Pokhara Airport scandal: illegal tax exemptions and multimillion-dollar losses for the state

Nepal’s anti-corruption agency has charged a second former finance minister and several former government secretaries, accusing them of causing nearly $24 million in losses to the state treasury in illegal deals with a Chinese contractor in the construction of Pokhara airport.

Nepal’s anti-graft body this week filed corruption charges against former Finance Minister Gyanendra Bahadur Karki, several former Nepali government secretaries, and representatives of a Chinese engineering contractor at Nepal’s special court for irregularities in the construction of the Pokhara International Airport.

The charge sheet filed by the Commission for the Investigation of Abuse of Authority (CIAA)  on Thursday alleges the “national officials and employees acted in collusion with the contractor to misuse public assets received as loans,” causing a loss of Rs 3.62 billion ($23.9 million) to Nepal’s treasury.

The case centers on illegal tax exemptions allegedly granted to China CAMC Engineering Co. Ltd. (CAMCE) during the construction of the Pokhara Regional International Airport, a centerpiece of Nepal’s national pride infrastructure drive.

“The new charges are on double benefits and illegal tax waivers,” Suresh Neupane, CIAA spokesperson, told OCCRP.

It is the third corruption case at Nepal’s special court for irregularities in the construction of the Pokhara International Airport, which was built under Chinese President Xi Jinping’s Belt and Road Initiative.

Former Finance Minister Karki did not respond to OCCRP requests to comment. He is the second former Nepali finance minister to be charged in the widening probe.

The charges come amid a renewed anti-graft push in the country. Nepal’s new government, elected after “Gez Z” protests toppled the previous one, has come to power with a string of arrests of high-profile figures, including the former Prime Minister K.P. Sharma Oli. 

Last year CAMCE denied any wrongdoing after a parliamentary committee on corruption named it in a report on irregularities in the airport project.

“As a professional and responsible international engineering contractor, we strictly complied with all legal and regulatory requirements of the Nepalese government throughout the bidding, contracting, and implementation phases of the Pokhara Regional International Airport Project,” CAMCE said in a May 2025 press statement.

The airport — promoted as a regional hub — has struggled since opening. Built without a detailed business plan, it has effectively been downgraded to domestic operations. International airlines have declined to fly there, citing air safety concerns and low passenger demand.

Political controversy deepened after a parliamentary Public Accounts Committee investigation found widespread irregularities and alleged billions of rupees were misused. The committee forwarded its findings to the anti-graft body, urging prosecutors to pursue charges.

Special court spokesperson Krishna Sharan Lamsal told OCCRP that the first two cases are now under judicial proceedings. 

In early December, CIAA filed corruption charges against 55 senior officials, including former Finance Minister Ram Sharan Mahat, and a Chinese company, alleging they embezzled millions of dollars during the construction of Pokhara International Airport. The agency alleges the group misused 8.36 billion Nepalese rupees ($74.34 million) by raising the airport’s approved cost estimate from $145 million to $215.95 million “with malicious intent.” 

In March, another case was filed against 21 individuals, including two Chinese officials and former Tourism Secretary Kedar Bahadur Adhikari, over alleged consultancy misappropriation.