Making It Big

  After Birendra Kanaudiya took over the management, matters became uneasy. Whenever we sent one of our representatives to the mills, he would chase them away with the help of local goons. The institutions that had loaned money to us became aware of the tension between Kanaudiya and me. On 3 July 1998, a joint meeting of the lending institutions decided that ‘the company promoters, Binod Chaudhary and Birendra Kanaudiya, shall accept each other’s shares in the company, and duly notify us of the same’.

  This decision made it possible for one of us to sell our stake to the other and to dissociate himself from the company. I welcomed the move and handed over all the responsibilities and liabilities of the mills to Kanaudiya, settling my stake in the mills for just Rs 4.85 crore, although I had invested Rs 12 crore. We signed the share transfer agreement on 15 October 1999, after which I and all others affiliated with the Chaudhary Group resigned from the mills’ board of directors. Our resignations were accepted at a board meeting on 11 February 2000. We also duly notified the Company Registrar’s Office of this.

  It is no wonder I was stunned when Rastriya Banijya Bank suddenly blacklisted us two years after we had severed ties with the mills.

  What actually happened was that after we notified the Company Registrar’s Office about our dissociation from Mahalaxmi Sugar Mills, the office had written to Birendra Kanaudiya seeking verification of this development. However, Kanaudiya never sent a response. As a result, our name was not formally removed from the list of the mills’ promoters, leading to our blacklisting by Rastriya Banijya Bank, which, separately, was quite well aware that we were no longer associated with the company. After we sold our shares, all the five banks that had loaned funds for the mills had signed a new agreement with Kanaudiya transferring the management of the mills to an entity called Rohit Group. How could the banks then publicly humiliate us by associating us with the mills’ loan defaulters? These banks also sought a proposal from Kanaudiya to restructure their loan to the company, which had now ballooned to Rs 80 crore, including interest. After recovering some money from Kanaudiya in early 2004, the banks went on to restructure the loan on the condition that he repay more money within a year’s time. The lenders had also agreed to let him take over the management.

  It may also be noted here that on 6 December 1999, the bankers had decided to conduct a field study to get the real picture of the financial health of the mills. Their report on December 27 in the same year stated that ‘Kanaudiya has worked hard to bring the company to its present level . . . and the future of the company looks bright if it continues in this way.’ It was based on this report that Rastriya Banijya Bank issued a no-objection letter on 7 January 2000 so that Birendra Kanaudiya could take loans from other banks and financial institutions. This letter automatically deactivated the liquidity guarantee I had given to the project.

  I filed a petition in the Supreme Court, saying we had been illegally blacklisted. Kanaudiya too issued a public notice in the Kantipur daily on 28 September 2004, declaring that the Chaudhary Group was not associated with the mills. It was on 18 January 2006 that the Supreme Court ruled in our favour.

  Nepal Rastra Bank, the Credit Information Bureau and the five banks that had issued the loan, then filed a writ at the apex court, appealing for a review of the verdict. That court again ruled in our favour, stating there were no flaws in the earlier verdict. With my legal position further consolidated, I approached the Credit Information Bureau, urging it to remove our names from their blacklist. They said that could not be done until they received a copy of the court’s verdict So I produced my copy. The bureau then removed our names from the blacklist on their website, saying it would be some time before they could erase it from their records.

  Still, this battle was not over for me.

  Some parliamentarians called into question the verdict of the court, raising the possibility that the Supreme Court judge who had handled our case might be impeached. I had to testify before the parliamentary Public Accounts Committee, as if I were a criminal. Chitra Bahadur K.C., leader of a fringe leftist party, was chairperson of that powerful committee. However, the chairperson of the Nepal Bar Association, Shambhu Thapa, and many senior advocates, including Radheshyam Adhikari and Madhav Baskota, none of whom I knew personally or professionally, not only supported the court’s verdict but questioned the committee’s legal right to review it.

