Lumbini Province Faces Growing Crisis as Cooperative Financial Misconduct Escalates

Butwal. Following the discovery of a nearly 30 million rupee embezzlement by the manager of Laligurans Cooperative in Rambha Rural Municipality-4, Palpa, the board of directors conducted an internal investigation and suspended the manager.

Later, after a complaint was filed at the Office of the Provincial Cooperative Registrar in Dang, the office conducted a field visit, and the police arrested the manager. Manju Pandey, the Provincial Cooperative Registrar and Deputy Secretary, stated that the investigation is ongoing as a three-year audit of the cooperative is required.

In Bardiya, the board of directors of the Madhyawarti Kshetra Aguwa Krishak Multipurpose Cooperative has also initiated an investigation into suspected embezzlement by its manager. After the manager became unreachable, the directors traveled to Dang to seek a recommendation from the Provincial Registrar's Office, which is required to file a formal complaint with the District Police Office, Bardiya.

The Cooperative Registrar's Office stated that staff have been deployed to investigate the incident, and a report is currently being prepared.

Similarly, City Savings and Credit Cooperative in Banke has also been accused of embezzlement by its manager. According to the Provincial Cooperative Registrar's Office, complaints have been filed against three cooperatives in the current fiscal year alone.

There are currently 848 registered cooperatives in Lumbini Province. Last year, seven cooperatives faced issues, and with 23 previously identified, a total of 33 cooperatives are now on the problematic list. The Registrar's Office stated that initiatives are underway at various levels to resolve these issues.

According to details received by Ratopati from the Cooperative Registrar's Office, cases have been filed in court against eight cooperatives. In seven cooperatives, agreements have been reached between both parties to return depositors' funds. Furthermore, 12 cooperatives have been referred to the police for further investigation, and three cooperatives have received court verdicts, with recovery processes now underway.

Based on the board of directors' applications, field studies have been conducted for three cooperatives, and reports have been prepared. Deputy Secretary Pandey stated that after reviewing these reports, recommendations for further action will be made to the police or other agencies as necessary.

According to her, among the 12 districts in Lumbini Province, most of the problematic cooperatives are in Rupandehi, followed by Dang, Banke, Bardiya, Palpa, Nawalparasi, and Gulmi.

• What is the status of the 33 problematic cooperatives?

Incidents of irregularities and embezzlement of depositors' funds in cooperatives are increasing across various districts of Lumbini Province. Experts in the field believe that recent events in Palpa, Bardiya, and Banke have raised questions about public trust in the cooperative sector.

The Cooperative Registrar's Office reported that eight cooperatives in Lumbini Province are currently facing court cases, including Namaste Savings and Credit Cooperative Ltd. (Bardiya), Namaste Savings and Credit Cooperative Ltd. (Banke), Deukhuri Savings and Credit Cooperative Ltd. (Dang), Supreme Savings and Credit Cooperative Ltd. (Rupandehi), Star Multipurpose Cooperative Ltd. (Rupandehi), Rupauliya Women's Multipurpose Cooperative Ltd. (Nawalparasi), Margadarshan Multipurpose Cooperative Ltd. (Rupandehi), and Phulbari Savings and Credit Cooperative Ltd. (Palpa).

Among the 12 cooperatives referred to the police for action, some officials and managers are in custody. These include Agantuk Savings and Credit Cooperative Ltd. (Rupandehi), Global Savings and Credit Cooperative Ltd. (Banke), Nagarik Savings and Credit Cooperative Ltd. (Dang), Shine Multipurpose Cooperative Ltd. (Rupandehi), Sarthak Multipurpose Cooperative Ltd. (Rupandehi), Manjushree Multipurpose Cooperative Ltd. (Rupandehi), Saptadiya Multipurpose Cooperative Ltd. (Rupandehi), Upakar Multipurpose Cooperative Ltd. (Rupandehi), Upadesh Multipurpose Cooperative Ltd., Durgami Multipurpose Cooperative Ltd. (Rupandehi), Mega Savings and Credit Cooperative Ltd. (Banke), and Palhi Multipurpose Cooperative (Nawalparasi).

Three cooperatives in the province are in the recovery process following court verdicts: Rastriya Savings and Credit Cooperative Ltd. (Gulmi), Traiyambakam Herbal Cooperative Ltd. (Rupandehi), and Rajdhani Savings and Credit Cooperative Ltd. (Dang).

Seven cooperatives reached settlements through discussions: Aayam Multipurpose Cooperative Ltd. (Rupandehi), Sunaulo Multipurpose Cooperative Ltd. (Rupandehi), Bishwobirat Multipurpose Cooperative Ltd. (Rupandehi), Janasewa Multipurpose Cooperative Ltd. (Dang), Namaste Multipurpose Cooperative Ltd. (Rupandehi), Laligurans Savings and Credit Cooperative Ltd. (Palpa), and Rising Multipurpose Cooperative Ltd. (Rupandehi).

Upon receiving complaints, the Cooperative Registrar's Office deploys staff to investigate and initiate further processes. Cooperatives currently undergoing this process include Madhyawarti Kshetra Aguwa Krishak Multipurpose Cooperative Ltd. (Bardiya), Gorkha Multipurpose Cooperative Ltd. (Dang), and City Savings and Credit Cooperative Ltd. (Banke).

• Provincial Government Prepares to Amend the Act

The provincial government has announced various reformative initiatives to make the cooperative sector organized, transparent, and reliable. Tikaram Pokharel, Vice-Chairman of the Provincial Cooperative Board, stated that work is being done in phases with the aim of securing depositors' funds and taking action against the guilty.

He explained that because there is legal ambiguity regarding the declaration of problematic cooperatives at the provincial level, similar to the federal level, the Lumbini Province Cooperative Act 2076 is being amended. He noted that while Section 84 of the Act allows for declaring a cooperative problematic, the provisions in Section 85 regarding the formation of a management committee are complex, leading to implementation difficulties.

Pokharel clarified that the lack of skilled manpower at the provincial level, unlike at the center, makes it difficult to form management committees, necessitating the amendment. He informed that the study task force for managing problematic cooperatives has submitted its report, and the amendment proposal has moved from the Ministry of Cooperatives to the Ministry of Internal Affairs.

After the amendment, the provincial government will be able to declare cooperatives with serious issues as problematic. Deputy Secretary Manju Bhusal clarified that, until now, the office only has the legal authority to make recommendations.

She estimated that currently, about 10 to 12 cooperatives could be declared problematic. She stated that initially, efforts are made to coordinate between the cooperative, management, and depositors according to the Act, and if the issue is not resolved, it is referred to higher authorities. She emphasized that only cooperatives in serious conditions, such as those where returning member funds is difficult or directors have absconded, should be declared problematic.

Overall, the provincial government has stated that its goal is to protect the interests of depositors by resolving issues in the cooperative sector through the amendment of the Act.