Resolve Cooperatives Row Right Away

With multiple cooperative owners, managers, and willful defaulters implicated in several incidents of cooperatives’ savings scams, the matter has grown more complicated for government authorities to resolve as quickly as possible. Recently, this issue has disrupted the parliament's business, posing a significant threat that it could grip the nation and government for an extended period of time.

Politically, the crisis has pitted the Nepali Congress, the main opposition, against the ruling parties. The main opposition urged the creation of a parliamentary investigative committee to examine the cooperatives' problems and insisted that the committee look into the current Home Minister's suspected role in the abuse of cooperative funds. However, Home Minister Rabi Lamichhane has consistently denied his involvement, claiming that he was ignorant of any misappropriation or fraud by his previous business company, Gorkha Media Private Limited, and its chairman, GB Rai. The governing coalition's other parties, the CPN-UML and CPN- Maoist Centre, supported the Home Minister. As a result, the process of addressing cooperative fund scams did not go smoothly.

Denial of charges 

On Sunday, the Home Minister addressed parliament, not only denying cooperative fraud charges but also condemning numerous opposition leaders for their involvement in fraud and misuse of power in other instances. He stated that if a probe panel were to investigate his role in fund misappropriation, similar panels should be formed to investigate the alleged involvement of Congress leaders such as general secretary and lawmaker Gagan Thapa, vice president and legislator Dhan Raj Gurung, and a few others in their suspected role in fraud cases.

In response, Congress lawmakers challenged the Home Minister, requesting that he form any panels against them while allowing Parliament to form a panel to examine the Home Minister's alleged involvement. Despite the major opposition's insistence, the ruling parties have refused to accept the Congress's demand that the House investigative committee look into the Home Minister and Gorkha Media's alleged role. Though the ruling coalition has agreed to constitute a 4-member House committee to investigate overall cooperative fund scams, they refused to include the Home Minister's name as a target of investigation in the panel’s term of reference (ToR). This refusal is likely influenced by fear that inquiry against the Home Minister by the House panel might result in his resignation and upset the government.

According to the NC, earlier House probe committees were formed to investigate the role of various sitting ministers, including former finance ministers Janardan Sharma and Ram Sharan Mahat, in charges of abuse of power. After the probe failed to find their participation, they returned to their respective positions. However, the government has refused to accept the Congress' current demand, forcing the major opposition to put the House to a halt and thus presenting a significant dilemma to the Speaker in maintaining the decorum of the House and its efficiency.

The political squabbling over the parliamentary investigative committee hampered House business, stalling parliamentary deliberations and the endorsement of multiple laws. The same delay has caused failure in the settlement of cooperative problems, in which billions of rupees deposited by ordinary and poor Nepalis have been embezzled. Consequently, the tens of thousands of Nepalis, or around 8 million, who have put billions of rupees in cooperatives are awaiting anxiously to get their money back. These people saw their hard-earned money stolen and misappropriated by cooperative owners, managers, prominent figures, and several willful defaulters who borrowed millions but failed to return the loans.

Many depositors have suffered through financial difficulties, causing them significant distress. They have claimed to be unable to handle everyday household matters or afford medical care after the crisis-ridden cooperatives closed. The majority of victims have called on the government to punish the embezzlers and defaulters and give them the required relief. Recently, cooperative victims from across the country marched in the capital and other cities and towns to highlight their predicament, as well as to request government assistance in quickly retrieving their funds.

With billions of rupees of duped funds and existing legal hurdles, government officials are finding it difficult to immediately retrieve the victims' deposits. The recovery procedure appears lengthy and arduous, partly because the embezzlers have alleged links to influential people and parties, as well as a tendency to take advantage of legal loopholes. This is not to say that the government should not take strong action. In addition to arresting and imprisoning the embezzlers, authorities must recover savings by confiscating the fraudsters' assets, mobilising all available resources, and enacting suitable legislation.

Negative impact

The ordinary Nepalis, including daily wage earners, street vendors, small grocery store and tea stall owners, barbers, and lower middle-class people who invested their hard-earned money in cooperatives, must get their money back. To do this, all political parties and the government must collaborate to hold cooperative fund borrowers, owners, and managers responsible.

Some individuals propose that the government should compensate cooperating victims for their lost money. This reasoning is faulty. 

If the government begins compensating victims, it would simply encourage more cooperative owners, managers, and borrowers to misappropriate savings, jeopardising deposits. The government may give short-term support to victims in need after losing their deposits, with an emphasis on recovering money from all defaulters. There is concern that recent events will have a negative impact on certain cooperatives that are doing well. The cooperative problem must therefore be addressed at its earliest, and victims must be reimbursed appropriately in order to rebuild trust in the sector, which is regarded as one of the three pillars of Nepal's economy.

(Upadhyay is former managing editor of this daily.)