Over 9 Billion Embezzled in Gandaki Province Cooperatives Crisis

Pokhara. More than 9 billion rupees have been embezzled from cooperatives in Gandaki Province. According to the Provincial Cooperative Registrar's Office, 6.97 billion rupees have been misappropriated from 19 large cooperatives operating within the province's jurisdiction.

The office has released a report following a financial analysis of the distressed cooperatives. Files for all these cooperatives have been forwarded to the District Police Office for further investigation. Registrar Bheshraj Rijal stated that preliminary investigations have been completed for 23 cooperatives, with 19 recommended for legal action.

Additionally, 2 billion rupees have been embezzled from three cooperatives based in Pokhara. The Surya Darshan Cooperative scandal in Pokhara is a nationally prominent case. Due to links with Gorkha Media, Rastriya Swatantra Party Chairman Rabi Lamichhane is among those accused. He was released from custody after three months upon posting a bail of 65 million rupees.

The Prime Cooperative in Pokhara recorded the highest embezzlement in Gandaki, with 1.54 billion rupees missing. The financial analysis report notes that Myagdi's Kumari Cooperative follows with 1.49 billion rupees embezzled.

The study also reports that 1.52 billion rupees were embezzled from Pokhara's Surya Darshan Cooperative. Kaski and Parbat districts show the highest number of problematic cooperatives. Under provincial jurisdiction, there are issues in nine cooperatives—six in Kaski and three under the metropolitan city.

Problems have also been identified in five cooperatives in Parbat and three in Lamjung. "Based on the investigated files, we are urging cooperatives to return savings. If savings are not returned within the given timeframe, we write to the police for investigation and necessary action," said Registrar Rijal. "We have sent files of 19 provincial-level cooperatives to the police. Investigation and legal processes are underway."

Some of the embezzled cases have reached settlements. A full settlement has been reached for Kalika Cooperative in Lamjung, while partial settlements have been made for Image Cooperative in Baglung, and Baishali and Nagdhunga cooperatives in Parbat. The court has ordered the determination of the exact claims for all individuals, including debtors, for three cooperatives.

The government has established separate standards for cooperatives under federal, provincial, and local jurisdiction. Out of 878 cooperatives under Gandaki Province, only 594 are active. Rijal noted that 284 cooperatives are registered but remain inactive.

Thirty-five inactive cooperatives have already been dissolved, including 12 in Syangja, 6 in Gorkha, 5 in Parbat, 4 in Tanahun, 3 in Kaski, and 2 in Myagdi.

The Registrar's Office reported that one cooperative each in Lamjung, Baglung, and Nawalpur has been dissolved. A total of 22 cooperatives have been dissolved within the current fiscal year.

This year, the office monitored 61 cooperatives and issued directives to operate according to regulations. Over 200,000 rupees in fines have been collected from 32 cooperatives that acted against the rules. Rijal notes that many cooperatives face problems because operators used funds for personal interests.

"Cooperatives that opened fake accounts, invested outside their jurisdiction, and had weak internal control systems are the ones facing the most problems. The main fault lies with the operators," said Rijal. "Because savers and shareholders did not pay regular attention, cooperatives acted arbitrarily. Some cooperatives are in a critical state."

The financial analysis report states that when an institution faces problems, not only the operators but also the debtors come under legal scrutiny. Analysis shows that after the misconduct of many cooperative operators, debtors stopped repaying loans. The Registrar's Office stated that those who do not repay loans on time will be brought under legal scope.

"It is the responsibility of debtor members to pay the interest and installments after taking a loan," said Rijal. "Some debtors have not settled their loans under the illusion that they will be waived. Loans taken from cooperatives will not be waived; please settle your loans on time."

Section 71, Sub-section (3), Clause (a) of the Gandaki Province Cooperative Act, 2075, provides for the cancellation of registration of cooperatives that remain inactive without any transactions for two consecutive years. To resolve the problems seen in cooperatives, the office aims to conduct intensive monitoring of over 100 cooperatives next year and fully dissolve inactive ones.

There are nearly 3,000 cooperatives under the regulatory jurisdiction of federal, provincial, and local levels in Gandaki. The metropolitan city stated that problems have also been seen in other cooperatives under its jurisdiction, and studies are currently underway.

Kiran Shrestha, coordinator of the Victims' Savings Struggle Committee, says many victims have died while waiting in hope of getting their money back. "Savers who sat thinking their money was safe in the cooperative and could be withdrawn when needed are now dying because they cannot afford treatment when they get sick," he said. "Neither have we received money through protests, nor through courts and offices."

Shrestha stated that they feel a sense of state failure. In some cooperatives, settlements have been made with victims by guaranteeing the return of funds. Accused defendants of the Pokhara cooperative were arrested but released from custody after guarantees of repayment were made.

• Over 6 Billion in Overdue Loans

Of the total cooperative investments, over 6 billion rupees are in overdue loans. Problems have also arisen in some cooperatives because debtors did not repay loans on time. There are 61.78 billion rupees in savings in cooperatives under provincial jurisdiction in Gandaki, while 61.65 billion rupees have been invested.

Investments have not been made according to the spirit of cooperatives. There is an investment of 3.97 billion rupees in the agricultural sector and about 580 million rupees in the industrial sector. Similarly, there is 1.74 billion rupees in other investments. Most investments were in real estate, and many cooperatives are suffering because the real estate market has shrunk.

How much embezzlement in which cooperative?

Gandaki Cooperative Registration and Updates Cooperative Membership