The government has suspended Bhishma Raj Dhungana, chairman of the Securities Board of Nepal, who was involved in the illegitimate purchase of shares of Sarbottam Cement. The government has also formed a judicial inquiry committee.
A meeting of the cabinet held on Wednesday formed a three-member investigation committee. Joint Secretary of the Nepal Law Commission Arjun Kumar Khadka and Narayan Prasad Poudel are members of the committee formed under the coordination of former High Court Judge Anantraj Dumre. The cabinet decided to suspend Dhungana citing the possibility of him influencing the investigation process or destroying evidence.
The Ministry of Finance had sought clarification from Dhungana regarding the purchase of shares of Sarbottam Cement in the name of Dhungana's daughter. The first IPO by the Book Building process to be brought by Sarbottam Cement is in controversy at recent times in the investor community. Sarbottam Cement has already concluded the issue manager signing ceremony for the IPO Book Building process. While 40% of the shares will be sold to institutional investors, 60% will be issued to the general public. The company has proposed to issue an IPO worth 60 lakh shares.
Dhungana's daughter Rebeka Dhungana, who lives in the US, has been found to have bought 10,000 shares. Rebeka has been allegedly found to have bought 10,000 shares of Sarbottam after the book building system process started.
Some argue that the company handed over these so-called "golden shares" to the chairman's daughter to influence the IPO price of Sarbottam Cement. The company's IPO issue is the first of its kind in Nepal where the IPO issue price is determined via the book building method. While the procedure considers the issue price via a bidding process, the regulator has the final say.
Chief Executive Officer of Nepal Stock Exchange (NEPSE) Chandra Singh Saud also resigned recently after being accused of buying shares of the same company. Saud was found to have bought 10,000 units of shares of the Sarbottam cement in the name of his wife.