  ‘The Public Accounts Committee is not the authority to review the verdict of the Supreme Court,’ Thapa told the parliamentarians. ‘If the verdict is flawed, then the judiciary alone can rectify it. Your work is to draft laws. Nonetheless, even if you draft a new law, it cannot affect the court’s verdict since the new law can address only those cases that do not predate it. If the parliamentary committee is to review the verdicts made by the Supreme Court, then what would be the significance of the court?”

  With the legal eagles vehemently opposed to such involvement, the committee decided not to review the verdict.

  So in the end, I won that battle.

  9

  The Politics at FNCCI

  I originally chose not to join the Federation of Nepalese Chambers of Commerce and Industry. I had many doubts about the modus operandi and background of this institution. Though our companies were affiliated with the FNCCI, I did not even attend its annual general meetings.

  Mahesh Lal Pradhan wanted to pull me into the FNCCI during its elections in 1988. Mahesh Lal was running for the position of the FNCCI president against Maniharsha Jyoti of the Jyoti Group. Maniharshajee was backed by leading business families such as the Golchhas, the Dugars and the Madanlal Chiranjeelals. Mahesh Lal wanted to woo younger entrepreneurs to challenge them. However, he was not trying to mobilize younger people with a long-term vision to transform the federation; to him, it was only a strategy to win the election.

  I discussed the matter with my confidants like Vijay Shah, Kishore Khanal and Dr Gopal Shrestha. We concluded that we had to become insiders in the federation to reform it, and that opting out would not serve our professional interests. As the people who had been dominating the federation were supporting the other side, we gave our full support to Mahesh Lal and canvassed for him at different chapters of the federation across the country. Sensing the popular mood in favour of Mahesh Lal, Maniharshajee decided to pull out of the race.

  The seats reserved for the associate sector of the FNCCI were always divided up among the old and established business houses. A newcomer never got a seat. I should have got an executive post in the federation under Mahesh Lal’s leadership, going by the gentleman’s agreement between us. But, despite winning the election, he could not bring himself to challenge the tycoons who dominated the federation. His behaviour defeated the very cause for which we had got involved in FNCCI politics in the first place. I think he did not want to further annoy the Golchha, Dugar and MC groups following his victory over their favoured candidate.

  Tolaram Dugar and Madan Lal Agrawal were very active in the federation in those days. They tried to reassure me, saying I had just joined the federation and that they were currently struggling to incorporate all the older members, and would include me after the next election.

  I was disappointed that Mahesh Lal did not fully support me. He was the one who had urged me to join the federation and I had blindly supported him without weighing the pros and cons of doing so. I had even canvassed votes for him. But now that the election was over, it appeared he was trying to avoid me.

  ‘I’m not going to give up,’ I said to Dugar and Agrawal directly. ‘If someone has to quit, then you quit, or we can always go to elections again. I’m prepared to fight it out even if I get only one vote because I assume you have the power to easily defeat me.’

  It was not the first time a member of our family had been the target of these people’s injustice. Father had asked Basant to file his candidacy for a post in the federation in a previous election, considering that I showed no interest in FNCCI politics. These people had persuaded Basant
to relinquish his plans, making him the same promise they made me now. I was not going to let my family be taken advantage of in order to suit their convenience.

  I still vividly recall that balcony at Blue Star Hotel where eleven candidates were assembled to claim ten executive posts in the federation. Everyone was trying to persuade me to give up. Had I withdrawn, the election itself could have been avoided. But I was adamant. Exasperated, Madan Lal Agrawal headed to Mahesh Agrawal of Mahashakti Soap and Chemical Industries, and snatched away his application form from his hands. Mahesh could not oppose his own uncle, after all.

  Now there were ten candidates for ten positions and I became an associate member of the FNCCI. Mahesh Lal was nowhere to be seen while all this unfolded.

