Government audit highlights dubious accounting practices by emergency rescue agencies, hospitals
Apr 14, 2019-
The 56th annual audit report of the Office of Auditor General has exposed dubious accounting practices by 11 firms and four hospitals that were involved in the emergency rescue and treatment of foreigners and has asked the concerned department to conduct further investigation and take action against them.
On July 30 last year, a government fact-finding committee had submitted a 700-page probe report to late Tourism Minister Rabindra Adhikari which stated that unscrupulous operators had been pocketing thousands of dollars from insurance companies by making multiple claims for a single chopper ride or pushing trekkers to agree to airlifts for minor illnesses. It also involves hospitals where the trekkers had been treated.
The audit report released on Friday said that the government probe committee had pointed out that one company had conducted 1,130 rescue operations from January 2015 to May 2018 and earned Rs113.2 million from the services. However, the Inland Revenue Office, Balaju record shows that company had not made any transaction in recent years but still earned a hospital income of Rs47 million in the fiscal year 2016-17. In the fiscal year 2017-18 (up to May), the company earned Rs33 million.
“This shows an under accounting of Rs39.44 million,” the audit report said. The audit has suggested that the issue needs to be investigated to raise Rs9.86 million tax including the fine and interest from the company.
The committee said in its report that there had been widespread complaints of dishonest companies serving adulterated food to make tourists sick so they can be evacuated by helicopter and in turn, receive commissions from helicopter companies and hospitals and clinics.
The audit said that three casinos have been operating without licences. The audit has asked the government to raise Rs40 million from the three casinos as an annual licence renewal fee. The casino regulation says casino operators have to pay royalty to the Tourism Ministry within two months after the beginning of the fiscal year.
If an operator fails to pay the fee by the deadline and pays within the next three months, the government will charge 15 percent penalty. And, if the operator fails to pay the fee within the extended deadline, an additional 15 percent (combined 30 percent) penalty will be charged.
The audit said that among the three casinos, two casinos have not settled Rs87.39 million in royalty fees and has suggested raising the outstanding dues by slapping penalties as per the law.
The report said that one casino licence holder has been operating mini casinos in Mahendranagar, Birgunj, Biratnagar and Kathmandu by renewing the licence for only one location. According to the report, a licence allows the operation of a mini casino in one location only.
The audit has asked the government to raise Rs15 million from the company, with the requirement of Rs5 million to renew the licence annually. The report said that some casinos that have not settled the government’s dues have been operating gaming houses in new names and asked to monitor and take action against them.
Based on the report of the Department of Tourism, the audit finding shows that one casino made financial details showing payment of Rs33 million in 2015-16, Rs35.2 million in 2016-17 and Rs37.5 million in 2017-18 for operating a casino in Kathmandu and mini casinos in Mahendranagar, Biratnagar and Birgunj. But based on the record of inland revenue office in New Road, Kathmandu, it has only deposited Rs15 million.
The report has asked the government to investigate the details and include the said Rs88 million as government income by charging an additional Rs22 million (25 percent of the fine).
Civil Aviation Arrears
The audit report said that one airline company has withdrawn its Nepal operation since September last year without paying Rs218.6 million in landing parking, airport development fees and others. The report said that the government should hold the concerned official of the Tribhuvan International Airport accountable as the official approved to release the plane without the company paying the outstanding dues.
The audit report said that the one company had signed an agreement to operate a new taxi parking facility at 50 ropanis of land belonging to the Civil Aviation Authority of Nepal.
On September 2, 2010, the Civil Aviation Authority of Nepal and the company had signed an agreement to operate the car parking facility under the build, own, operate and transfer modality for 30 years.
However, going against the agreement, the company has constructed the underground parking and built a 52 feet tall building against the approved design of 37 feet. The audit has recommended an investigation on the violation of the contract. The report said as per the agreement, the company has to pay Rs7.8 million as a land lease fee annually to the Civil Aviation Authority of Nepal but it has not settled any amount as of now.
Chinese Aircraft Woes Continues
The audit report said that Chinese-made planes of the Nepal Airlines Corporation have been incurring heavy losses for the state-owned national flag carrier every year since it was purchased. The report said that the Chinese-made MA60 aircraft made an income of Rs206 million this fiscal year. However, its operating and other indirect expenses were Rs313 million and Rs212 million respectively, incurring total losses worth Rs316.4 million annually. The corporation has been operating two MA60s.
Similarly, from the Y12e, the corporation earned Rs25 million in income this year. However, its operating and indirect expenditure were Rs188.5 million and Rs96.3 million respectively. In total, losses from the Y12e operation stood at Rs289.7 million this year.
Last fiscal year, losses from MA60 aircraft had amounted to Rs66.7 million, while losses from Y12e amounted to Rs39.4 million. Last year, the audit pointed out that the corporation did not seem to have made a solid working plan to operate these aircraft at a profit. This year’s report said that nothing have changed despite the audit’s recommendation given last year.
Published: 14-04-2019 08:40