Nepal anti-graft body charges officials, China firm in Pokhara airport corruption scandal

Nepal took loans from China to build an international airport in the scenic city of Pokhara. Not a single international scheduled flight has taken off from there since its inauguration on January 1, 2023. Now, it has landed in a corruption case.

Nepal’s anti-graft agency this week filed charges against 55 individuals, including five former ministers, 10 senior bureaucrats, and a Chinese state-owned construction firm, China CAMC Engineering Company, in what is dubbed the biggest corruption case the Himalayan country has witnessed.

They have been accused of inflating construction costs while building the Pokhara International Airport, 200 kilometres west of Kathmandu, the capital.

The filing follows months-long investigations by the Commission for Investigation of Abuse of Authority (CIAA), Nepal’s constitutional anti-graft body, and findings by a parliamentary committee earlier this year. The parliamentary panel, in its report made public in April, had said that irregularities and corruption were found in the construction of the $216 million airport.

According to the chargesheet filed on Sunday (December 7, 2025), the anti-corruption agency has determined that NPR 8.36 billion ($74.34 million at the exchange rate as of August 10, 2018) should be recovered from the 56 defendants, including the Chinese firm, the construction arm of the state-owned conglomerate China National Machinery Industry Corporation (Sinomach).

“The 55 individuals and the [Chinese] company manipulated the approved airport cost estimate with malicious intent, excessively inflating the figures and making corresponding overpayments,” reads the chargesheet filed by the anti-graft agency. “There is proof to establish that there was corruption,” it adds.

A special court will decide the final sentences, though officials familiar with court proceedings say the hearings could take several months

A runway for corruption

The Pokhara International Airport, first envisioned in 1971, moved forward only in 2011. Allegations soon emerged that the deal lacked transparency and was negotiated behind closed doors.

When bids were called, CAMC initially quoted $305 million — lower than the other two bidders, both Chinese firms — but far higher than the Nepal government’s own estimate of $169.69 million. In May 2014, the Civil Aviation Authority of Nepal and China’s CAMC signed a contract to build the airport for $215.96 million. In effect, the deal looked like a compromise between the government’s estimate and the company’s initial quote.

During then-Prime Minister KP Sharma Oli’s Beijing visit in March 2016, a soft loan agreement was signed. Work began in November 2017, and the airport was inaugurated by then-Prime Minister Pushpa Kamal Dahal in January 2023.

The airport was constructed with a loan from China Exim Bank. With no flights, it quickly became a white elephant, raising concerns about Nepal’s ability to repay the loans.

The CIAA chargesheet now alleges that Nepali officials colluded with the Chinese company to improperly justify a revised total cost of $244.04 million, including a 3 percent contingency and 13 percent Value Added Tax.

China in Nepal

Nepal’s reliance on Chinese loans and technical expertise has long been a subject of political debate. Beijing has sought to expand its influence in the Himalayan nation, and Kathmandu has shown eagerness to tap China’s financial and technical resources. Previous governments, particularly those led by left-leaning parties, have often attempted to silence critics of Chinese aid and loans.

Concerns about the Pokhara airport surfaced early, with allegations of irregularities in the China-funded project. While controversies in Chinese projects abroad, including in Sri Lanka, were often dismissed, Nepal has now officially filed a graft case against a Chinese company.

Madan Krishna Sharma, President of Transparency International Nepal, says the Pokhara airport is a well-known corruption scandal involving almost all major political parties.

“This project faced corruption allegations from the very start. This is a positive move by Nepal’s anti-corruption agency and should set in motion other corruption cases as well,” he said.

On the day the Pokhara airport was inaugurated, Chinese ambassador Chen Song stoked controversy by branding it part of the Belt and Road Initiative (BRI), China’s multi-billion dollar infrastructure scheme. Many pointed out that it could not technically be true, as it was initiated long before Nepal joined the BRI.

Beijing has used the BRI to expand its influence in Asia and Africa. In Nepal, however, it has been polarising, with some warning of potential debt traps. Nepal renewed its BRI agreement with China in 2024 during Mr. Oli’s visit to Beijing, after weeks of heated debate at home.

With the Pokhara airport, described as a BRI project by a Chinese diplomat, now embroiled in a major corruption scandal, questions are likely to arise over Chinese funding in Nepal.

Mr. Sharma, however, cautions that the case against a Chinese company should not be over-interpreted in terms of bilateral relations.

“The Pokhara airport is a commercial project, contracted to a Chinese firm. If the anti-graft agency has found wrongdoing on its part, it is liable to face the same action a Nepali firm would have,” he said. “So, the law applies equally.”

Systemic problem

Analysts say the latest filing of graft charges highlights the systemic nature of corruption in Nepal, exacerbated by multiple factors.

Sanjay Upadhya, a US-based Nepali author and analyst, says limited oversight of foreign aid and the involvement of multiple intermediaries further complicate corruption risks.

“Political instability arising from multiple transitional periods has resulted in institutional weaknesses and a lack of effective anti-corruption measures,” he said. “Even organisations like the CIAA, which brought the corruption charges in the Pokhara airport case, often face political pressures and allegations of partial prosecution.”

The Pokhara airport case comes at a time when Nepal has a non-political government, installed after the September 8-9 Gen Z protests, and amid promises to take a stern stand against corruption in line with the youth-led movement. Nepali youths had protested against years of corruption and misgovernance, leading to the fall of the government led by Mr. Oli, chief of the Communist Party of Nepal (Unified Marxist-Leninist).

The current civilian government, led by former Chief Justice Sushila Karki, has vowed to take a firm approach to corruption while preparing for general elections scheduled for March 5.

Historically, corruption cases in Nepal are often initiated but rarely pursued to a conclusion. In the Pokhara case also, while it is seen as a positive step, the challenge lies in ensuring timely resolution, as court proceedings in Nepal often drag on for months, if not years.

Nepal ranks 107th out of 180 countries in Transparency International’s Corruption Perceptions Index.

Mr. Sharma notes that concerns about the Pokhara case disappearing without resolution are valid.

“Let’s hope the courts, where political appointments have become a norm, deliver justice in the larger interest of the country and the people, based on substance rather than loopholes,” he said.