Resolve Cooperative Sector Problems

The cooperative sector in Nepal has been in crisis over some years because of mismanagement, and embezzlement of depositors’ hard-earned money. Various investigations have shown that the problem has emerged due to the involvement of the cooperative operators in the misuse of funds. Hundreds of cooperatives across the country have failed to return depositors’ money while many cooperative operators have been on the run. A lack of proper monitoring is behind this anomaly. Share members of various cooperatives based in the Kathmandu Valley and other parts of the country have frequently taken to the streets, demanding that their deposits be returned.

Agreements

Such protests have led to the formation of various study committees to seek a solution to the problem. The successive governments have signed agreements with the victims of cooperatives, pledging to settle the issue as soon as possible. Considering the gravity of the issue, a parliamentary special probe committee was constituted about three and a half months ago. Coordinated by UML lawmaker Surya Thapa, the seven-member panel was formed after the Nepali Congress disrupted the parliamentary proceedings for more than two months. The NC, which was the main opposition in parliament at that time, raised the issue as media reports highlighting the connection of the then Deputy Prime Minister and Home Minister Rabi Lamichhane to the embezzlement of funds of some cooperatives poured in. Earlier, the party had demanded his resignation as he was suspected to have destroyed evidences by abusing his power. 

The special probe panel has been entrusted with the responsibility of investigating the crisis-stricken cooperatives, their legal and institutional purposes, financial systems, managerial arrangements and transparency. It has also been assigned to recommend measures for the immediate return of savings to the depositors of the crisis-ridden cooperatives. The panel has carried out investigations into numerous cooperatives. It has received suggestions from political parties with national status on how to resolve the problems plaguing cooperatives.  In the course of its investigation, the committee discussed matters concerning the cooperative sector with officials from various relevant bodies such as the National Cooperative Federation, the Savings and Credit Central Cooperative Association and the National Cooperative Bank Limited.

The investigation committee has interrogated many suspects, including Lamichhane, who is also the president of the Rastriya Swatantra Party (RSP). Initially, the committee had asked for documents from 20 cooperatives that were declared perilous by the government. It also sought papers from the cooperatives which had transferred funds to Gorkha Media Network. Lamichhane was working as the managing director of Gorkha Media Network before joining politics. Though Lamichhane has denied accusations labelled against him, various evidences have proved his involvement in the misuse of depositors’ money.  

He had good connections with Gitendra Babu (GB) Rai, the chairman of the Gorkha Media Network. Rai, who is believed to have been staying in Malaysia for months, is charged with misusing hundreds of millions of rupees in collusion with various cooperatives located in Kaski, Chitwan and Rupandehi districts. Though the government has attempted to arrest Rai, it has failed to do so as of now. The parliamentary special probe committee has found some 500 cooperatives in crisis. The panel is preparing to submit its report to the government. Its report is expected to bring out a clear picture of the cooperatives reeling from problems.    

What is more concerning is that alleged new cooperative scams linked to high profile individuals have kept on surfacing one after another. NC vice-president and former minister Dhan Raj Gurung has also been accused of abusing funds of a cooperative. The issue was raised in the parliament after his former wife Jyoti Gurung was charged with the assumed fraud involving the Miteri Savings and Credit Cooperative. His party has also stood in favour of conducting necessary investigations into the matter. 

A couple of weeks back, the cooperative's chairman Kumbhraj Gurung had filed a complaint with the Department of Cooperatives, blaming Jyoti Gurung for misusing Rs. 12.5 million. However, Dhan Raj has claimed that he and Jyoti got divorced in 2019. The Central Investigation Bureau (CIB) of the Nepal Police has begun its probe into the fraud case. The CIB is in the process of investigating the way funds were misused and find out the individual(s) involved in the embezzlement of funds. However, no complaint against Dhan Raj has so far been lodged. 

Harsh laws in need

It appears that many politicians, their supporters and relatives may have been involved in cooperative frauds directly or indirectly. The government must take this matter earnestly and step up required measures to address the problems seen in the cooperative sector. The constitution itself has considered cooperatives as one of the three pillars of the national economy. But cooperatives have become a means of cheating their share members. This has happened because of legal loopholes, ill-intentions of cooperative operators and lack of timely and effective inspections. There should be harsh laws in place to tame the cooperative sector. Every cooperative should be run as per the principles of cooperatives.    

In view of the victims’ plight, the government must come up with a practical plan to return their money. The political parties also need to take this opportunity to purify themselves. They must be ready to take action against any members and cadres if they are found involved in cooperative frauds. The agencies responsible for monitoring cooperatives must also be made accountable to ensure that they carry out their responsibilities effectively. It is also necessary to promote fiscal literacy among people so as to protect them from possible fraudulent activities.  

(The author is a former deputy executive editor of this daily.)