High-level rehabilitation body planned to recover deposits

KATHMANDU, AUG 20 -

The Ministry of Cooperatives and Poverty Alleviation has moved to establish a fully empowered high-level rehabilitation committee to recover public deposits stuck in troubled cooperatives.

Although the government has announced forming a new Cooperative Act under its reform plan, the ministry has proposed amending the existing act to enable it to set up such a committee and inserting a clause allowing long jail terms citing possible delays in introducing new legislation. The government’s initiative follows the recommendation of the high-level commission led by former chairman of the Special Court Gauri Bahadur Karki formed to probe troubled cooperatives. The Cooperatives Ministry has sent the amendment bill to the Law Ministry.

The Cooperatives Ministry said it had asked for the Law Ministry’s okay to amend Cooperative Act 1992 and insert a clause establishing the rehabilitation committee.  

“We have planned to form the committee with a view to speedily provide relief to long-suffering depositors,” said Suresh Pradhan, joint secretary at the ministry.

The Karki panel, which was formed eight months ago, had received 12,962 complaints against 130 troubled cooperatives. These organizations have been accused of misappropriating Rs 11.41 billion in deposits and interest of the general public.

Two months ago, the Cabinet had given the Cooperatives Ministry the go-ahead to form the committee as per the recommendation of the Karki panel.

Pradhan said the proposed high-level rehabilitation committee would consist of five members and be led by a former justice of the Appellate Court. The members will include experts from the cooperative sector and financial institutions. According to Pradhan, they have envisaged that the proposed committee will have a tenure of at least two years.

“The committee will be given full authority to investigate the assets of the trouble cooperatives and their promoters. Besides, it will also have the authority to file cases against proprietors who have been accused of swindling depositors,” he said.  

The ministry has also sought to empower the committee to take stern action against guilty promoters in line with the probe panel’s recommendation. The panel has advised heavy punishment in the cooperative sector.

“We have also suggested enabling the committee to slap four-month to 20-year jail terms against wrongdoers depending on the misappropriated amount.”

Cooperative Act 1992 states that the number of cooperatives will be increased before regulating the sector.

The act permits the regulator to impose a mere Rs 1,500 fine irrespective of the degree of the offence. As per the law, the police can, at the most, file a forgery case even if there has been massive misappropriation of funds.

Emboldened by weak laws, errant cooperatives have been found to have cheated depositors of their savings.

Source: The Kathmandu Post