Army Theft Scandal Shakes Nepal’s Famed Gurkha Ranks : Asia: Top general steps down two weeks before retirement. Military is no longer taboo subject in media.

In Nepal, say the word military and the first image it evokes is the Gurkhas, the tough-as-nails tribespeople with sharp kukri knives who have fought ferociously on battlefields from France to the Falklands.

From now on, though, another word may come to mind: graft. An unprecedented corruption scandal has shaken the Royal Nepali Army to its uppermost brass and forced the resignation of its chief, Gen. Gadul Shumsher Rana, who was just two weeks away from honorable retirement.

Ironically, the scandal reached its denouement just as the Himalayan kingdom’s monarch, King Birendra, was heading to London to participate in ceremonies marking the end of World War II in Europe.

The Gurkhas, recruited by the British from the foothills of the Himalayas since the beginning of the 19th Century, fought on every front in World War II, from Singapore to Italy to North Africa.

Their small homeland paid dearly in blood for the defense of Western democracy: Nearly 9,000 Gurkhas fell in battle, died of wounds or disease or vanished in action.

These days, Gurkhas, as famous for their fidelity as for their bravery, still serve in special units of the British and Indian armed forces, while landlocked Nepal has its own 40,000-strong army.

Currently, 2,000 Nepalese soldiers are serving with U.N. missions in hot spots such as Lebanon, the former Yugoslav federation and Haiti. For the peacekeepers, it is a chance to polish their skills, learn to use state-of-the-art weaponry and earn money for themselves and their country, where the average person makes only $165 a year.

According to Nepalese officials, crooked members of the army’s Ordnance Office found another way to riches, pilfering about 13 million rupees, or $260,000, in government funds earmarked for the purchase of boots, clothing, stationery and other supplies.

The chief embezzler, Maj. Gen. Yogendra Pratap Jung Rana, master general of the Ordnance Office, also accepted heavy kickbacks. After a court-martial that took almost a year, he was booted out of the army, sentenced to four years’ imprisonment and ordered to pay 10.4 million rupees, or $208,000, his reported share of the loot.

Two army colonels implicated in the scheme were disqualified from holding any government jobs in the future. Another officer who was detained for interrogation committed suicide.

The 60-year-old army chief, who resigned Friday to assume “moral responsibility” for the whole mess, was indirectly blamed for not taking timely steps to check the corrupt activities of some troops serving under him.

Gadul Shumsher Rana apparently is not related to the dismissed Maj. Gen. Rana and would have retired honorably this month at the end of his four-year term.

His resignation was accepted with immediate effect by King Birendra. For Nepal, where multi-party democracy was restored only in 1991, the kickback and embezzlement scandal was a watershed. Army affairs used to be a taboo subject for the media, but the latest scandal was followed avidly by the press as, for the first time, an army chief was forced to leave office.

Nepal’s Communists, who came to power in November’s elections, have long opposed allowing Nepalese youths to be recruited to serve as what they call mercenaries in foreign lands. Since they have been in office, though, they have done nothing to oppose the tradition of Gurkha recruitment. One reason is that there are few alternative avenues of employment for Nepal’s rapidly increasing population.

Dhruba Adhikary, a Katmandu-based journalist, contributed to this report.