Intensified Investigation into Passport Procurement Contract
Kathmandu has witnessed a significant escalation in the investigation into alleged irregularities in a passport procurement contract. The Commission for Investigation of Abuse of Authority (CIAA) has taken decisive steps to address these concerns, leading to the arrest of several individuals involved in the process.
On Tuesday, Director General Tirtha Raj Aryal and Director Sunil Kumar KC were arrested. The following day, Manindra Raj Malla, a Nepali agent of the German company Muehlbauer ID Services GmbH, and Tulsi Prasad Acharya, the department's former accounts officer, were also detained. The Special Court has approved their continued custody, with Suresh Neupane, spokesperson for the anti-graft body, confirming that four individuals have been arrested as part of the investigation.
According to a CIAA source, investigations are currently underway against more than 35 individuals suspected of involvement in the passport contract irregularities. A CIAA official revealed that Siddhartha Thapa, the Nepali agent of another German company, Veridos, is currently missing. The official stated that the suspects were taken into custody due to the risk of evidence destruction or flight. Investigations are also examining the roles of senior officials from various government departments involved in the contract process.
The CIAA has uncovered indications that legal provisions were manipulated from the start when the passport procurement and printing contract was awarded. The commission is also looking into allegations that the quality of the passports did not meet contractual standards and that the contractor failed to ensure the agreed level of functionality and reliability. "We are also examining suspicions that the company awarded the passport contract did not fulfill its obligations under the agreement due to collusion," the official said.
The CIAA has preliminarily claimed that irregularities involving nearly Rs8 billion may have occurred in the passport printing contract. Statements have already been recorded from over 20 individuals associated with the government and the companies involved in the contract. As part of the investigation, four people have been taken into custody and are being questioned.
Key Details of the Passport Procurement Agreement
On June 6, 2025, the Department of Passports awarded two German security printing companies, Veridos GmbH and Muehlbauer, for the execution of the eMRTDS system. This included pre-enrolment, enrolment, data management, and delivery systems, along with eMRTDS booklets with personalization, quality control, and packing systems.
Soon after the agreement was signed, complaints were lodged with the commission. A similar complaint was also registered at the Prime Minister's Office (PMO). Recently, the PMO showed interest in the decision made by the KP Oli government. Its technical team visited the Department of Passports and began an investigation, according to an official at the PMO. The team found numerous anomalies in the procurement process, including uncertainty over passport supplies, with the existing stock sufficient to meet demand for only about three weeks.
"After thoroughly examining the situation, we found that passport stocks were running low and that the German companies were not ready to supply new passports once the existing stock was depleted. With the contract with the French company already expired and the new German firms unable to deliver passports on time, we anticipated a looming crisis and immediately took up the matter with the CIAA and Foreign Minister Shisir Khanal," said the official, requesting anonymity because he was not allowed to talk to the media.
Escalating Concerns and International Involvement
A team of senior CIAA officials visited the Prime Minister's Office on Monday and questioned Foreign Secretary Amrit Bahadur Rai, Aryal, KC, and other officials about the passport procurement process. Local representatives of the German companies were also present in the meeting. German Ambassador to Nepal Udo Volz was called for the discussion as the German government holds a stake in Veridos, the company that secured the largest share of the passport supply contract. Volz was asked to stay for hours.
An official at the Prime Minister's Office, however, said that the ambassador had arrived without an appointment and without observing due protocol, and that the office merely registered its objection to the breach of protocol. An official privy to the developments said Volz, in a meeting with ambassadors of European countries in Nepal, had expressed dissatisfaction with the PMO's actions
The arrests followed the questioning of the officials. As per last June's agreement, the German companies will deliver 6.4 million biometric or e-passports to the government of Nepal for the next five years. The first package is associated with pre-enrolment, enrolment, data management, and delivery systems, while the second system is associated with personalisation, quality control, and packing systems.
Ongoing Challenges and Criticisms
As per last year's agreement, the German companies had to complete the data migration, installation of the personalisation centres in all 77 districts and Nepali missions abroad, and deliver passports by December-end. The contract with IDEMIA-now known as IN Smart Identity France SAS-was valid until December. IDEMIA has been providing biometric passports to Nepal since November 2021.
But before December, when the stock began to run low, the government led by Sushila Karki procured 700,000 passports from IDEMIA to address the shortfall. Even as the PMO started taking interest in the deal, officials at the Department of Passports assured Khanal that they are ready to go live within a couple of weeks or as soon as the stock passports procured from IDEMIA clear out completely.
The technical team from the PMO found a series of irregularities in the passport procurement process, including the splitting of the tender into two packages, compromises in the technical and financial evaluation process, and delays by two German firms in migrating the biometric data of around 20 million Nepalis to a new system.
In order to ensure safe migration of the data, the two German companies had to set up three separate data centres of 35 terabytes each to store details of 20 million Nepalis, but they failed to complete them until the designated date, one investigating official said. However, the Department of Passports (DoP) told the PMO team that it is actively migrating the old biometric data into the new system using scripts, checks, and safeguards to ensure proper transfer.
"In any major migration and deployment, there will likely be challenges. The team has a multi-week plan to gradually test and roll out the system. Printing capability and enrolment processes have already been tested at the DoP and the DAO Kathmandu, and testing at a mission in Riyadh is planned," DoP officials said during the PMO discussion on Monday.
Additional Concerns and Financial Burden
The PMO team also questioned the need to replace the existing passport management system, arguing that the current infrastructure could remain functional for another five years. Officials estimated that replacing the system could impose an additional burden of more than Rs4 billion on the state without significant service improvements.
The tender was awarded without technical auditing because the present systems have a life of five years and no need to replace, the officials said, as per the 2700001 ISO system and its compliance, the present technical system can still work for over 5 years. So replacing the old system with a new one has incurred over Rs4 billion to the state," the official said.
Since there is no difference between the technical service and support being provided by the old French and new German companies, there's no need to pay Rs4 billion extra, they said, alleging that the quality of passports provided by the German company Veridos was compromised too. The passports provided by the French firm are 100 GSM in weight and waterproof, but the passports delivered by the German company have 90 GSM in weight and are not waterproof.
The DoP has already received half a million passports from the German company, including some for testing, but the quality of the passport is not the same as the French-delivered copies, they said. Investigators further raised concerns over the quality of passports supplied by Veridos, claiming that they were inferior to those previously supplied by the French contractor. With fewer than 100,000 passports in stock-enough for only about three weeks of demand-the PMO feared a looming supply crisis.
The PMO's review of procurement documents also found alleged discrepancies in the tender evaluation process. Officials claimed that mandatory technical requirements, including server specifications and printing infrastructure, were relaxed to accommodate the winning bidders despite objections raised during the procurement process. The PMO also found that some members of the 15-member technical committee had not signed the final evaluation reports.
"Investigations have progressed significantly, and several findings appear to be dubious," said the official at the commission.