved significant economic growth through precisely this type of industry.

  Besides radio sets and tape recorders, the government allowed free import of around three dozen other products. This brought a wave of ‘sky porters’ into Nepal. Smugglers would hire young people for a paltry wage and send them to Hong Kong or Bangkok, fulfilling the youths’ dreams of visiting a foreign country. On their return journey, they were expected to bring in as many items as could be freely imported in their ‘personal baggage’. For a long time, many young people continued to earn easy but illegal income by acting as ‘sky porters’. An entire generation was duped.

  Our Saraswoti Pulp and Paper Mill became the second target of the government. It revoked the loan approved by the NIDC. At the same time, the government decided to establish its own Bhrikuti Paper Factory, copying our plan even to the extent of locating the factory at Gaidakot in Nawalparasi district, only twelve kilometres from the site of my proposed factory. After preventing one of its citizens from privately investing in a factory, the government appealed for foreign investment to help open a virtually identical factory. Eventually, the government had to privatize the factory as it was poorly managed.

  My plan to import beer had to be aborted too, because of India’s excise duty policy. This meant my plan to open a brewery in collaboration with Mohan Meakin had to be abandoned too. Some people close to the Palace later launched Golden Eagle Beer in collaboration with the same Indian company.

  While all this was happening, the FNCCI, ‘the representative institution of the private sector’, and its office-bearers gave me no support whatsoever. On the contrary, I was told that a delegation of the FNCCI had met with government officials to oppose the radio ‘assembling’ factory. They opposed an enterprise that would have generated employment and potentially changed the face of Nepal’s industrial sector, choosing to support the free importation of radios instead!

  Reeling under these relentless attacks from all directions, I went to meet Finance Minister Dr Prakash Chandra Lohani. Ramesh Nath Pandey, an influential politician at the time, arranged the meeting. I was not even acquainted with Dr Lohani at that point, so there was no question of any personal animosity between us. The ministry of finance was at Bagh Durbar, where the Kathmandu Metropolitan City office is now located. As soon as I entered his office, he said, ‘So you are the famous Binod Chaudhary.’

  I asked him the reasons behind the attacks on me.

  ‘I don’t have any personal enmity towards you,’ he replied. ‘You have become the victim of a political conflict. You have become a scapegoat.’

  Today I enjoy a very cordial relationship with Dr Lohani.

  I also called on Surya Bahadurjee at his residence to discuss a way out of the crisis. Trying to cheer me up, he said, ‘This is an attempt to weaken you. However, remember one thing: overcoming these obstacles will take you to the pinnacle of success.’

  This incident is largely responsible for my level of eminence in the professional sector today. Had I not been dragged into this political conflict, I might not have sought alternative ways to grow.

  I was twenty-seven at the time of this incident.

  Many well-intentioned people told me that I should not continue to feel resentful towards the royal palace and that I should look for a compromise. Some even suggested I should meet Lokendra Bahadur Chand and beg his forgiveness so that he might fix my problems. As Neer Shah was an old friend, some others suggested I should approach the royal palace for help through his good offices. My professional career was in a shambles at the time.

  Sometimes, rescue comes from unexpected quarters. I found a saviour in the form of Prince Dhir
endra.

  I had met him while I was operating Copper Floor. I was well acquainted with Neer Shah and S.K. Singh in those days, and Dhirendra was a frequent visitor to our discotheque. I thought that since I knew him, perhaps if I confided in him there might be something he could do to protect me.

  I went to meet Prince Dhirendra.

  He was well aware of my situation. ‘I know your problems inside out,’ he said, as he patted my back. ‘They want to destroy you.’

  ‘What should I do, Your Highness?’ I asked, putting my hands together in supplication.

  ‘You work with me and all your problems will simply vanish,’ he said. ‘No one will dare touch you.’

  I was awash with relief. I felt as if I had gone looking for an angel but had found God Himself instead. I proceeded exactly as he advised me.

  ‘If you start a business with me, the whole world will know I’m your partner,’ he said. ‘Later on, you can work independently, but everyone will still think I have a partnership with you.’

  We immediately planned to establish Apollo Steel Industries. The Golchha Group had a monopoly in steel in Nepal at that time, but we did not face any problem in getting a licence for our steel mill because Prince Dhirendra’s name was associated with it. Normally, as I mentioned earlier, the royals would take 51 per cent of the shares, and the rest would go to the investor. However, Prince Dhirendra did exactly the opposite. I got the majority of shares and he kept 49 per cent.

  He told me, ‘I’m involved here just to help you out. You do your business. I’ll take only 49 percent.’

  Apollo Steel was not just another factory to me but, I hoped, an infallible means to get me out of the political mess in which I found myself. Even if I had not received a single penny from it, I would not have cared. My entire professional future was now vested in that one enterprise.