Nepal Shaken by Fake Bhutanese Refugee Scam

In early June, a district court in Kathmandu, Nepal, sent a stern anti-corruption message by ordering former ministers and top-ranking bureaucrats into detention for their alleged involvement in a fake refugee document scam that has grabbed the nation’s attention since late March. It was a striking move by the judiciary in a country where corruption runs rampant and political leaders remain largely immune from prosecution.

The Kathmandu District Court’s preliminary judgment came three weeks after prosecutors filed a case against 30 people, many of them members of Nepal’s small elite, for their alleged involvement in defrauding and extorting over $2 million from Nepali citizens, promising to send them to the United States in the guise of Bhutanese refugees exiled in Nepal. While 12 of them remain on the lam and two of the accused have been released on bail, those in judicial custody include Nepal’s former Deputy Prime Minister Top Bahadur Rayamajhi and former Home Minister Bal Krishna Khand. The accused have been charged with treason, organized crime, fraud, and forgery.

A total of 875 Nepalis were reportedly hoodwinked by syndicate members who charged them between 1 million rupees to 5 million rupees ($7,615-$38,000) to provide fake refugee documents that would help them fly to the United States, an explosive investigation by journalist Devendra Bhattarai in the Nepali newspaper Kantipur revealed in March. Their names were reportedly added to a 2019 government report, which is yet to be released, that aimed to resolve various issues pertaining to the remaining Bhutanese refugees in Nepal.

Corruption scandals aren’t new to Nepal—politicians have been linked to multiple incidents around real estate and business procurement. The South Asian nation ranks 110 out of 180 countries and regions and was scored 34 out of 100 in Transparency International’s 2022 Corruption Perceptions Index, indicating widespread graft. The revelation of the scheme has deepened mistrust of politicians—and led to calls for sweeping reform.

“This is a prime example of misuse of power for personal gains—this is corruption at its peak,” Padmini Pradhananga, the president of Transparency International Nepal, told Foreign Policy. “To dupe their own citizens under the pretext of refugees is a crime against the state. This has harmed Nepal’s image—it’s a global embarrassment.”

More than 100,000 ethnic Nepalis, known as Lhotshampas—who previously made up about one-sixth of Bhutan’s population—fled to Nepal in the early 1990s following the Bhutanese government’s assimilation campaign. The implementation of Bhutan’s “one nation, one people” policy resulted in the “mass denationalization of many Lhotshampas,” ultimately leading to their expulsion from the country.

By 1992, tens of thousands of ethnic Nepali refugees from Bhutan, known for its “gross national happiness” index but run by an autocratic monarchy, had settled in camps run by the U.N. refugee agency, UNHCR, in eastern Nepal. Between 2007 and 2016, more than 113,500 Bhutanese refugees were resettled in third countries, including the United States, with more than 6,000 of them still remaining in Nepal, according to the agency.

The syndicate involved in the fake refugee documentation scam reportedly swindled victims, promising them a shot at the American Dream—the United States has taken in the most

Bhutanese refugees among the eight countries where they were resettled. But dozens of Nepali victims started reporting to the police after the promises weren’t met, prompting Nepali law enforcement officials to start a probe. According to the investigative report, multiple people from different districts across Nepal submitted evidence to the police, including bank receipts of amounts they handed to the fraudsters and fake refugee cards.

The syndicate reportedly tampered with the 2019 report to add the names of 875 Nepalis as Bhutanese refugees, claiming they were not included or left out from the registration process and were now seeking third-country resettlement. However, the coordinator of the government taskforce responsible for the report told Kantipur that he was “unaware of any tampering or alternation.”

Rayamajhi, who was the deputy prime minister between 2015-16, has been accused of facilitating the scam, while Khand, who served as home minister from July 2021 to December 2022, allegedly created a fraudulent document similar to the original 2019 report approved by the Council of Ministers, according to media reports. Khand climbed the ranks in the Nepali Congress, leading the party’s youth wing, while Rayamajhi is associated with the Communist Party of Nepal (Unified Marxist-Leninist) and has been suspended following the allegations.

Before switching political allegiance, Rayamajhi was affiliated with the Maoist faction that launched a decadelong civil war that began in 1996 and killed more than 13,000 people. The party fought for radical sociopolitical changes and hoped to uplift the marginalized, but many of the former guerillas, who later turned to mainstream politics, have been mired in corruption afterward. Prime Minister Pushpa Kamal Dahal, who led the Maoist insurgency and now heads the current coalition government, has vowed to probe into the fake refugee scandal.

A U.S. State Department spokesperson told Foreign Policy that the Bhutanese refugee resettlement program ended in 2016 and there were “no significant concerns regarding fraudulent activities” associated with that process. The spokesperson added that the United States hoped Nepali authorities would hold the perpetrators involved in the refugee scam accountable and deter future corruption.

UNHCR Nepal also said that the resettlement program ended that year and will not resume again. It’s unclear if any of the scam victims actually made it to the United States.

More than 7,500 miles away, resettled Bhutanese refugees who are now U.S. citizens said they were following the situation unfolding in Nepal with shock and surprise. They say they’ve mostly been caught off guard by the alleged involvement of prominent Bhutanese rights leader, Tek Nath Rizal. He was among the 16 sent to detention in June.