  I was so encouraged by this psychological victory that I decided to file my candidacy for the position of vice president at the federation in the same year. My forceful entry into the executive committee had shaken the institution. When I declared my intention to contest for the post of vice president under the associate sector, it sent shockwaves across the federation. I was putting forward my name for the vice presidency at a time when even many of the founding members could only dream of doing such a thing. Hulas Chand Golchha had been groomed for the post, but I decided to go ahead to challenge him. Some members made fun of me for daring to challenge a senior and distinguished businessman like Golchha, and I’ll admit it felt somewhat odd to oppose a man who was my father’s peer. But I ignored them.

  I asked Mahesh Lal to support my candidacy. I even tried to pressure him, but he would not give me his support. ‘As I was elected unanimously to the post of president, I can’t take sides,’ he told me. ‘You have to fight this battle on your own.’

  I was left with no other choice than to form a new group immediately, which was a daunting challenge for a person who had just entered the federation. Surya Prasad Pradhan from Butwal, who later became a lawmaker, strongly backed me. Vijay Shah, Kishor Khanal and Dr Gopal Shrestha were there, of course, to back me in the associate sector.

  Having failed to convince me to give up my candidacy, many members started to lobby against me. The immediate past president of the federation, Pashupati Giri, went all out against me. He met every member of the executive committee to lobby against me. I too intensified my own lobbying to counter him. Gradually, the tide started to turn in my favour. My opponents realized that Hulas Chand Golchha might not have the easy victory they had expected. They now devised a new strategy—to work out an amicable solution with me. Sometimes Hulas Chand would hold one-on-one parleys with me, and sometimes the entire executive committee would urge me to settle for a deal. Mahesh Lal was in a fix. He could not support Hulas Chand since he belonged to the rival faction. I had backed him during his election, but he could not support me in return as that would annoy all the big business houses.

  This was probably the first instance in the history of the federation when the election of the associate vice president attracted more attention than the election of the president itself. Suddenly, I became the centre of attention in the umbrella body incorporating the country’s foremost industrial entrepreneurs, and this attention worked in my favour. I had already registered a strong presence in the federation. It then suddenly occurred to me that if I pressed ahead with my candidacy, I might actually emerge victorious, but also stood to lose many friends in the process. That was unavoidable in politics—it would always be two steps forward sometimes, and one step back at other times. I withdrew my candidacy. I settled instead for the position of chairperson of the influential industrial committee of the federation. This was the most powerful position in the federation after that of vice president. So it was that I succeeded in rising to a very important position within the federation in a very short span of time. And, despite all the opposition I faced in the past, I never let that affect my behaviour as vice president. I played an active role in the federation, harbouring no hard feelings or biases against anyone.

  In 1990, Mahesh Lal Pradhan again filed his candidacy for the post of president at FNCCI. Laxmi Das Manandhar was his rival. Manandhar was backed by the powerful Salt Trading Group comprising the Dixit and Hem Bahadur Malla families. We had a good relationship with Laxmi Das Manandhar and Hem Bahadur Malla, and had been shareholders in Salt Trading since father’s days. However, I still supported Mahesh Lal, and Laxmi Das lost the election.

  Dr Gopal Shrestha had, however, supported Laxmi Das and was against our faction. However, once the election was over, he supported me in every way. He even joined the Chaudhary Group later on. Sadly, he is no longer with us.

  In the next election, I directly filed my candidacy for the post of vice president. One of the leading businessmen of the country, Mohan Gopal Khetan, was my rival. Perhaps he thought Mahesh Lal might persuade me to pull out of the race, but I was intransigent. Eventually, Khetan was compelled to withdraw from the race and I was elected vice president of the FNCCI unopposed.

  During my term in that position, Padma Jyoti of the Jyoti Group was the ex officio vice president of the federation in the capacity of being the president of the employers’ council from the associate sector.

  From the time I joined the FNCCI, I was actively engaged in trying to empower its district chapters. These chapters, spread all over the country, had only a ceremonial role in the federation. Though the office-bearers at the secretariat could easy solve their business problems, it was not so easy for those in the districts to do so. The Agro Enterprise Centre and the Economic Liberalization Project supported by the USAID helped me push this cause forward. The donors actually wanted to mobilize resources for the project centrally, but I came up with a plan for the institutional development of enterprises at the district level. This helped open new chapters of the federation in the districts and empower the existing ones. It also led to the modernization of the office buildings of the federation secretariat and the district chapters.

