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A handful of Nepali investors have made fortunes buying and selling Ncell shares using funds which appear to have flowed covertly to them via tax havens from the Malaysian telecom giant, Axiata, and Sweden’s Telia.
Some transactions by the Nepali investors appear to challenge Nepal’s laws on foreign exchange controls, taxation, and foreign ownership.
An investigation by the Centre for Investigative Journalism-Nepal (CIJ-Nepal) and Finance Uncovered, a British journalism organisation, has found that the primary Nepali beneficiaries from these deals appear to be leading businessman Upendra Mahato, his associate Niraj Govinda Shrestha, and businesswoman Bhavana Singh Shrestha along with her company Sunivera Capital Venture.
This trio appears to have profited enormously from their ownership, at various times since 2012, of a 20 percent stake in Ncell, which is reserved by law for domestic investors.
Telia’s sale of 80 percent of Ncell’s share to Axiata in 2016 has caused great controversy in Nepal. But less scrutiny has been given to the buying and selling of the other 20 percent of Ncell, a deal that is so opaque it is not possible to see where hundreds of millions of dollars have ended up.
We estimate that today this 20 percent stake may be worth well over $300 million and has earned more than $80 million in dividends since 2016, based on figures published by Axiata and Nepal’s central bank.
Our investigation finds that Axiata paid $90 million to a secretive offshore company with a link to Bhavana Singh Shrestha, months before her company Sunivera bought 20 percent of Ncell’s shares and became Axiata’s partner in the telecoms company.
Telia also lent Niraj Govinda Shrestha $230 million via a tax haven in 2012 to buy the Ncell stake from Mahato. Shrestha, however, claims to have only paid Mahato $3 million, and it is unclear what he used the rest of Telia’s loan for.
Our findings suggest overseas telecom giants provided money to Nepali investors to buy shares in Ncell in opaque ways that appear to test Nepali’s foreign investment rules.
Axiata denied to us that it had covertly financed the Ncell share purchase by paying money to an offshore company, called Southern Coast Ventures. It said that it did not know what this company did with the money after receiving it.
Axiata also denied breaking any laws and said that it “does not have, and never has had, any financial or other business relationship with Sunivera Capital Ventures Pvt Ltd … aside from the obvious point that Sunivera is a minority shareholder in Ncell.”
Telia told us that some of its past dealings in Nepal and other countries before 2013 “gave rise to questions” and that it passed material on these dealings to Swedish prosecutors, who decided not to act.
We sent Mahato questions about these matters in July 2020. He replied that the information was “proprietary and confidential” and did not provide substantive responses to our questions.
After follow-up inquiries in November 2020, Mahato called the CIJ-N and stated: “Some people can't digest the fact that Nepali businessmen have done well overseas. That's why they go after these businessmen looking for holes in their [business] dealings.”
“As far as the question of wrongdoing in the transaction of 20 percent share is concerned, if Telia bought the share illegally, it should not be legalised by letting the company pay the taxes. It should be confiscated,” he said. “An illegal act should not be legalised by taxing it. That's all I have to say.”
Neither Niraj Govinda Shrestha nor Bhavana Singh Shrestha responded to our inquiries.
At the heart of the story is a legal requirement, dating back to 2004, that at least 20 percent of Ncell must be owned by local investors.
At the start of 2012, this 20 percent stake was owned by Synergy Nepal, a company chaired by Mahato, who was a long-standing investor in Ncell. The other 80 percent was controlled by Telia of Sweden, then called TeliaSonera.
In March 2012, Synergy Nepal sold the 20 percent Ncell stake to Mahato himself, who promptly sold it to Niraj Govinda Shrestha.
Both Mahato and Shrestha have separately declared to courts in Nepal that the value of this sale was about $3 million.
Nepal’s tax authority believes the true value of the shares was just under $42 million and has stated that Mahato owes more capital gains tax.
Mahato has challenged this tax assessment in court and the case is ongoing.
However, the sums of money involved may have been much larger. Telia lent Shrestha $230 million in 2012 to buy the Ncell stake via one of its subsidiaries in a tax haven in the Netherlands.
This loan was “reduced to zero” by Telia, so it was never repaid.
It is not possible to confirm whether Shrestha actually paid some or all of the $230 million to Mahato to buy his Ncell shares, as available public documents do not provide this information and Mahato himself has refused to answer.
