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  Another reason for the misunderstanding between Girija Babu and me was the Dhamija scam. Girija Babu’s German son-in-law and his brother were directly involved in the case.

  I still vividly recall that meeting of the RNAC’s board of directors. The board meetings were generally convened between quarter to five and half past five in the evening so that the secretaries from the line ministries could attend after their regular office hours. The first thing they would do was to eat chicken cutlets. I was not interested in waiting for up to forty-five minutes while they ate, so I would arrive for the meetings at around 6 p.m.

  One day I arrived for the meeting at 6 p.m. to find them all impatiently waiting for me.

  ‘What’s up?’ I asked, as I took my seat. ‘I can sense there’s a serious issue on the agenda.’

  ‘No, no, nothing like that, Binodjee,’ one of them said awkwardly. ‘We were just waiting for you.’

  ‘So what’s the matter?’

  ‘We’ve already taken care of it. We just wanted your presence.’

  ‘Come on, tell me, what have you done?’ I asked.

  ‘Nothing special,’ one of them said. ‘We’re going to replace the General Sales Agent for Europe. We don’t need to discuss this at length now. It’s already settled.’

  I was shocked. I could sense that they were trying to keep me in dark about some big scandal. I was already wary about the RNAC’s following the Boeing scandal.

  ‘Why was it necessary to remove the existing GSA and appoint a new one?’ I asked. ‘I deserve to know.’

  They looked at each other.

  ‘We have received a letter from Dirgharajjee,’ one of them said, producing a sheet of paper. Dirgharaj Koirala was one of Girija Babu’s advisors.

  ‘What letter? Let me see it,’ I stretched out my hand for it.

  The letter asked the board to ‘settle the issue of the appointment of the GSA for the Europe sector as soon as possible’.

  Earlier, the board had received a proposal from the prime minister, which was actually a directive, to appoint Fair Limited, a company operated by Dinesh Dhamija, as the GSA for the Europe sector. The proposal did not include any information on Fair Limited’s track record. In those days, RNAC used to sell tickets worth roughly US$110 million in Europe. I felt that such a huge trade should not be handed over on an ad hoc basis to an unknown company.

  ‘Does the prime minister’s office have the right to appoint a GSA?’ I had asked the board.

  ‘No, we take the decision,’ one of them said. ‘But we have to abide by their directive.’

  ‘Don’t give me that crap,’ I snapped at them. ‘If the PM’s office thinks it has the authority to make that decision, then it should come here and make it. However, if the board of directors has the authority, then it has to independently assess the performance of the existing GSA. We need to have solid reasons, such as the net worth and institutional capacity of the proposed GSA, to prove that it’s better than the existing one.’

  All of them were dumbstruck.

  ‘So, what should we do then?’

  ‘Let’s set up a panel to investigate the matter. They will go to Europe to assess the status of both companies and recommend one to us.’

  But that board of directors did not have the guts to take such a decision, one that would have bulldozed the prime minister’s directive.

  The meeting was adjourned.

  They never convened the next meeting. After a month, the board was dissolved. Members of the new board met at the prime minister’s residence at Baluwatar to appoint the GSA.

  This incident not only dragged Girija Babu, a towering figure in the democratic movement, into financial irregularities but also shortened his political tenure. The Public Accounts Committee of the House of Representatives launched an investigation and released a report implicating the prime minister in the scandal. This report could not be tabled in Parliament. The country was thrown into midterm polls.

  The case became so controversial that passions ran high even after the elections. The minority government led by the Communist Party of Nepal (Unified Marxist-Leninist) scrapped the Dhamija agreement. It also formed a judicial probe panel led by Supreme Court Justice Min Bahadur Rayamajhi. However, the panel could not establish beyond doubt that there had been financial irregularities in the case. Nobody came forward to testify that the prime minister had issued a directive to the RNAC to appoint Fair Limited as the GSA.

  Meanwhile, the Commission for the Investigation of Abuse of Authority (CIAA) also set up a special committee to look into the case. The committee summoned me for my statement. I went. I met the tourism secretary, Mohan Raj Sharma, and RNAC’s general manager, Bobby Shah, outside the CIAA building. They were just leaving after having had their statements recorded. I went to the chairperson’s office.

  ‘We have summoned only you because of the legal compulsion to summon everyone related to the case,’ he said. ‘We know very well that you had tried to stop them from taking this decision.’

  I felt proud that day. I had done the right thing, even though I was in the minority.

  The CIAA, however, absolved Girija Babu of any wrongdoing, stating it could not prove that the former prime minister had ordered the appointment of the RNAC’s GSA for Europe. The commission also concluded that it was ‘natural’ and ‘a legal responsibility’ of a prime minister to direct any institution and its officials to expedite a job.

  Investment Promotion Council row

  The coalition government of the Nepali Congress, the Rastriya Prajatantra Party and the Nepal Sadbhavana Party constituted an Investment Promotion Council under the chairmanship of the prime minister on 2 April 1998.

  I was appointed vice chairperson of the council.

