CEO of a bank accused of fraud, organized crime and banking fraud Nepal Rastra Bank’s Approved Employee Bye-Laws – ‘Automatic Suspension’

The Central Investigation Bureau (CIB) on Wednesday filed a corruption case against the bank’s chairman Prithvi Bahadur Pandey, directors Prajanya Raj Bhandari, Kabi Kumar Tibrewala, Diwankar Shakya Udai, Shalikram Belbase and Shova Shrestha. The police have named most of the operators as absconding defendants.

The case pertains to the auction of the property of Smart Telecom, which has already been owned by the government. During the investigation, CEO Pandey was also arrested. He was later released after the Supreme Court ordered him to remain outside jail for further investigation.

The main question: Can a person accused of fraud and banking fraud continue as the CEO of the bank?After this incident, the biggest question that has arisen is whether a person who has been filed in court on serious criminal charges like fraud, organized crime and banking fraud can continue to work as the CEO of the bank.

Legally, the Bank and Financial Institutions Act (BAFIA) does not provide for the automatic termination of the post of CEO merely on the basis of the filing of a case. According to BAFIA, a person who has been convicted of such offences and has not paid his sentence, or if he has not paid his sentence, is disqualified from being the CEO of a bank for five years after serving his sentence.

However, Nepal Investment Mega Bank’s Employees Bylaw seems to have made a different arrangement. As per the bylaws, an employee concerned can be automatically suspended from the time a case related to fraud or banking offence is registered against him until he gets the final clearance. There are also instances where bank employees who were previously suspended for banking offences were suspended from the day the case was filed.

This is why the question has arisen whether the rules applicable to the general employees of the bank apply equally to the CEO of the bank or not?

This issue is not only legal but also a question of good governance, ethics and institutional credibility.The chief executive of one of the country’s commercial banks has been charged with serious charges of fraud, organized crime and banking fraud.

At present, most of the directors of the bank are mentioned as absconding defendants, so the possibility of any immediate decision from the board of directors seems unlikely. In such a situation, what steps the regulatory body Nepal Rastra Bank will take will now be decisive.

So far, neither the bank nor CEO Pandey has made any official statement on this matter.