The loan was not reported in Telia’s group accounts at the time, only in those of one of its Dutch subsidiaries.
Telia confirmed the loan’s purpose more than a year later. A Telia spokesman told the Swedish newspaper Dagens Nyheter: “We have financed [Niraj Govinda Shrestha’s] purchase of the 20 percent. We have the shares pledged and an option to register the shares in our name if the limit for foreign ownership decreases or disappears.”
This appears to mean Telia lent Shrestha the money to buy the 20 percent stake in Ncell in the hope that Nepal’s law would change in the future and enable Telia to own the stake itself.
We told Telia and Shrestha our belief that this was not a genuine loan at all, but a device for Telia to get around Nepali law by having Shrestha hold the shares on its behalf. Neither responded to this point.
Telia later reported that it had an “economic interest” in Shrestha’s Ncell shares, but it has not explained what it means by this.
Semanta Dahal, a partner at a Kathmandu law firm specialising in foreign direct investment, said that under Nepal’s Foreign Exchange (Regulation) Act, a Nepali person or entity cannot receive financing from abroad to buy the shares of a company in Nepal without permission from the central bank. He was commenting on the law in general, not about Telia in particular.
The foreign exchange law also prevents the owner of shares in a Nepali company from borrowing against those shares without the permission of the central bank.
In a reply to our Right to Information request, Nepal’s central bank said that it had no record of any such loan being authorised, as the foreign exchange law requires, or having been brought into the country.
So it is possible that the $230 million may have remained offshore. This would create a risk of tax avoidance in Nepal on any profits from it, contrary to the Income Tax Act.
We asked Telia if the Swedish company knew of this risk and had lent the money to Shrestha anyway. Telia did not respond to this point. Nor did Shrestha.
However, Telia’s Asian investment plans soon collapsed under the weight of a huge corruption scandal in Uzbekistan – unconnected to Nepal – and Telia never took ownership of the 20 percent Ncell stake. Shrestha never paid back the loan either.
Telia “decreased to zero” the value of the loan to Shrestha in 2016 as it sold its investment in Ncell. The accounts of the Dutch subsidiary stated this was in return for Shrestha carrying out what Telia described as “certain legal acts as a consideration for the obligations under the loan agreement.”
Telia and Shrestha declined to tell us what these “legal acts” were.
Because Telia “zeroed” the loan, Shrestha appears to have received the Ncell shares more or less for free, which enabled him to sell them for a huge profit later on. Neither Telia nor Shrestha would comment on this point either.
Telia’s plans for Nepal, along with other Asian countries, collapsed after journalists working with the Organized Crime and Corruption Reporting Project uncovered evidence in 2012 that Telia had made corrupt payments in Uzbekistan.
The scandal, unconnected to Nepal, claimed the jobs of three top Telia executives who were later found not guilty of bribery in a Swedish court. Telia eventually had to pay a gigantic $965 million fine in the United States for violating its anti-bribery laws.
Telia’s new management hired an international law firm, Norton Rose Fulbright, to investigate its other deals in Asia, including in Nepal.
The lawyers’ findings have not been published. However, Telia’s board chair Marie Ehrling told its shareholders in 2014 that “it cannot be ruled out that certain conduct [by Telia] has been in violation of the law” in its dealings in Nepal and other Asian countries.
Telia told us: “Several transactions, not only in Nepal, gave rise to questions and therefore Telia made this material available to prosecutors in Sweden, who decided to not take any actions.”
The investigation does not appear to have found any evidence of corruption or fraud in relation to Telia’s dealings with its Nepali partners.
Nonetheless, Telia became so alarmed that its past dealings in Asian countries might have been corrupt that it decided to quit the region entirely. “A decision was reached: let’s sell all these companies because it’s too painful. It was like a fire sale,” a source with knowledge of the situation told us.
Telia decided to sell its controlling stake in Ncell to Axiata in April 2016. Telia seemed so concerned about the risks of corruption in obtaining official permissions for the divestment, according to the same source, that it sent a lawyer to Kathmandu to monitor the process.
Telia did not comment on this specific point but said: “The divestment of Ncell was conducted in a responsible and ethical manner in accordance with laws and regulations in concerned countries.”
Telia also told us that it “has not contributed to tax evasion and has paid taxes that are required by law to be paid.”
