UML Returns Rs 38.6 Million After VIP Treatment Controversy

The disclosure that the CPN-UML returned more than Rs 38.6 million to the state treasury to avoid a possible corruption case has once again pulled Nepal’s political culture of impunity into public focus.

The pattern is not new.

The same political protection mechanism had surfaced earlier during the Baluwatar land scandal, when the names of UML leader Bishnu Paudel and his son Navin Paudel were linked to the purchase of disputed government and guthi land. While the Commission for the Investigation of Abuse of Authority filed corruption cases against multiple individuals, the Paudel side was spared after returning the land to the government.

Now, a strikingly similar situation has emerged again — this time over state-funded foreign medical treatment taken by senior political figures despite legal restrictions already being in place.

How the controversy began

Before 2 October 2018, Nepal had a long-standing practice where the state covered foreign medical treatment expenses for sitting and former high-ranking officials, including prime ministers, presidents and ministers, through Cabinet decisions.

But growing criticism over misuse of public funds forced the KP Sharma Oli government to introduce the Public Health Act on 2 October 2018.

The law clearly stated that the state could no longer bear expenses for foreign medical treatment for any individual, including sitting or former constitutional office holders.

From that point onward, anyone — including the prime minister or president — could seek treatment abroad using personal funds, but reimbursement from the state treasury was prohibited.

Ironically, the very person who led the government that introduced the law was KP Sharma Oli himself.

The loophole that kept the payments alive

Despite the new law, payments from the state treasury did not stop.

Between 2019 and 2023, former President Ram Baran Yadav reportedly received Rs 6.525 million in multiple installments.

KP Sharma Oli himself, while serving as prime minister, received around Rs 12.3 million in Bhadra 2076 and another Rs 11.6 million in Asoj the same year, taking the total to nearly Rs 23.9 million.

Former Prime Minister Jhalanath Khanal received Rs 8.139 million in Asar 2078.

Former Home Minister Narayan Kaji Shrestha and former Finance Minister Barshaman Pun also received payments from the state treasury for treatment abroad.

The payments continued because governments exploited a loophole.

While the Public Health Act prohibited direct payment for foreign medical treatment, an older financial assistance procedure still existed. That old mechanism allowed the state to provide “financial assistance” or “relief” to current and former high-ranking officials.

Successive governments used that old provision to bypass the spirit of the law.

Instead of officially categorising the money as “medical treatment expenses,” the payments were approved by the Cabinet under the label of “financial assistance.”

Supreme Court shuts down the ‘backdoor’

In 2023, a group of lawyers filed a writ petition at the Supreme Court arguing that the loophole being used by political leaders was unlawful and unconstitutional.

The petition demanded the cancellation of the old procedure, an end to state-funded foreign treatment for VIPs, and a policy prioritising treatment inside Nepal.

On Baisakh 14, 2083, the Supreme Court delivered what has widely been viewed as a landmark constitutional verdict.

A five-member constitutional bench led by acting Chief Justice Sapana Pradhan Malla, alongside justices Kumar Regmi, Dr Manoj Kumar Sharma, Saranga Subedi and Abdul Aziz Musalman, ruled that Clause 12.1 of the procedure used to distribute state funds for foreign treatment was unconstitutional.

The court ordered the provision scrapped entirely. The verdict made it clear that no directive or procedure could stand above Section 30 of the Public Health Service Act, 2018.

The court also ordered that from now onward, no sitting or former president, prime minister or other high-ranking office holder could receive even a single rupee from the state treasury in the name of “financial assistance” or “relief” for foreign medical treatment.

It further instructed the government to ensure treatment arrangements within Nepal’s domestic hospitals.

One exception remains

The Supreme Court, however, left intact a separate provision under the President and Vice-President Remuneration and Facilities Act, 2017.

Under that law, sitting presidents and vice-presidents may still receive limited foreign treatment support if treatment is impossible within Nepal and a medical board makes a special recommendation.

Outside that narrow exception, the court ruling effectively made all such payments made after 2 October 2018 legally questionable.

Pressure rises after legal risk emerges

The verdict also opened the legal path for the Commission for the Investigation of Abuse of Authority to pursue corruption investigations against those who received state funds despite the legal prohibition.

Complaints were subsequently filed at the anti-graft body seeking investigation into KP Sharma Oli and others.

As pressure on the CIAA increased, reports have now surfaced that the UML returned more than Rs 38.6 million to the state treasury in a lump sum.

Mainstream media outlets including Onlinekhabar and Naya Patrika have published reports citing multiple sources claiming that the amount has already been returned.

The disclosure has strengthened public suspicion that returning the money is being used as a political shield against corruption prosecution — much like the Baluwatar land case, where the return of disputed assets ultimately protected powerful political figures from legal action.