January 14: The government has failed to manage problematic cooperatives. Although the government formed a problematic cooperative management committee six years ago for the management of organizations that could not return the depositor’s money, it has not been able to distribute the assets and liabilities even in a single case.

There is a provision in the Cooperatives Act 2074 that that allows the Ministry of Land Management, Cooperatives and Poverty Alleviation to declare a cooperative as problematic upon the recommendation of the Registrar of the Department of Cooperatives. Following the declaration, there is a provision in the law for the committee to investigate the organization's assets and liabilities and settle the arrears.

According to this arrangement, the Federal Government formed the 'Problem Cooperative Management Committee' on January 13, 2018. So far, the government has declared 15 institutions as problematic and assigned the responsibility to the committee to settle the issue, but none of the institutions have been held fully accountable.

According to member secretary of the committee, Keshav Prasad Paudel, the embezzled amount of the depositors of Kuber Savings and Loan Cooperative and Standard Multipurpose Cooperative has been returned to the depositors as of the last fiscal year but the authorities are yet to recover the loans given by both the organizations.

In 2074, the government declared Oriental Cooperative as problematic for the first time. However, Oriental Cooperative moved the court and won the case, the government could not settle its arrears. In 2079, Oriental was once again declared problematic by the ministry and handed over to the committee for financial management. The problem of Oriental Cooperative has not been resolved even in 10 years.

A commission formed by the government to study the problematic cooperatives had suggested to solve the problems of the cooperatives by forming a management committee. According to the suggestion of the commission headed by Gauri Bahadur Karki, the government incorporated the provision for the formation of the committee in the Cooperatives Act itself.

The government made Karki the first chairman of the committee. However, due to the change of government, he could not work for a long time. Then Yuvraj Subedi and Kumar Prasad Pokharel led the committee. Kashinath Dahal has been the chairman of the committee for two years.

According to the Cooperative Act, there is a provision that the chairman of the seven-member management committee should be a judge of the High Court or a person with similar qualifications. Similarly, there is a legal provision that among the members should be one person who has worked at the 11th level in the civil service, one person who has worked at the 9th level in a bank and financial institution or a chartered accountant, one member appointed by the Cooperative Federation and one member secretary of a gazetted second class government employee.

Sudarshan Prasad Dhakal, an expert on cooperatives, says that the management model of troubled cooperatives is flawed.

"There is a provision for the government to announce a cooperative as problematic and hand over its responsibility to the committee after the cooperative becomes problematic," he said, adding, "This provision is not helpful in solving the problems of the cooperatives."

The committee has also suggested the government to freeze the assets of the organization and its directors before declaring the organization problematic. A member of the committee said that by the time the committee takes over the problematic cooperatives, the organisations will already have sold all the property and the director hides the property, and even the documents of the organization are already lost. So, it is difficult to work.

"It is the responsibility of the government and the depositors to protect the assets of the organization before it is  handed over to the committee," he said.