Telia’s activities in Nepal, including its departure from the country without paying capital gains tax, has caused lasting controversy.
According to former acting Auditor General Sukadev Bhattarai Khatri, who has become a fierce critic of tax abuse and corruption in the country, politicians and the authorities have not done enough to get to the bottom of these deals.
"They seem to have played a role in covering up instead of investigating these transactions," said Khatri. “I have publicly blamed prime ministers and state agencies for their failure to probe past transactions, and they have never challenged my statements.”
At the same time that Telia sold its stake in Ncell to Axiata, Niraj Govinda Shrestha sold his 20 percent stake to Sunivera Capital Venture in Nepal. This company was solely owned by Nepali businesswoman Bhavana Singh Shrestha (who is not related to Niraj Govinda Shrestha), and was registered on December 8, 2015, four months before the sale of Ncell.
Niraj Govinda Shrestha declared a profit of $105 million on the sale and paid tax on it in Nepal. Neither he nor Mahato would explain to us how the same Ncell shares could be bought in 2012 for a declared price of only $3 million and then sold for a profit of $105 million only four years later.
Nepal’s Office of the Auditor General said in April 2017 that Shrestha’s sale of his shares to Sunivera had been massively undervalued and he needed to pay $57 million more in tax, plus interest and charges.
Shrestha was later asked by Nepal’s tax authority to pay a slightly smaller amount than that identified by the Auditor General. Shrestha challenged the tax authority, arguing in a statement to the court, that the tax authority was wholly wrong to make its own estimate of the market price of the shares and should, according to him, have accepted for tax purposes the price agreed to between the buyer and the seller.
The case is still ongoing and Shrestha did not respond to our questions.
Niraj Govinda Shrestha sold his Ncell shares to Sunivera and Telia was paid another $48 million to dissolve its “economic interest” in these shares.
Telia has reported that this $48 million came from “Sunivera Capital Venture Pte Limited, registered in Singapore”. At the time, this company was owned by Bhavana Singh Shrestha. However, its accounts for the relevant period do not record any payment to Telia.
We asked Telia to explain this apparent discrepancy but Telia replied only that its divestment from Nepal, including the dissolution of its interest in Niraj Govinda Shrestha’s shares, “have been disclosed and accounted for in Telia’s accounts in a correct and transparent manner”.
Bhavana Singh Shrestha did not reply to our questions at all.
So where did Sunivera get the money to buy the Ncell shares in 2016? It is not possible to see from public records because as a private company in Nepal, Sunivera does not have to publish its accounts.
We asked Axiata if it had provided any of the money for Sunivera’s share purchase, just as Telia had provided the money to Niraj Govinda Shrestha in 2012 for the same purpose. Axiata says that it “did not finance any part of the 20 per cent local shareholding in Ncell by Sunivera.”
However, Axiata’s corporate filings show that only weeks before it and Sunivera agreed to become co-investors in Ncell, Axiata paid $90 million to an offshore company called Southern Coast Ventures, which related to their joint investment in Cambodia.
Southern Coast Ventures is so secretive that it is not even possible to find out what country it is based in. Its owners are hidden from public view and when we asked Axiata who they were, Axiata refused to tell us.
But there is evidence, provided to us by Axiata itself, that this company has a link to Bhavana Singh Shrestha via her husband, Satish Lal Acharya.
Axiata does not deny that some or all of the $90 million that it paid to Southern Coast Ventures may have ultimately been used to pay for Sunivera’s purchase of the Ncell shares from Niraj Shrestha and Telia.
However, Axiata told us that it “had no knowledge or interest at the time, and continues to have no knowledge or interest, as to how SCV used the [US$90 million].”
With so many issues still unexplained, it is not possible to clearly answer the question of how and why a handful of Nepali investors were able to make such large profits from the shares of Ncell using funds that came in an opaque fashion from abroad. Khatri, the former acting Auditor General, told us: “The government needs to open up the file on Ncell’s share transactions and dig into it thoroughly.”
Two of the Nepali individuals who have benefited from the 20 percent stake in Ncell appear to have had connections with each other, and to Telia and Axiata, via Cambodia. These connections sometimes run through secretive, but legal, companies in tax havens.
Bhavana Singh Shrestha, the owner of Sunivera in Nepal, is married to a Singaporean businessman of Nepali origin, Satish Lal Acharya.
