KATHMANDU, May 26: The Finance Committee of parliament has instructed the government to recover assets from the chairman, board directors, officials and senior staffers of Oriental Cooperative to return depositors’ money.
Thousands of depositors are still waiting their hard-earned money to be returned from the cooperative that landed into crisis three years ago due to haphazard lending practices and lack of corporate governance.
The committee’s meeting held on Thursday decided to direct the Ministry of Cooperatives and Poverty Alleviation (MoCPA), the Ministry of Finance and Nepal Rastra Bank (NRB) to take the process of returning depositors’ money from the troubled cooperative forward.
In it decision, the committee has told the government to sell movable and fixed assets of the senior officials of the cooperatives as well as their families and collateral pledged at the bank and financial institutions. It has urged the government to first repay loans of BFIs and return the deposits of public on proportionate basis from the amount generated from the recovery of assets.
According to the report of a probe commission formed by the government in September, 2013, under the leadership of former Special Court Judge Gauri Bahadur Karki, a total of 12,962 people have claimed that they lost Rs 7.6 billion in deposit and Rs 2.4 billion in interest amount in 150 cooperatives. Of the total claim, Oriental Cooperatives alone owes Rs 5.5 billion to around 11,840 account holders.
Though the committee has taken a lead to direct the government to return people’s deposits following the pressure from the victims of Oriental Cooperatives, the chance of depositors getting their hard-earned saving back is still slim. Experts say that the government lacks the legal framework to settle assets and liabilities of troubled cooperatives.
The erstwhile government led by Sushil Koirala had made amendment to the Cooperatives Act through ordinance last year to insert a provision of forming asset and liabilities management committee to return depositors’ money. However, it became void as it was not tabled in the parliament by the incumbent government.
An official at MoCPA told Republica that “some leaders of the cooperative movement lobbied heavily” to kill the amendment.
Among others, the Karki-led Commission had also recommended to the government to first amend the law to form such assets and liabilities committee which can work toward returning public deposits. The recommendation also includes forming new cooperatives law with provisions of strict punishment.
The Finance Committee has also instructed the Ministry of Home Affairs to nab the chairman, directors and high-level officials of Oriental Cooperatives and take action against them. Oriental Chairman Sudheer Basnet is at large, according to the police.
The finance committee has also directed the government to initiate the process of drafting new cooperatives law.