Month into new govt, Nepal home minister Sudan Gurung quits over links to bizmen under laundering lens

Nepal home minister Sudan Gurung, a handpicked aide of PM Balendra Shah, resigned on Wednesday amid scrutiny over his wealth disclosures, investments and alleged business links with businessman and power broker Deepak Bhatta, who is being investigated in a money-laundering case.

In a day of dramatic developments, Shah took charge of the home ministry after Gurung’s exit, just 26 days after his anti-corruption govt took office.

Gurung’s resignation is the second ministerial setback for Shah within weeks. On April 9, Shah sacked labour, employment and social security minister Deepak Kumar Sah after a disciplinary panel found that he had misused his position to keep his wife, Junu Shrestha, on the Health Insurance Board, a move the party said had breached its code of conduct and discipline.

Gurung, a former event manager and nightclub DJ who founded NGO Hami Nepal after helping with relief work during the 2015 earthquake, had emerged as one of the leaders of last year’s deadly Gen Z protests that forced former PM KP Sharma Oli’s resignation and eventually propelled Shah to the prime minister's post. Notably, Shah and Gurung formally joined the ruling Rastriya Swatantra Party (RSP) together on Jan 18, with Gurung announcing on social media that they would enter the party office together.

Announcing his resignation, Gurung said he was stepping down to allow an impartial probe and avoid any conflict of interest. “For me, ethics matter more than a position, and no power is greater than public trust,” he said, adding that questions raised by citizens had to be answered with “moral integrity”. Shah had sought a written clarification from him before the resignation.

Gen Z activists, whose protests had helped propel Gurung from civil society into Nepal’s political corridors, had also demanded his dismissal and arrest after questions emerged over his assets and alleged links with Bhatta. In a statement, Gen-Z Movement Nepal said allowing him to remain in office “could influence the investigation process and represents a clear conflict of interest”, adding that a minister facing investigation could not continue without violating “basic ethical and legal principles”.

The controversy began after ministers’ asset declarations were made public on April 12. Gurung declared shares and securities, 89 tola (1.04kg) of gold, 6kg of silver, more than Nepali Rs 61 lakh (Rs 38 lakh) in cash, a vehicle and land in Dhankuta, along with properties registered in his father’s and grandfather’s names in Chitwan and Gorkha. The disclosures triggered questions over the wealth of a politician who had built his public image around activism, disaster relief and clean governance.

The issue deepened after reports surfaced that Gurung held founder-level shares in two micro-insurance firms — Star Micro Insurance and Liberty Micro Life Insurance — where his name appeared alongside figures linked to Bhatta and Shanker Group vice-chair Sulav Agrawal. Gurung had invested Nepali Rs 25 lakh (Rs 15.6 lakh) each in the two firms, which had not yet launched initial public offerings. Agrawal was also arrested earlier this month as part of a broader money-laundering probe into transactions worth Nepali Rs 3.7 billion (Rs 231 crore).

Gurung denied concealing the investments, saying they were part of his declared stock-market portfolio. “Someone who intends to hide assets does not openly declare over Rs 20 million in investments,” he said earlier. He also said buying shares did not amount to a business partnership.

Critics, however, said unlisted founder shares should have been separately identified and not clubbed under general securities holdings. They also questioned the source of funds after records showed Nepali Rs 22.5 lakh (Rs 14 lakh) was deposited by Chang Agarwal and Nepali Rs 37.5 lakh (Rs 23.4 lakh) by Bijay Kumar Shrestha into Gurung’s personal account on May 9, 2023. The next day, Nepali Rs 25 lakh (Rs 15.6 lakh) each was transferred from the account to Liberty Micro Life Insurance and Star Micro Insurance.

Financial records also raised questions over donations. Gurung’s personal account had received around Nepali Rs 60 lakh (Rs 37.5 lakh) in May-June 2021 as Covid-19 relief donations, of which Nepali Rs 25.9 lakh (Rs 16.2 lakh) was later transferred to Hami Nepal. Hami Nepal’s bank account received Nepali Rs 2.28 crore (Rs 1.42 crore) between July 2021 and Aug 2025, while Shanker Group was identified as one of its largest corporate donors.

Bhatta, chairman of Infinity Holdings, has interests in energy, real estate, travel, consumer goods, govt contracts, insurance and stock-market sectors. Investigators have been examining alleged suspicious transactions involving Bhatta, Agrawal, Shanker Group and Himalayan Reinsurance.

Shah’s govt is also facing protests and brawls along the India-Nepal border over stricter customs duty on goods worth over Nepali Rs 100 (Rs 63) brought from India, while Kathmandu has seen large demonstrations over govt’s move to ban party-affiliated student politics in colleges and replace student unions with student councils.