Insurers give Nepal ultimatum to end tourist rescue fraud

Kathmandu (AFP) - International insurance companies have set a September 1 deadline for Nepal to clamp down on fraudulent helicopter rescues of tourists or they will stop giving cover, industry sources say.

An AFP investigation earlier this year revealed a lucrative insurance racket around pressuring hikers in the Himalayas into unnecessary rescues.

Multiple tourists are crammed into a single chopper, but each insurance company gets billed for the flight. The trekking operators, lodge owners, helicopter companies, and even hospitals pocket the extra cash.

The fraud became so acute that Nepal's government, which relies heavily on tourism, launched a probe in June in a bid to keep insurers from pulling out altogether.

AFP has since learned an alliance of insurers from Britain, Australia and New Zealand have warned they will stop providing cover unless concrete action is taken.

Danny Kaine of Traveller Assist, a UK-based company that represents international insurers in Nepal, confirmed the deadline and said: "They are essentially trying to reduce their massive losses from the past two years."

The helicopter scam has become such a money-maker that some budget tour operators are luring customers by selling treks at below cost price -- knowing they can make enough profit on kickbacks when the tourists are evacuated.

In some cases, trekkers themselves are in on the scam, opting for a quick ride home billed to their insurance, while others are being scared into rescues for minor illnesses.

"It was a joke among trekkers about how easy it was to get a heli down," a Dutch tourist in the Everest region told AFP.

- 'Deliberately ill' -

Insurers have demanded all helicopter rescues are pre-approved and capped at $4,000 per flight.

They also want an inquiry into business permits after it emerged that some trekking outfits, charter companies and helicopter owners were operating with forged documents.

A mass pull out by the insurers would seriously dent Nepal's vital tourism industry, which the government is banking on to revive the economy. Ministers have set an ambitious goal of attracting 2 million tourists a year by 2020 -- double the number who visited last year.

The tourism ministry probe launched in June found there had been more than 1,300 helicopter rescues in the first five months of the year, costing insurers over $6.5 million.

The investigation, covering 36 trekking companies, 10 helicopter companies and six hospitals, also uncovered evidence of guides putting baking soda -- a laxative -- in food to give tourists diarrhoea and then pressuring them to be evacuated by helicopter.

"We've heard of cases where tourists have been made deliberately ill," Prakash Sharma Dhakal, the official who led the probe, told AFP.

"In our investigation, we've seen a profit margin of up to 63 percent by some companies... and hospitals have issued bills of up to six million rupees ($53,700)," Dhakal added.

As a result of the probe, he said, action was being proposed against 15 companies.

- 'PR exercise' -

Industry insiders warn that the investigation has only revealed the tip of the iceberg, amid allegations that some businesses pressured the ministry to look the other way.

"I know that there are some companies that are involved in the fraud that they haven't even spoken to," a source close to the investigation told AFP.

Kaine of Traveller Assist said the probe was a "PR exercise".

"I don't believe that the ministry has run an investigation of this scale before and I think they are under quite a lot of pressure to show that they are doing something about the fraud," he said.

There are an estimated 2,000 trekking companies in Nepal promising to whisk tourists into the Himalayas, but many are unlicensed, operating from scruffy, cramped offices in the dusty backstreets of Kathmandu.

In recent years, a large private helicopter industry, offering scenic mountain tours as well as rescues, has also developed, with 20 new choppers delivered to Nepal since 2012, according to industry magazine Vertical.

Some major tour operators have financial interests in the helicopter companies, creating a worrying "conflict of interest" in both taking people to the mountains and rescuing them, said Dan Richards, CEO of Global Rescue, a US-based company that carries out medical evacuations for paying members.

Global Rescue has made repeated attempts to report instances of wrongdoing to the government.

But this has made them deeply unpopular among some of the biggest players in Nepal's tourism industry who have lobbied the ministry to have Global Rescue's team of international experts kicked out of the country.

"They don't like having our personnel on the ground who can identify their bad behaviour and call it what it is: fraud," the company said.