Acharya chaired a company called Applifone in Cambodia which he reportedly founded in 2006. Applifone was controlled by Telia between 2008 and 2010, when it was merged into another Cambodian company called Latelz.
Acharya was a director of Latelz, according to corporate records from Cambodia. He may also have been an investor in Latelz. Acharya was the shareholder and director of a company called Pasa Holdings in the British Virgin Islands from January 2009 onwards, according to the Offshore Leaks database of the International Consortium of Investigative Journalists, the source of the Panama Papers.
Pasa Holdings owned 20 percent of Timeturns from June 2009 until May 2012, according to corporate records from Cyprus. And Timeturns was the ultimate parent company of Latelz.
Upendra Mahato, a key investor in Ncell, may also have been an indirect investor in Latelz. An online profile of Mahato says, without giving dates, that he and his close family members were “involved in” Timeturns, among other companies, “either as a major shareholder or promoter”.
Neither Acharya nor Mahato responded to our questions about Timeturns.
In December 2012, Axiata agreed to buy Latelz from Timeturns and merge Latelz into its own Cambodian operations to create a new telecoms business, Smart Axiata.
The outcome of the takeover of Latelz in 2012 was that Axiata owned 90 percent of an offshore company called Glasswool Holdings, based in the Malaysian tax haven of Labuan. Glasswool owned Smart Axiata in Cambodia.
The other 10 percent of Glasswool was to be retained by the former owners of Latelz, according to Axiata’s corporate filings.
In February 2013, Axiata reported that this 10 percent stake in Glasswool was actually owned by an offshore company called Southern Coast Ventures.
Between 2013 and 2015, Axiata engaged in a series of share transactions with the mysterious Southern Coast Ventures. First, Axiata allowed it to increase its ownership of Glasswool to 15 percent. Axiata’s accounts do not provide any evidence that Southern Coast Ventures paid for these extra Glasswool shares.
Then on December 8, 2015, Axiata paid $90 million to Southern Coast Ventures to buy back 10.3 percent of Glasswool. In other words, $90 million flowed from Axiata to Southern Coast Ventures two weeks before Bhavana Singh Shrestha, the owner of Sunivera who is married to Acharya, signed an agreement with Axiata to work together as shareholders of Ncell in Nepal.
So who might be the owners of Southern Coast Ventures?
One clue is that when we asked Axiata to put us in touch with Southern Coast Ventures, so that we could ask our questions directly, they referred us to a Singaporean company called Bitmap, which is 50 percent owned by Acharya.
Acharya is also a director of Smart Axiata in Cambodia, according to corporate records there. Axiata told us that Acharya is “an investor in the mobile telecommunications sector with whom Axiata has an ongoing business relationship from its operations in Cambodia.”
Axiata does not deny that Acharya either has an investment in Southern Coast Ventures or works for someone who does. Nor does Axiata deny that some or all of the money that it paid to Southern Coast Ventures may have been used by Sunivera to buy the Ncell shares.
However, Axiata denies that it knew this might happen, saying that it “did not finance any part of the 20 per cent local shareholding in Ncell by Sunivera" and “had no knowledge or interest at the time, and continues to have no knowledge or interest, as to how SCV used the [US$90 million].”
Axiata denies any breach of the law in Nepal or other countries, in respect of these transactions, and we have found no evidence to suggest otherwise. Sunivera did not respond to our questions.
But Axiata has not explained its dealings with Southern Coast Ventures in any detail. When we asked about them, the Malaysian telecom company referred us to its corporate filings which provide next to no information about this company and none at all about its owners.
Axiata also says it has paid more than $420 million in capital gains tax in Nepal on its acquisition of Ncell, though this tax payment is in dispute between Axiata and Nepal and currently going through arbitration.
Given the importance of Ncell to the Nepali economy and the huge sums of money at stake, much more transparency is needed about the nature of the connections between Nepal and the foreign investors in Ncell, both current and former.
This story is a collaboration between the Centre for Investigative Journalism-Nepal and Finance Uncovered, a UK-based journalism organization.
Rudra Pangeni Rudra Pangeni is an investigative journalist affiliated with the Centre for Investigative Journalism, Nepal. He is a 2019 Bertha Fellow.
Diarmid O'Sullivan Diarmid O'Sullivan reports for Finance Uncovered, a UK-based journalism organization.