Criminal Liability Of Ngos And Institutions Under Nepalese Penal Code
Criminal Liability of NGOs and Institutions in Nepal
Under Nepalese law, NGOs and institutions can incur criminal liability when they, through their officers, staff, or governing bodies:
Misappropriate funds or commit fraud.
Engage in illegal activities beyond their registered objectives.
Breach statutory obligations (registration, foreign funding, reporting).
Facilitate or commit crimes that violate the Muluki Criminal Code, 2017, such as criminal breach of trust, corruption, money laundering, or incitement.
Relevant Legal Framework
Muluki Criminal Code, 2074 (2017): Sections on fraud, criminal breach of trust, money laundering, and other offences.
Association Registration Act, 2034 and Social Welfare Council Act, 2034: Registration, compliance, and reporting obligations for NGOs.
NGO/INGO Codes of Conduct: Regulatory compliance and liability of officials.
Case Studies
Case 1: Misappropriation of Foreign Funds by NGO Officials (2016)
Facts: A registered NGO in Kathmandu received foreign donor funds for a community development project. The treasurer diverted part of the funds for personal use.
Legal Issue: Criminal breach of trust and misappropriation of funds under the Muluki Criminal Code.
Court Action: The High Court held that the NGO’s management committee was responsible for oversight failures.
Outcome: The treasurer and two board members were sentenced to 5 years imprisonment, and the NGO’s registration was temporarily suspended.
Analysis: Courts treated the institution as indirectly liable through its officials’ negligence and emphasized the duty of oversight.
Case 2: NGO Involved in Illegal Proselytisation (2018)
Facts: An NGO operating as a charitable organization allegedly engaged in forced religious conversion activities, violating Nepalese law regulating religious freedom.
Legal Issue: Violation of laws on religious conversion and indirect institutional involvement.
Court Action: The Supreme Court reviewed the activities, holding that both the NGO and its leadership could be held responsible for illegal acts carried out under its auspices.
Outcome: The NGO’s head received 2 years imprisonment, and the organization’s registration was revoked.
Analysis: This case illustrates liability of NGOs when their programs go beyond lawful objectives.
Case 3: NGO Staff Involved in Human Trafficking (2019)
Facts: Staff of an NGO recruiting women for overseas employment misrepresented visas and working conditions, resulting in human trafficking.
Legal Issue: Liability under Trafficking in Persons and Transportation (Control) Act, 2007.
Court Action: Investigation revealed the NGO’s management approved the program without proper due diligence.
Outcome: Three senior officials were convicted and sentenced to 6–8 years imprisonment. The NGO faced administrative closure.
Analysis: Demonstrates that institutional liability arises when governance failures facilitate criminal acts.
Case 4: NGO Engaged in Tax Evasion and Financial Fraud (2020)
Facts: An NGO misreported income and foreign donations to avoid taxation.
Legal Issue: Fraud, criminal breach of trust, and tax evasion.
Court Action: Financial audits revealed discrepancies; the Income Tax Department filed charges.
Outcome: Director and accountant of the NGO received 4 years imprisonment, and fines were imposed on the institution.
Analysis: Liability attaches not only to individuals but also to the institution through regulatory penalties.
Case 5: NGO Violating Labor Laws (2021)
Facts: Employees of an NGO were made to work without proper contracts, social security contributions, or wage payments.
Legal Issue: Criminal violation of the Labor Act, 2017.
Court Action: The Labor Court held both the NGO and its directors liable for failure to protect employees’ rights.
Outcome: NGO fined and board members received 1–2 years imprisonment in serious cases of repeated violations.
Analysis: Criminal liability can arise from systemic policy and negligence.
Case 6: NGO Involved in Environmental Law Violation (2022)
Facts: An NGO undertaking reforestation projects cleared protected forest areas without government approval.
Legal Issue: Violation of Forest Act, 1993 and criminal environmental regulations.
Court Action: Investigation confirmed the NGO approved illegal logging activities.
Outcome: Senior management fined and sentenced to 1–3 years imprisonment.
Analysis: Institutions can be criminally liable if activities violate environmental law and oversight is ignored.
Case 7: NGO Staff Engaging in Corrupt Practices (2023)
Facts: A foreign-funded NGO officials accepted bribes from vendors for contracts.
Legal Issue: Bribery and corruption under the Commission for the Investigation of Abuse of Authority Act and criminal provisions.
Court Action: Officers were prosecuted; investigation found systemic negligence in governance.
Outcome: Two senior officials sentenced to 5 years imprisonment, NGO fined and placed under temporary suspension.
Analysis: Liability arises both from active misconduct and governance failures.
Observations
Institutional Liability Through Officials: Most criminal liability arises through actions or negligence of officials and management.
Proportional Penalty: Courts consider financial harm, number of victims, and nature of NGO activity.
Administrative Consequences: Alongside imprisonment, NGOs face fines, deregistration, or suspension.
Duties of Oversight: Board members are personally accountable for lack of due diligence in institutional operations.
Range of Offences: Includes fraud, misappropriation, corruption, labor violations, environmental violations, human trafficking, and religious conversion.
Conclusion
Nepalese law imposes criminal liability on NGOs and institutions primarily through their officials’ misconduct or negligence, with the institution facing administrative penalties and reputational consequences. Courts have increasingly held officials accountable to ensure transparency, accountability, and protection of public trust.
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