September 2: The government has formed a committee to investigate the alleged involvement of Bhishma Dhungana, chairman of the Securities and Exchange Board of Nepal (SEBON), in illegal purchase of the share of Sarvottam Cement in the name of his daughter.

With the formation of the probe committee, Dhungana has been suspended from his post. The committee can recommend his removal from the post if he is found guilty.

The cabinet meeting held on Wednesday (September 1) formed a three-member investigation committee under the chairmanship of former high court judge Anantraj Dumre. Narayan Prasad Poudel is an expert member of the committee and Arjun Kumar Khadka, joint secretary of the Nepal Law Commission, is another member.

After the meeting, Minister for Law, Justice, and Parliamentary Affairs Gyanendra Bahadur Karki said that the committee was formed in accordance to sub-section 7 of section 7 of the Securities Board Act 2063 BS.

As per the existing laws, if the chairman is found to have caused loss to the board, the Government of Nepal can form a committee of inquiry. The government has said that the necessary investigation has been started as there is a provision to remove the chairperson upon the recommendation of the probe committee.

It has been found that Dhungana’s Daughter Rebecca had purchased shares of Sarvottam Cement against the law. Altogether 11,912 units of shares of Sarvottam Cement were found to be registered in the name of Rebecca Dhungana, daughter of SEBON chair Bishma Raj Dhuganna, and the same number of shares is also found in the name of Sushila Kumari Bohora, wife of Chandra Singh Saud, general manager of the Nepal Stock Exchange.

The government was under pressure to investigate after Dhungana, chairman of the Securities and Exchange Board, bought shares in the name of his daughter and Chandra Singh Saud, CEO of Nepse, in the name of his wife. It is estimated that the price per share will be around Rs 750 when Sarvattam issues an IPO through book building process. The duo had purchased the shares at Rs 250 per unit.

Saud, the then chief executive officer of the Nepal Stock Exchange, has resigned from the post to facilitate investigation after it was revealed that he had purchased shares in the name of his wife.

However, Dhungana has been reluctant to resign. This issue was also discussed in the Finance Committee meeting of the Parliament.

The Ministry of Finance had sent a letter to the Securities and Exchange Board of Nepal (SEBON) on July 29 and the Nepal Stock Exchange (NEPSE) on July 29 to submit a clear, factual answer within three days. The Ministry of Finance had sent a letter to the Chairman of SEBON and the General Manager of NEPSE seeking clarification regarding the issue. The finance ministry said it was investigating the matter but has not reach a conclusion.

Finance Minister Janardan Sharma has been saying that action will be taken against the two if they are found guilty.