Former president of Gurkha charity 'expelled'

Investigation into fate of £2m collected from veterans demanded

Officials claiming to be in charge of the welfare organisation at the centre of the bitter controversy over Gurkha veterans being charged money for advice on settling in Britain are demanding an investigation into what happened to more than £2m collected under the scheme.

The Gurkha Army Ex-Servicemen's Organisation (Gaeso) has split and the faction who say they are now in control say they have expelled former president Padam Bahadur Gurung and his associates, claiming they were responsible for the practice of charging £500 each from 4,000 ex-soldiers who wanted to move to the UK.

The British Government, which has set up a free advice centre in Nepal for the veterans, has ordered an investigation into the fees being charged and into a firm of British solicitors, Howe & Co, which has been handling Gurkha cases referred to it by Gaeso.

A statement from Gaeso Central Convention Organising Committee's Bhakta Sher Rai and Padam Sundar Lumbu, said: "Padam Bahadur Gurung and other culprits do not represent Gaeso and us; they were expelled. We have been opposed to the misleading and cheating of Gurkhas over rights and benefits in the UK. Collecting a fee of £500 from each of the Gurkha applicants for settlement in the UK has never been a Gaeso policy or decision as a non-profit- making Gurkha rights organisation. We are fully aware that Nepali rupees, equivalent to some £2m, collected from around 4,000 Gurkha applicants have never been properly accounted for or reported accurately.

"We would like to press our demand to both the Nepali and the UK government authorities for immediate investigations of this scandal so as to return all such money collected to the Gurkha applicants."

Howe & Co acts for its Gurkha clients on a legal aid basis and has consistently denied receiving any money from that paid out by the former soldiers and has shut down its offices in the Nepalese capital, Kathmandu, until the UK government investigation has been completed. The company has said that it has "absolutely nothing to hide."

Officials from the Justice Department, who are conducting the inquiry, have visited the office of Howe & Co and examined documents. They are also travelling to Nepal where they will meet, among others, rival Gaeso officials. Padma Bahadur Gurung has declared that he remains the lawful president of Gaeso. He said that he does not want to comment on the issue of fees being charged as "an inquiry is going on. We cannot say anything on the issue until it is over".

However, Krishna Kumar Rai, who says he is the vice-president of Mr Gurung's faction of Gaeso, has told the Kathmandu Post that the money charged covered operating expenses including "staff salaries, electricity and water bills and bills for travel abroad".

The affair has also led to bitter controversy, with Defence minister Kevan Jones being forced to apologise to the actress and Gurkha rights activist Joanna Lumley after criticising her for not speaking out about the alleged exploitation of the former soldiers. Gopal Siwakoti Chintan, who had acted as legal adviser to Gaeso for 10 years, claimed Ms Lumley and her fellow campaigner Peter Carroll from the Gurkha Justice Campaign were warned more than nine months ago, while on a visit to Nepal, that money was changing hands and asked to speak out against the practice.

But Mr Rai and Mr Lumbu said Ms Lumley and Mr Carroll could not have known about the fees being charged.

While the accusations and recriminations continue, dozens of Gurkha veterans are living in destitution in Britain after arriving here believing that they will receive free housing and be provided with jobs. Many have spent their life savings and raised loans to make the journey.