Department of Cooperatives to scrutinise co-ops’ AGM

KATHMANDU, JAN 08 -

The Department of Cooperatives (DoC) will now supervise the annual general meeting (AGM) of cooperatives amid reports that a majority of cooperatives are not following due procedures while holding such meetings. The department made such a provision while introducing a working guideline to supervise the cooperatives .

At present, the DoC officials are not allowed to take part in AGM of any cooperatives . During its recent inspections, conducted in association with the Nepal Rastra Bank, the DoC found out many cooperatives were holding AGM in the absence of majority of their members. This led to the situation whereby most of the members were ignorant about actual financial status of the cooperatives they were involved in.

Kedar Neupane, registrar at the DoC, said that the department believed the presence of a government official at the AGM would force the cooperatives to follow due procedures. The DoC has planned to keep a close eye on the cooperatives that were not holding the AGM regularly. “Big cooperatives involved in huge financial transactions will also be monitored to ensure they are holding AGM by adopting due procedures,” said Neupane.

A large number of depositors have been victimised after two big cooperatives —Guna and Oriental—landed into trouble failing to pay back depositors. The depositors of small cooperatives such as Exim and Ugrachandi are also suffering due to anomalies at the hands of promoters.

According to him, the DoC or its division offices will assign their staff to attend AGM of the cooperatives . Officials attending the AGM will have to submit their reports on the AGM either to the DoC

or division office. “However, officials attending the AGM should not take any cash and other benefits from the cooperatives ,” said Neupane.

The DoC and the central bank also found anomalies such as transfer of collateral in the name of board members and other cooperatives they had promoted and cooperatives being run as family business with family members working as director, audit committee member, chief executive and employees. Even the non-member and persons outside the working area of cooperatives concerned were found discreetly assuming the role of director and audit committee member, according to the inspection report. Kin and close circle of directors have been found appointed as advisors on huge renumeration without making any provision in the bylaws.

While providing loans, some cooperatives were found to have charged service fee as high as eight percent and flat interest rate up to 60 percent. On the other hand, top officials and chief executive of some cooperatives were found to have taken out advance as they wished, and taken out loans without collateral and at very low interest rate.

Source: The Kathmandu Post