  Another important achievement during my term was an amendment to the federation’s statute. I wanted an amendment that powered the chapters in the election of the federation president and other office-bearers. For that, the chapters needed to provide at least 50 per cent of the voters. But members from the associate sector did not agree with this proposal, fearing it would end their pivotal role in federation politics. Nevertheless, we managed to secure this arrangement with the help of some like-minded friends and colleagues. That was the first time the secretariat had delegated significant powers to its district chapters. This ended the decisive role of the associate members in the elections. The district chapters could now call the shots in the federation.

  Yet another reform we introduced in the federation related to the way we went about our issues and demands. We started to be more aggressive in our approach, whether it was in dealing with the government or otherwise lobbying for our agenda. The federation even took to the streets to oppose unfair levies such as the sports and toll taxes. The media started to air our opinions. Mahesh Lal’s leadership was helpful in bringing about these reforms. He did not stop my aggressive campaigns, possibly because he wanted someone to do the work of reformation at the federation while he, as president, could take the credit. These reforms, as well as changes brought about by economic liberalization and the growing role of the private sector, raised the size and status of the FNCCI. I won many friends and supporters across the country for actively campaigning for these reforms. The strong bonds I had developed with many district chapters of the federation also made me a natural candidate for the position of president by the time of the upcoming elections in 1993. But my detractors hardly wanted to see me elected unopposed. They tried to field Padma Jyoti against me. However, he declined as his father Maniharshajee had just passed away. Hulas Chand Golchha then stepped forward to challenge me. Mahesh Lal and a few others pressured me until the eleventh hour, both directly and indirectly, to withdraw my candidacy.

  Election fever started to grip the federation. I visited the districts. Beside
s my friends such as Nirak K.C., Bipin Malla, Shashi Agrawal, Vijay Shah and Kishor Khanal, the Newar community outside the Kathmandu valley, especially Ananda Raj Mulmi, Dr Gopal Shrestha, Ashok Palikhe, Chakor Man Shakya and Rajendra Pradhan, also supported me. The Nepal Chamber of Commerce even declared me as its official candidate. The Western Chamber of Industry and Commerce, encouraged by the Pokhara chapter, also backed me strongly. However, I did not have to campaign for very long. Hulas Chand then withdrew his candidacy, citing health reasons.

  I was elected unopposed as the president of the FNCCI.

  I again applied for the top post in the federation in 1996. This time Padma Jyoti stood against me.

  Sometimes your success becomes your enemy. The more bricks I added to the structure of the federation, the more organized my detractors became. A new equation emerged against me in this election.

  The federation office had moved from a rented apartment at Tripureshwore to its own four-storeyed building at Teku. I had worked hard to mobilize funds from many sources for the construction of the new building. Everybody supported me then. The FNCCI, which had been limited to collaboration with the Punjab, Haryana and Delhi (PHD) Chamber of Commerce and Industry, now entered into partnerships with the national-level industry organizations of India. We sealed a partnership accord with the Confederation of Indian Industries and worked with them in the run-up to the signing of the Nepal–India Trade Treaty in 1996. The draft of the treaty was prepared before the end of my tenure.

  The FNCCI became an integral part of the delegations accompanying Nepal’s head of state on foreign visits, and featured on the itinerary of visiting foreign heads of state. The federation was now treated as an authorized interpreter of documents issued by the state. Foreign donors were drawn to the federation. All these reforms suddenly made the position of the FNCCI president even more desirable. Nobody realized how much hard work lay behind my achievements. My colleagues now wanted to grab my chair, by hook or by crook. They teamed up to prepare a list of future federation presidents. For the first time in the history of the federation, the members campaigned against its own president, arguing that no individual should hold the top position for more than one term.