Kathmandu, June 26 -- Nepal's passport department is running critically low on booklets-fewer than 45,000 remain-even as half a million passports supplied by a German company sit unused, caught in a legal and political standoff following a corruption case that has now drawn in the German government.

The Commission for Investigation of Abuse of Authority filed charges last week against officials from the Department of Passports and the local representatives of two German firms, Veridos GmbH and Muehlbauer ID Service GmbH, over the electronic passport procurement contract.

The case has left the government unwilling to distribute the passports Veridos has already delivered-even as the French company that has supplied Nepal's passports sinc...