Cheating by contractor

Group Members: (Group 34)

Shreetika Pokharel, Blue Zone
Sandhya Gautam, Yellow Zone
Introduction

DEFINITIONS

Contractor

Nepali: ठे केदार

A contractor is a person or firm that undertakes a contract to provide materials or labour to perform
a service or do a job.

When you think of contractor, you may picture construction sites; however, the word has other
meanings as well. Legally, if you sign a contract to perform a specific job then you are known as a
contractor.

Cheating by Contractors:

When contractors hired to perform a specific job in a specific way and a specific time with fixed
amount of money to be paid, act dishonestly and unfairly upon any of the terms in order to gain an
advantage, it can be termed as Cheating by Contractors.
Historical Development of Contractor Jobs in Nepal

● Very old practice in Nepal

● Before the 1950s, houses, monuments were constructed because of the existence of
contractors; contract jobs were given informally, without signing contracts.

● There were provisions of strict punishment under fraud and if Cheating was done in the
case of governmental contracts, it was treated as a crime against the government.

● Until 1950s: Absence of specific laws to protect Clients from Cheating done by
Contractors.
·
Contd.

● After the commencement of the first 5 year plan in 1956, Government of Nepal started planned
development with the construction of road, bridges, airports, dams, hydropower and buildings. As
a result, the government created various contracting jobs.

● The engineers, technicians came to work from other countries and workers were hired through
labour contractors who were given thekka, a fix job contract to do a certain kind of work.

● Contractor jobs took a really long time to flourish in Nepal. Currently, the 15th five-year plan is in
progress. Some plans have been quite successful and some have failed terribly. However, Nepalese
contractors have been able to develop their management skill, improve working capacity, financial
and technical capabilities, and acquire suitable construction equipment. As a result, local
contractors have also been able to compete and participate in mega construction project in the
present context.
Types of Contractors

1. Small Renovation Contractors

-small amounts of capital
-does not require much estimating or a large construction organization
-They usually perform home alterations or small commercial and office work.
2. General Contractors
- These companies often are experts in either new buildings or alteration work.
- Many building contractors subcontract a major portion of their work, while alteration
contractors generally perform many of the trades with their own forces.
- Some general contractors specialize in public works.
contd.

3. Real estate developer

- They build to sell before or after completion of the project.
- One- and two-family home builders are included in this category.
4. Professional Construction Manager
- An individual, or a group of individuals who perform the functions required in
building a project as the agent of an owner, but do so as if the job was being
performed with the owner’s own employees
5. Program Manager
- Same as professional construction manager but a program manager takes decisions on
behalf of the owner including hiring professionals to complete the projects.
Contd.

6. Package Builders
- Such companies take on a contract for both design and construction of a building.
- Often these services, in addition, include acquisition of land and financing of the
project

7. Sponsor Builders
- In the field of government-aided or subsidised building, particularly in the field of
housing, a sponsor-builder may be given the responsibility for planning design,
construction, rental, management, and maintenance.
- A sponsor guides a project through the government processing and design stages.
Laws in Muluki Criminal Code 2074
Section 249

Prohibition of cheating:

(1) No person shall commit, or cause to be committed, cheating.

(2) For the purposes of sub-section (1), a person who dishonestly causes any kind of loss, damage or
injury to another person whom he or she makes believe in some matter or to any other person or
obtains any benefit for him or her or anyone else by omitting to do as per such belief or by inducement,
fraudulent, dishonest or otherwise deceptive act or preventing such other person from doing any act
shall be considered to commit cheating.

Explanation: Where the victim of cheating has got a deed executed by the cheater, the deed shall apply
to that matter.
Contd.
(3) A person who commits the offence referred to in subsection (1) shall be liable to the
following sentence:
(a) A sentence of imprisonment for a term not exceeding ten years and a fine not exceeding one
hundred thousand rupees, in the case of cheating the Government of Nepal or anybody under
full or majority ownership or control of the Government of Nepal, except in cases of
corruption,
(b) A sentence of imprisonment for a term not exceeding five years and a fine not exceeding
fifty thousand rupees, in the case of cheating by lying one's name, designation, title,
qualification,
Contd.

c) A sentence of imprisonment for a term not exceeding seven years and a fine not
exceeding seventy thousand rupees in the cases of any kind of cheating other than that
referred to in clause (a) or (b).

(4) A sentence of imprisonment for a term not exceeding one year, in addition to the
sentence set forth in sub-section (3), shall be imposed in the case of cheating a child, person
of unsound mind, helpless, illiterate or person above seventy-five years of age.
Contd.
Section 250

Prohibition of causing difference in bid or contract:

(1) No person who has undertaken the responsibility of carrying out any
construction related work or other work or other person who acts on his or her
behalf shall, with dishonest intent, carry out, or cause to be carried out, the
construction or other work, by not using the materials of the specified standards
or quality or by altering the quantity of the materials to be used or otherwise
using materials not conforming to the specified quality.

(2) A person who commits the offence referred to in subsection (3) shall be liable
to a sentence of imprisonment for a term not exceeding ten years and a fine not
exceeding one hundred thousand rupees.(1 lakh)
(3) No person who has undertaken the responsibility of supplying any materials,
goods or services or other person who acts on his or her behalf shall, with
dishonest intent, supply materials, goods or services falling short of the quality or
quantity or otherwise provide materials, goods or services not conforming to the
specified quality.