  Surya Bahadurjee was the prime minister then. We consulted Girija Babu about the council. His attitude was positive; he was impressed with the progress made in Sri Lanka, where a similar institution had been created. Despite the civil war in Sri Lanka, this board was credited with helping the country achieve better economic progress than other South Asian countries. He said all the parties and the government in Sri Lanka had given top priority to the recommendations of that board.

  ‘We, too, have been considering establishing a board of investment for years,’ he told Surya Bahadurjee. ‘If you establish it, I will continue it after I become prime minister again.’

  The top leaders of the two parties in the ruling coalition agreed that I would be appointed vice chairman of the council. Congress leader Arjun Narsingh K.C. was a witness.

  Surya Bahadurjee kept his promise. On 7 April 1998, I received a letter confirming that the Cabinet had decided to appoint me as vice chairperson of the Private Sector Investment Promotion Council led by the prime minister. The other members of the council consisted of representatives of each of the four national-level political parties, the chief secretary of the Government of Nepal, the governor of the Nepal Rastra Bank (the central bank) and the vice chairperson of the National Planning Commission. Representing the private sector were members Ananda Raj Mulmi, Mahesh Lal Pradhan, Padma Jyoti, Diwakar Golchha, Prabhakar Shumsher Rana and Anup Shumsher Rana.

  The structure of the council, as we envisioned it, was modelled on similar boards in Singapore, Thailand, Malaysia and Sri Lanka. It would have its own secretariat inside the prime minister’s office. The proposed aims of the council included creation of an investment-friendly environment in the country, harmonization of the views of the political parties on business matters for achieving economic growth, wooing foreign investment and providing an effective ‘one-stop shop’ for investors by coordinating with the line ministries.

  However, Surya Bahadurjee had to resign as prime minister only four days after the formation of the council. In accordance with an understanding between the coalition partners, Girija Babu replaced him. Now the onus lay on Girija Babu to institutionalize the council. He had promised the council continuity during the consultations that Surya Bahadurjee and
I had with him. However, within a few days of Girija Babu’s taking over as prime minister, rumours were rife that the government was considering establishment of another agency in place of the council. None of the members of the council were told what was going on. Even I, the vice chairperson of the council, was kept in the dark. The government neither invited us to assume office nor consulted us about the future of the council.

  On 16 July 1998, the government announced the formation of the Industry, Commerce and Trade Consultancy Group. I was asked to be a member of it. This consultancy group was different from the council we had envisaged. The autonomous council’s mandate was to bring about a convergence of views among the political parties on issues relating to economic prosperity and investment promotion, in line with the internationally accepted concept of a ‘board of investment’. This consultancy group, in contrast, was nothing more than a group of five to six advisors to the prime minister, representing the government as well as non-government sectors. It had no role at the policy-making level to determine the economic course the country should take; neither were its powers and responsibilities clearly established. We were well aware of the pathetic status of dozens of non-empowered councils related to environment, tourism, imports and employment promotion. Agencies that do not have clearly defined powers, responsibilities and organizational structures are useless. That was the reason we had envisioned a board that was empowered as well as autonomous. However, Girija Babu had rejected that vision and created, instead, just another useless agency.

  This made me lose confidence in Girija Babu. The idea of accepting a position, which came to me by the grace of the Girija Babu-led government, and would, at the end of the day, achieve nothing, offended my pride and my sense of honour. I wrote a letter to the prime minister telling him I could not accept membership of the new agency. I even published the letter in the newspapers about it. Many of my friends advised me not to decline the offer made by an important person like Girija Babu or, at least, not to publicize my letter.

  I would not listen to anyone. I rejected the appointment.

  The ‘board of investment’ concept was scrapped in a political environment in which the goal of national economic growth was sacrificed for the sake of vested interests. Today, we can see the price the country is paying for that.

  Proximity to the UML

  Around fifteen years ago, the CPN-UML was trying to win the confidence of the private sector, much in the way the Maoists did more recently once they were in power.

  We, as industrial entrepreneurs, were wary of the UML in those days. The reason, of course, was the word ‘communist’ attached to its name, and the pejorative terms such as ‘brokers’, ‘bourgeois’ and ‘capitalists’ they used when speaking about the private sector. We were haunted by the fear that the UML would want to nationalize all industry and that we would have to fight yet another autocratic system.

  Shortly after they came into the open as a political party, the UML leaders succeeded in creating a strong power base. The powerful speeches and charismatic image of the general secretary of the party, Madan Bhandari, was primarily responsible for UML’s rise in popularity in such a short period of time. Nevertheless, the UML had to allay the fears of the private sector in order to secure its political future.

  In April 1992, the country was gripped by election fever. It was in that context that I attended a seminar organized by the UML at Bluestar Hotel or entrepreneurs from the industrial sector.

  ‘Local industrialists like you have risen to great heights by utilizing local resources, labour, capital, and through your sheer industriousness. I don’t have words to express my admiration,’ Madan Bhandari said. ‘The country’s economic future rests in your hands.’