Rizal, a former member of Bhutan’s National Assembly and Royal Advisory Council, was sentenced to life in 1993 for nine offenses, including treason and “sowing communal discord” between the country’s different communities. He was granted amnesty in 1999 and has since been advocating for the rights of Lhotshampas in Bhutan and Nepal.

Narayan Phuyal Sharma, who moved to the United States under the refugee resettlement program, was among the thousands who crossed from Bhutan to Nepal in 1992. Now in Philadelphia, he told Foreign Policy that the Bhutanese diaspora has been closely watching Rizal’s case. The community also sent a letter to Nepal’s Ministry of Home Affairs on June 12 appealing for Rizal’s fair trial. They claimed Rizal was “led to believe the proposal of these government functionaries was a legitimate state response for the Bhutanese refugees.”

“The person who has invested much of his life in the Bhutanese refugees cause has been accused in this case,” said Sharma, who has a background in law. “We believe the higher court will give justice to Rizal, but the damage [to his reputation] has already been done. It’s an irreparable loss.”

Sharma also said that the Bhutanese government could use the fake refugee document scam to dismiss their cause. Bhutan maintains that most of the refugees left voluntarily and renounced their citizenship, and they would need to reapply for citizenship if they were to return. However, none of the exiled have returned to their homeland so far, and there have been no high-level repatriation talks between Bhutan and Nepal since 2003.

“The government of Bhutan always said we are not genuine people, and they will use it in favor of the narrative,” Sharma said of the scam. “The government of Nepal, to one extent, has contributed to our dehistoricization. On what moral standing will they talk with Bhutan on the solutions for those who remain in the camp.”

In Nepal, the country’s anti-corruption crusaders say many politicians have lost their moral compass. High-level officials, including ministers, in almost all governments have been embroiled in corruption scandals, regardless of the ruling party—from earthquake aid money to the procurement of COVID-19 vaccines. Nepalis’ trust toward their elected representatives has gradually eroded over time, as they have witnessed officials prioritizing personal gains even during the most challenging times. Red tape and mismanagement of aid money caused delays in reconstruction efforts following the devastating 2015 earthquake, impacting thousands of people. Meanwhile, the allocation of contracts for Chinese medical equipment to those with close ties with the government at the onset of COVID-19, and later questionable practices related to vaccine procurement from India have further made Nepalis dubious of those in power.

In May, crowds in Kathmandu joined a public protest against corruption and demanded accountability against those involved in the fake refugee scam.

Deepak Adhikari, a journalist who has reported on both the exiled Bhutanese and Nepal’s corruption, told Foreign Policy that the impunity received by politicians and politically exposed persons encourages high-level corruption in the country. An investigation this year by Adhikari and Rudra Pangeni, also a journalist, exposed massive corruption involving top officials in an aircraft procurement deal for the state airline. None of the accused have been charged, and the investigation has dragged on for four years.

In 2020, former Communication and Information Technology Minister Gokul Baskota was allegedly caught on tape demanding bribes from a businessman in exchange for a government deal. He resigned from his post and no charges were filed. However, he got elected as a parliamentarian in last year’s election.

“Their chutzpah is bewildering,” Adhikari said of politicians allegedly involved in the refugee scam. “They thought they’d be untouched—it’s because of the immunity and impunity they receive.”

While the refugee scam exposes deep-rooted corruption in Nepal, it also shows the desperation of people willing to go to huge lengths to leave the country. More than 1,000 Nepalis are said to leave the country every day, with unemployment at 11.1 percent—one of the highest in South Asia—and the monthly minimum worker wage at just 15,000 rupees ($115). Many of them head to the Gulf countries and Malaysia despite instances of excruciating work conditions and labor rights violations, while their remittance supports the country’s economy. Those paying hefty sums in exchange for fake refugee documents in hopes of migrating to the United States for a better life indicate “they see no future in Nepal,” Adhikari said.

Profiting from the public’s desperation shows how far politicians are prepared to stoop, Pradhananga from Transparency International Nepal said. She added that corruption has persisted from one government to another regardless of the ruling parties, and it’s only been on the rise because “those in power aren’t answerable to the state or people,” but that this case may bring Nepal closer to accountability.

In the past years, new political parties such as the Bibeksheel Party and Rastriya Swatantra Party have emerged in Nepal. The fresh faces have been seen as an “alternative force,” and they have vowed to challenge the country’s established political leaders. They also pledged to combat corruption in their election agendas. During the 2022 general elections, the Rastriya Swatantra Party, helmed by popular former television journalist Rabi Lamichhane, gained significant support from voters and even became part of the Dahal-led government’s cabinet. But then came Lamichhane’s citizenship debacle—in January, the Supreme Court said he hadn’t reobtained Nepali citizenship after renouncing his U.S. citizenship, as Nepal doesn’t allow dual nationality. Then, in April, came an alleged bribery scandal involving one of the Rastriya Swatantra Party lawmakers, whom the party suspended.

For many, the scandals serve as a stark reminder of the pervasive corruption that plagues Nepali politics. They underscore the growing disillusionment toward politicians whom Nepalis trusted to be different and bring positive changes. But with each election, they’re mostly left with is disappointment and a sense of déjà vu.