Monday, June 13 2005 18:20 Hrs (IST) - World Time -

Kathmandu: Nepal's Royal Government has plunged into controversy following reports that King Gyanendra's deputy and his wife were among blacklisted defaulters who failed to pay back loans obtained two decades ago, costing the treasury losses worth over 20 million Nepalese rupees.

In two separate reports, The Kathmandu Post daily said that Tulsi Giri, vice-chairman of the Council of Ministers and his wife Sahara had obtained loans, which they never paid back.

Sahara obtained loans some 21 years ago for her trading company from the then State-owned Nepal Bank Limited, the daily said in a report today (Jun 13, 2005). General Electronics, an electronic goods trading firm in which Sahara and Tulsi's cousin Subodh Giri had shares, has been blacklisted for failing to repay Rs. 4.12 million to the bank, it claimed.

Two days ago, the daily had published another report claiming that Tulsi, a royalist hardliner who favoured military solution to the Maoist insurgency, had obtained a loan of Rs. 17.4 million from the bank in 1986, before leaving Kathmandu for Colombo.

During his self-imposed political exile, Giri had stayed in Sri Lanka and then in Bombay and Bangalore for the next 20 years before the King picked him up for the top post following the February 1 power grab.

The daily also said that during his days in Nepal, Giri was the chairman and shareholder of The Himalayan Plastic Pvt. Ltd, which had obtained Rs. 2 million in loan with him as guarantor. The company never paid back the money it took as loan from the bank, it said.

Interestingly, Finance Ministry had decided last week to ask concerned Ministries to boycott blacklisted defaulters without knowing that Giri was one of them. The royal Government has decided to bar defaulters from assuming any responsibilities in public posts.

But later, the Finance Ministry put on hold its earlier decision to send names of the defaulters to other Ministries to boycott them.

The Government has not yet formally denied the allegation against Giri.

Speaking to reporters at a function, Giri refused to resign from the top post over the allegations, saying he will not quit simply because his name was among blacklisted persons.

"First, let the bank contact me, then I will decide in the matter," he said.