Earlier this week, police raided the residence of industrialist Beni Gopal Mundanda of Debenara Group in Biratnagar. The scale of the raid was so huge that authorities blocked a roughly 500-meter stretch of Pandit Meghraj Marg—from Golcha Chowk to the District Administration Office, Morang—for nearly five hours and restricted movement of people during the operation.
Police, however, returned empty-handed after finding no evidence of wrongdoing and subsequently gave the Mundada family a clean chit. The incident has been widely discussed within business circles as an example of what they describe as “intimidating” enforcement tactics. After drawing flak from all quarters, the Kosi Provincial Police Office has sought a written explanation from Superintendent of Police Kabit Katwal, the chief of the District Police Office, Morang.
The raid on Mundada’s residence was not an isolated event. Business leaders say aggressive law enforcement practices, which are often carried out before completing thorough investigations, are creating a climate of fear among entrepreneurs. This, they warn, is discouraging both domestic and foreign investment at a time when the economy is struggling to regain momentum.
The controversy intensified in April after the Central Investigation Bureau (CIB) detained Shekhar Golchha, former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and chairperson of the Golchha Group, in connection with alleged share-trading irregularities flagged in preliminary findings by the Securities Board of Nepal. Similarly, Nepal Investment Mega Bank (NIMB) CEO Jyoti Prakash Pandey was arrested for performing a routine banking function: the sale of assets pledged for loan recovery. Both were later released on court orders.
In both cases, complex financial and regulatory matters were treated as immediate criminal offenses. This sent shockwaves through the business community.
In a separate case, Ramesh Sharma of Sharma and Company and Pitamar Badu of Lama Construction were reportedly detained and taken directly to a ministry for questioning over construction delays. The move has been seen by many as the high-handedness of the government and an act of bypassing standard administrative and legal channels in favor of political instruction.
After a series of arrests of businesspersons, three leading private sector umbrella bodies—the Federation of Nepalese Chambers of Commerce and Industry, the Confederation of Nepalese Industries (CNI) and the Nepal Chamber of Commerce (NCC)—called for a change in the government’s approach to handling economic offenses.
“The private sector is not opposed to legal action against the guilty. However, we urge the government to adopt a ‘hear first, detain only after guilt is proven’ principle in financial offense cases,” they said in a joint statement in April. “The trend of sudden arrests, freezing of bank accounts, and seizure of operational assets prior to completing investigations has demoralized entrepreneurs and created uncertainty in the business environment.”
While the government had assured representatives of the private sector that time that no such actions would be taken unless absolutely necessary and supported by evidence and investigation, the recent raid on businessperson Mundada’s residence had left them anxious and worrying.
The issue has come at a time when the private sector, which accounts for 81 percent of the country’s economic output and nearly 86 percent of employment, is already grappling with sluggish growth, weak demand and limited access to credit. Instead of improving confidence and fostering a conducive environment for investment, current enforcement practices are deepening uncertainty and discouraging risk-taking.
The long-term consequences of such practices could be severe. One major concern is the deterrence of foreign direct investment. International investors closely monitor legal predictability and the protection of property rights, and arbitrary arrests and raids risk making Nepal a less attractive destination for capital. Allegations of pressure from the Prime Minister’s Office on Department of Passports officials to scrap a contract with a German firm in favor of a French company, IDEMIA, are also unlikely to inspire confidence among foreign investors.
Such activities also put domestic investment at risk. Business leaders say entrepreneurs are becoming increasingly hesitant to commit capital to large-scale projects such as hydropower, infrastructure and manufacturing. Instead, capital is remaining idle, shifting to less productive sectors or moving abroad.
The impact extends beyond individual businesses. When company leaders are detained and financial accounts are frozen, operations can grind to a halt. This can disrupt supply chains, delaying payments and put thousands of jobs at risk.
Such disruptions can also affect government revenue, as slower business activity translates into lower tax collection, potentially widening the fiscal deficit and constraining public spending on infrastructure and development projects.
