Govt wants more teeth for law on cooperatives fraud
KATHMANDU, Dec 2:
With cases of fraud at cooperatives on the rise in recent years, the government has proposed stricter punishment and fines for the fraudsters.
The Ministry of Cooperatives and Poverty Alleviation (MoCPA), in a draft amendment to the Cooperatives Act 1992, has proposed a maximum jail term of 20 years for cooperatives fraud. It has also proposed making the fraudsters liable for paying back the amounts claimed against them as well as fines equal in amount to the claimed amounts. The existing law authorises the cooperatives registrar to impose a fine of up to Rs 1,500, while the government has been punishing cooperatives fraudsters under the Civil Code, which provides for a jail term of up to four years.
According to officials at MoCPA, they have sent the Cooperatives Act draft amendment to Prime Minister Sushil Koirala, who is also Minister for Cooperatives and Poverty Alleviation, for final approval.
“The draft amendment act will be sent to the Ministry of Law and Justice for final approval before getting it tabled at the cabinet,” Joint Secretary at MoCPA, Suresh Pradhan, told Republica.
In the amended cooperatives act, the ministry has proposed stricter punishment, in response to widespread complaints from experts and activists in the cooperatives sector that the lenient treatment of offenders has been encouragng financial indiscipline and irregularities at many cooperatives.
A high-level commission to probe troubled cooperatives, formed under Gauri Bahadur Karki in November last year, has also suggested that the government introduce a provision for stricter punishment in the cooperatives law. “The punishment we have proposed in the draft is based on the recommendation of the commission which has concluded that the existing law is too lenient. If the draft amendment is endorsed, it will help reduce financial crime in the cooperatives sector,” Baburam Bhusal, undersecretary at MoCPA, told Republica.
Though the ministry is also preparing to replace the Cooperatives Act 1992 with an entirely new act, officials say that immediate amendment to the existing law will help provide relief to the victims of some 150 troubled cooperatives.
The draft amendment also proposes ´a powerful cooperatives assets management committee´ to return deposits mobilized from the public as well as hand over the housing units and apartments promoted by the cooperatives to those who booked them. The committee would have the authority to manage the assets of the troubled cooperatives and settle their liabilities.
According to the report of the Karki-led commission, as many as 12,962 people have filed complaints against the 150 troubled cooperatives and made claims against them totalling Rs 10 billion, including Rs 7.6 billion in principal and Rs 2.4 billion in interest. The highest claim for deposits is Rs 5.5 billion against Oriental Cooperatives, which was promoted by Sudhir Basnet.
A high-level official at MoCPA told Republica that the ministry was lobbying stakeholders to get the amendment effected through an ordinance. “Since parliament is not in session and we intend to deliver relief immediately to the victims of troubled cooperatives, it would be better if the law is amended through ordinance,” the official added.
Source: Republica