(4) A person who commits, or causes to be committed, the offence referred to in

sub-section (3) shall be liable to a sentence of imprisonment for a term not
exceeding five years and a fine not exceeding fifty thousand rupees.
The Public Procurement Act, 2063 (2007)

Section 63. Blacklisting and Exclusion From the Blacklist:

(1) The Public Procurement Monitoring Office may blacklist a bidder, proponent, consultant, service provider,
supplier, construction entrepreneur or other person, firm, organization or company in the following grounds from
one year to three years on the basis of seriousness of his/her/ act:-

(c) If it is proved latter that s/he had committed substantial defect in implementing procurement contract or
had not substantially fulfilled obligation under the contract or the work carried out according to the
procurement contract is not of the quality as per the said contract

(e) If s/he/it is proved of having signed the procurement contract by falsifying qualification or
misrepresenting,
Ways in which contractors cheat their client
- Not using the materials of the specified standards or quality
- Altering the quantity of the materials to be used
- Over-billing
o Making client pay for resources that will not be used in the project

o Price of materials inflated compared to market value

o Charging more labor charge than what will be paid to the labors

o Hiring less skilled labors while charging money for hiring skilled labor

o Taking payment for work outside the scope of the project

- Asking for a large down payment, payment in full or up-front or substantial money in advance and
disappearing
Ways in which contractors cheat their client
- Underbuilding

o Leaving out key project details

o Not completing the project agreed upon

- Product swapping:
o Using lower quality products than what was paid for
o Selling materials left over from previous jobs

- Estimate changing:
o Deliberately running into unexpected problems that require additional cost
o Agreeing on a particular price and unnecessarily increasing project costs later

- Not obtaining required permits

- If a supplier, with dishonest intent, supplies materials, goods or services falling short of the quality or
quantity or otherwise provide materials, goods or services not conforming to the specified quality
Nepal

· During 2017-2021- at least 50 bridge failures

· By July 20, 2021, newspapers have reported 21 bridge collapses in 2021 alone; 11 of which collapsed
during construction period and remaining after completion
· Major causes for these collapses are improper construction methodology, inferior quality of work,
faulty design and poor maintenance
· In April 2021, an under-construction bridge above Trishuli River collapsed
· August 2017- Jabdighat Bridge over Babai River built by Pappu Construction Pvt. Ltd collapsed
· The government of Nepal blacklisted 36 low-performing contractors, including Pappu Construction, in the
first seven months of the fiscal year 2019-2020 for substandard work, failing to complete projects on time,
deliberately delaying their work, breach of contract terms or violation of public procurement law.
Pappu Construction Pvt. Ltd

In 2018, The Commission for Investigation of Abuse of Authority (CIAA) filed a corruption case at the Special
Court against Pappu Construction owner and lawmaker Hari Narayan Rauniyar and his son Sumit Rauniyar for
building a substandard bridge over the Babai river in Jabdighat, Bardiya.

Federal Socialist Forum-Nepal lawmaker Hari Narayan is a member of Parliament from Parsa constituency No
3.

The anti-graft body had filed a case against the Rauniyars in the backdrop of allegations that Pappu
Construction kept winning contracts worth billions of rupees despite failing to complete construction on time.
The Rauniyars and other defendants were accused of using substandard materials in the construction of Babai
bridge.
Pappu Construction Pvt. Ltd

The CIAA had accused lawmaker Rauniyar and his son Sumit each of embezzling Rs
193,225,695.The CIAA had investigated the project after it received complaints about Pappu
Construction compromising on the quality of Babai Bridge in Jabdighat.

Pappu Construction had signed a contract with the government on 6 July 2011 to construct the bridge
linking Gulariya and Barbardiya municipalities.

The CIAA had stated in the charge sheet that piles of the bridge were not built as per the depth design
and the bridge caved in due to cavities in the piles.
Manoj Bhetwal
-Bhetwal, Chief of Jaleshwor Swachchhanda Bkoi Builders Pvt Ltd, is notorious for not
initiating construction work of much-hyped Kathmandu View Tower.
-After Bhetwal bagged the contract to build 29-storey tower on 6 March 2015, with a
deadline to complete the project within five years, the government decided to move the
existing bus park from the construction site to Khulla Manch.No notable work progress
of view tower could be seen at the site.
-On 6 April 2017, the builder was granted another permission by Kathmandu
Metropolitan City to build some fundamental structures at Khulla Manch, such as a
restaurant, a health facility, couple of toilets and two bus stands to facilitate the bus park.
Contd.
-After getting permission from the local government he built at least additional 52 stalls at the bus park at
Khulla Manch, some on the temple premises there. Locals and activists in the area had later submitted a
memorandum to KMC stating that Bhetwal was illicitly earning above Rs 18.1 million per year from the
bus park at Khulla Manch, while not speeding construction work at the Old Bus Park.

-Bhetwal ran the racket with tacit support of the local government. No action was initiated to punish
Bhetwal and others involved in the illegal activity.Later, locals initiated more stringent protest
programmes that forced KMC to dismantle the additional stalls in the bus park at Khulla Manch.

The police after acquiring arrest warrant from the Patan High Court on February 5 were searching for
him.

Police said he surrendered to the police today after he landed at Tribhuvan International Airport from
India. (March 10, 2020)