  Following his speech, we were allowed to address the seminar. I took the microphone and said, ‘Comrade, at the outset, you need to change your approach to the private sector if you want collaboration with us. On the one hand, you address us as local industrialists and say the progress of the country rests in our hands. You praise us for industrializing Nepal by utilizing labour, capital and the resources of the country. On the other hand, however, in your written material, you describe us using terms with pejorative connotations, such as “brokers”, “bourgeois” and “capitalists”. First of all, you need to remove all those terms that mock or belittle us from your written material. Then we can talk about collaboration.

  ‘Comrade, what is the meaning of the word “broker” in the present day? What does “bourgeois” mean? Who is a “capitalist”? We are all brokers. We make products by utilizing the labour force, and bring them to our customers. We are, therefore, brokers between the workers and the customers. We invest capital and earn capital, hence we are capitalists. Therefore, the way things are presented in your written material does not provide an honest picture of the private sector. You can’t win our confidence that way.

  ‘Comrade, no matter what you say in a public forum, we view what you put in writing as a reflection of your true position. Therefore, there has to be uniformity between what you say and what you write. So long as your official documentation continues to use pejorative terms in relation to the private sector, we will continue to harbour distrust and apprehension.’

  After the seminar, comrade Bhandari took me aside and said, ‘I am very impressed with the way you express yourself. You have expressed your views in an extremely effective manner.’

  Before we left, he told me, ‘We’ll meet soon.’

  However, I was never to meet him again.

  Following the mid-term polls of 1994, the UML formed a minority government led by its chairperson Manmohan Adhikari. I was the chairperson of the FNCCI at the time. The UML forming the government was akin to the Maoists forming the government after the Constituent Assembly elections of 2008. Immediately after the government was formed, the BBC called me from London seeking my reaction.

  ‘Now that a communist government has taken over power in Nepal, how do you think you’ll be able to function?’

  I replied honestly: ‘I think you are trying to imply that the industrial sector in Nepal will be now nationalized and that people in private business are ready to flee the country with their capital. Some industrial entrepreneurs here have similar fears. But the fears are completely unfounded.

  ‘Times have changed. This is not the age of the Soviet Union. Russia itself has transformed into a socialist state. China, too, has adopted a mixture of socialism and capitalism. Hence, I don’t see any reason to panic just because a communist government has been formed. I fully back this government and I call upon the business community also to support this government.

  ‘This change is the need of the hour. The people had given a clear mandate to the Nepali Congress to run a stable government in the country for five years. That government collapsed within three years due to the intra-party strife. The Congress party itself is responsible for the position it is in today. Therefore, we, the business community, must assimilate this change and be prepared to cooperate with the government. We need to initiate dialogue with the party which has come to power for the first time, on the fundamental problems dogging the industrial and commercial sectors of the country and suggest ways to derive optimum benefits while addressing these problems.’

  This was a clear endorsement of the government, which was not sure whether the private sector would cooperate with it or not. Since I was chairperson of the FNCCI, my expression of support for the government was instrumental in shaping the view of the entire private sector. The UML leaders openly praised me for taking that position. This played an important role in bringing me closer to the UML.

  I used to meet with Hari Pandey of Gandaki Noodles while I was vice chairperson of the FNCCI. He played a big role in my election to the post of chairperson. Coincidentally, he was an active leader of the UML and went on to hold the key ministerial portfolios of industry and water resources. I called him up and said, ‘I have given a clean chit to this government from the pr
ivate sector. Now your leaders should work to win our confidence.’

  ‘You tell us what this government needs to do,’ he said.

  ‘I will organize a reception in honour of the members of the new Cabinet,’ I said. ‘You should use it as an opportunity to bring about a fundamental change in the attitude of the private sector towards a government with a communist background. Give the private sector the message that the UML has jettisoned its traditional bias against it and has adopted timely and relevant economic policies. Then a new relationship based on mutual trust can be nurtured.’

  ‘What does the private sector want to hear?’

  ‘Your ministers should publicly state that they are committed to an open market economy and that the government will not back away from economic liberalization. Bring in programmes that bring the benefits of an open market and economic reform to the grass-roots level.’

  ‘You start your preparations. I will take the initiative inside the party,’ he said, approving my proposal.

  After that, I took part in many discussions with the UML. I had a role in drafting the party’s economic policy. The communist terminology and approach that the UML had been using with respect to the private sector were amended. While I was collaborating with the UML, I had no plans to affiliate myself with the party. As a representative of the private sector, all I wanted was cooperation with the ruling party. My other aim was to get the UML to commit to the private sector, on economic liberalization and foreign investment.

  We did not have to wait long to see if the UML would keep its promises.

  On 29 December 1994, the UML government tabled its first half-yearly budget in the House of Representatives. This was the first-ever budget presented by a communist government in the history of Nepal. It being so, it introduced some powerful social programmes. But it also included liberalization and promotion of the private sector to dispel any doubts remaining in the business community about its commitment to its promises.