KATHMANDU, Nov. 2: A complaint filed with the Central Investigation Bureau (CIB) of Nepal Police on May 21 alleged that payments for milk sold to the state-owned Dairy Development Corporation (DDC) were being deposited into employees’ bank accounts instead of those of farmers.
Following an investigation, the CIB found that more than Rs 120 million had allegedly been embezzled, implicating former DDC General Manager Sanjiv Jha and other employees.
The CIB arrested eight people after finding evidence that employees had collected money directly from dairy farms. Acting on the complaint, the bureau raided DDC’s central office in Lainchaur and its Kathmandu Dairy Office in Balaju on May 27, seizing relevant documents.
The documents showed that part of the payments made by DDC for milk collected from farmers had been diverted into employees’ accounts. According to a CIB investigating officer, employees arranged for farmers to receive payments at inflated rates and later transferred portions of the money into their own accounts.
Investigators found that employees received payments through 17 agricultural and livestock cooperatives. The CIB alleges that proceeds eventually reached former general manager Jha, although money was not deposited directly into his account.
CIB chief and Additional Inspector General Uma Prasad Chaturvedi said investigators had conducted an extensive probe into the alleged corruption.
The bureau is preparing to submit its findings to court, including details of why farmers were not receiving the correct payments and how the money was diverted. After nearly four months of investigation, the CIB says it has uncovered an organised arrangement involving DDC employees. Some suspects remain at large.
How the scam worked
Dairy and agricultural cooperatives collect milk from farmers and supply it to DDC. Payments are calculated based on the milk's fat and solid non-fat (SNF) content, rather than volume alone. Fat commands a higher price than SNF.
DDC settles Rs 120 million dues to dairy farmers
DDC employees allegedly withheld accurate information about the fat and SNF content of milk supplied by farmers. Farmers were not given proper test results or details of how their milk was assessed.
Employees then contacted farmers, claiming they had increased the recorded fat content to secure higher payments. They asked farmers to return the additional money.
In another method, employees told farmers that their milk had quality problems and that they had mixed it with another supplier's milk to increase the recorded quantity. They then demanded the payment for the additional volume.
Bhairavpur Buffalo Livestock Farm was one such case. The farm supplied 1,000 litres of milk, but DDC employees allegedly said the milk had quality problems and would not qualify for payment. They offered to add another 1,000 litres from a different supplier, raising the recorded volume to 2,000 litres. The employees then demanded the payment for the additional 1,000 litres.
Fearing they would lose payment for their own milk, the farmers agreed.
The CIB is currently investigating cases dating back to 2021. Its findings show that around Rs 50 million was allegedly embezzled during Jha's tenure as general manager alone.
Who received the money?
Investigators identified 17 agricultural and livestock farms through which DDC employees allegedly diverted payments.
They include Sushant Livestock Centre, Laligurans Livestock Farm, MNMB Buffalo and Agriculture Farm, Srijana Livestock and Agriculture Farm, Jayanari Animal Development Farm, Sakriya Mahila Dairy Producers Cooperative, Sarlahi Integrated Agriculture and Livestock Farm, Sarlahi Dairy Industry, Jaipriya Agriculture and Cooperative, Annapurna Multipurpose Cooperative, Jorpati Dairy Producers Cooperative, Simle Milk Purchase and Sales Farm, Rapti Hariyali Dairy Producers Cooperative, Sarlahi Agriculture and Livestock Farm, Pant Livestock Farm, Sodari Cow Farm and Bhairabpur Buffalo Livestock Farm.
Laligurans Livestock Farm alone transferred Rs 44.2 million into employees' accounts.
Investigators found that substantial amounts were channelled to accounts linked to Ramkewal Raya, a close associate of former general manager Jha. Another employee, Ritesh Rai Yadav, who died in an accident, received Rs 18.6 million from Laligurans Livestock Farm.
His account also received Rs 6.91 million from Bhairabpur Buffalo Livestock Farm. In total, Rs 27.8 million from agricultural farms was deposited into his account.
Ritesh and Ramkewal were family members. Ramkewal had also secured a position at DDC for his son, Jitendra Kumar Yadav. Farmers allegedly deposited Rs 2.7 million into Jitendra's account.
Investigators found that Ramkewal received Rs 11.4 million from various agricultural farms. Jitendra's account received Rs 13.2 million. Both have been arrested.
Junior technician Manhari Sharma received Rs 11.5 million from agricultural farms, including payments from Jorpati Dairy Producers Cooperative in Bharatpur.
Junior technical assistant Bijay Kumar Yadav allegedly received Rs 4.613 million illegally from Simle Milk Purchase and Sales Farm.
Another DDC employee, Shivananda Rai, collected Rs 16.9 million from various agricultural farms under the pretext of daily wages, according to CIB sources.
Another arrested suspect, Nabin Rai Yadav, allegedly received Rs 19.3 million.
The CIB has arrested eight suspects so far and is searching for others allegedly involved in collecting money from farmers and causing losses to DDC.
Chaturvedi said the prime minister was also following the investigation. He said investigators had uncovered how employees, from senior management to lower-level staff, allegedly worked together to divert farmers' payments.
All those arrested are being investigated on charges of criminal breach of trust and organised crime. The Kathmandu District Court has authorised their detention for seven days for further investigation.
