KATHMANDU – Raj Bahadur Shah, a prominent Nepali industrialist and partner of multinational brewery Carlsberg in Nepal, has been implicated in a major stock market manipulation scandal, according to a study by the Securities Board of Nepal (SEBON).

The SEBON investigation reveals that Shah engaged in irregular trading practices in collusion with fellow businessman Deepak Bhatta. As a result of the board’s findings, Shah has been sentenced to one year in prison.

Shah is widely recognized as a major figure in Nepal’s liquor industry and is also one of the country’s highest income tax payers. He recently entered Gorkha Brewery, Nepal’s Carlsberg manufacturer, after the company acquired Raj Brewery. Shah initially holds an 8 percent stake in Gorkha Brewery, with plans to increase his share to 15 percent. He currently serves as Chairman of the Board of Directors at Gorkha Brewery.

Millions in Unpaid Loans

Beyond the stock market violations, Shah is also implicated in questionable lending transactions. According to documents obtained by Nivesh News, he has taken out loans worth millions of rupees and failed to repay them.

Shah owes Rs 89,70,97,346.71 to Bhrikuti Stock Broking Pvt. Ltd., a securities broker. He has not made any payment on this amount since August 7, 2002, yet has continued to conduct loan transactions.

Between July 23, 2002, and July 19, 2002, Shah purchased 1,051,204 units of shares in Nepal Reinsurance Company for a total of Rs 1,418,80,72,937.95. Of this, he paid only Rs 52.5 crore to Bhrikuti Stock Broking, leaving the outstanding balance of nearly Rs 90 crore unpaid.

The investigation found that Shah obtained trading limits without depositing advance funds, and shares were credited to his account through the broker even though full payment was never made. Similarly, he purchased 125,111 units of Himalayan Life Insurance shares for Rs 165,56,92,982.60, and 309,936 units in the name of Shubhi Agarwal for Rs 40,73,13,898.70.

Market Manipulation Charges

Authorities concluded that Shah, following the same pattern as Deepak Bhatta, bought shares without advance payments, secured them in his account despite non-payment, and artificially inflated share prices—misleading both investors and the stock market.

The board found that Shah acted in connivance with Bhrikuti Stock Broking to manipulate securities prices, violating Sections 96 and 98 of the Securities Act, 2063. Section 96 addresses stock market manipulation, while Section 98 covers fraudulent transactions.

Under Section 101 of the Act, offenders face fines ranging from Rs 50,000 to Rs 175,000, imprisonment of up to one year, or both, plus compensation for losses incurred by victims. Section 98 carries penalties of up to Rs 300,000 in fines, two years’ imprisonment, or both, along with mandatory victim compensation.