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Cooperatives new draft act seeks stiff penalty for fraudsters

A draft for new cooperatives has proposed strong penalty – including 20 year jail term – against frauds.

A high-level commission formed to investigate troubled cooperatives has proposed a new cooperatives Act that has included strong penalty against those involved in embezzlement of public money.

The existing Cooperatives Act does not have any provision to take action against cooperatives and their promoters, if they commit irregularities. The loophole in the Act and ‘political patronage’ has encouraged the cooperatives to cheat public.

The commission was forced to draft the new Act itself as others may not be able to address the sector that was conceptualised to help people but in Nepal has been a tool to cheat.

The proposed Act has provisioned jail term of up to 20 years for those involved in irregularities. They will also be subject to pay the misused amount plus an equivalent amount in fines, besides the jail term.

The proposed Act has recommended a strong recovery panel to recover the public deposits that have remained stuck with troubled cooperatives.

The commission formed six months ago is planning submit its report to Prime Minister Sushil Koirala tomorrow.

The commission had received some 12,778 complaints. It has also identified 130 cooperatives as troubled with Rs 9.63 billion liability. Of the total 12,778 complaints filed in the commission, some 11,286 are against Oriental. Oriental alone has more than Rs 6 billion in liabilities.

Out of the 130 troubled cooperatives, the commission has so far interrogated directors of 35 cooperatives. It has also asked the troubled cooperatives to submit their financial status. But none of the 130 troubled cooperatives have submitted till date.