Nepal D+

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Nepal is placed in Band D+. With regard to political corruption risk, before the signing of the Comprehensive Peace Agreement (CPA) in 2006, which formally ended the armed conflict in the nation, there was no public discussion of a national defence policy. Since then, the CPA and the interim constitution have created significantly more space for discussion and debate of defence and security related issues. A special parliamentary committee, the Security Special Committee, has been formed to discuss, adopt, and implement the decisions of the Council of Ministers relating to the Nepal Army. In addition, the Army Act of 2006 has created a mechanism through which corruption offences within the army can be addressed. However, to date no debate relating to defence policy in parliament has taken place. An absence of a policing function to investigate corruption or organised crime in the defence services increases risks of impropriety. There is a lack of public belief that defence and security institutions will tackle issues of bribery and corruption.

Nepal has strong provisions relating to financial corruption risk contained in the interim constitution. There is no allowance for secret spending and off-budget military expenditure is not permitted. Also, while defence and security institutions own a number of petrol pumps and small factories, these do not constitute businesses of any significant scale. Furthermore, the majority of outputs from these small businesses are utilised by the institutions themselves rather than for the generation of profit. Yet, in 2011, the State Affairs Committee of the Parliament admitted that they were unaware of the sale of antique weapons that took place in 2001, and from which the government had received only half of the payment due from a US-based company.

Regarding personnel corruption risk, the Pension and Salary Department under the Policy Directorate is responsible for making regular payments of salaries and pensions in Nepal Army. These payroll systems are assessed to be strong, with personnel receiving the correct pay on time. Also, salary scales are published on the Nepal Army website. However, there is little anti-corruption training for military and civilian personnel. While the Army Act provides a mechanism for addressing corruption offences, these are prosecuted by court martial rather than through civilian courts. To date, there is no evidence of prosecutions of army personnel through this process. Finally, although illegal in accordance with the anti-corruption law of 2002, facilitation payments are known to remain widespread in Nepal.

In terms of integrity in operations, there is no evidence of military doctrine addressing corruption as a strategic issue, of specific training on corruption issues for commanders, nor trained personnel deployed to monitor corruption in the field.

In relation to procurement corruption risk, while the government is considered to comply with the Public Procurement Act 2007, this act does not include any restrictions on the use of agents, intermediaries or sub-contractors in the procurement cycle. The Act also permits security-sensitive procurement which is not competed, albeit to a low level only. Details of planned and actual defence purchases are not consistently made public. While procurement requirements are in line with the approved budget and are approved by the Ministry of Defence, they are not based on a National Defence and Security Strategy which complicates assessing their relevance to strategic national requirements.

Research finalised: February 2012

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