Nepal's Co-operative Finance Companies Financial Scam Nationwide - A Country Without Government Oversight and Central Bank Monetization Puts Poor People at Risk
The past few years have witnessed a series of shocking financial scams involving co-operative finance companies in Nepal. From large-scale embezzlement to fraudulent land plotting schemes, these scams have left ordinary depositors in distress and financial ruin. What's even more concerning is the lack of government oversight and central bank monitoring, which has allowed these scams to thrive, leaving many to wonder if the country is operating without a functional government.
In a shocking revelation, Shivshikhar Co-operative has been exposed as perpetrating a financial scam five times larger than the infamous Oriental Cooperative Society case. Kedarnath Sharma Neupane, the mastermind behind the scam, allegedly embezzled a staggering 15.5 billion rupees from ordinary depositors through Shivsikhar Multipurpose and Tulsi Cooperative. Additionally, he obtained 5.5 billion rupees from various banks under his investment, resulting in a total fraud amount that dwarfs the Oriental case.
Sharma, who had been evading authorities for an extended period, was finally apprehended in India recently. The investigation revealed that the funds of Shiv Shikhar Cooperative had been channeled into 43 private companies under the Shikhar Organization. Approximately 6 billion rupees were traced to India, with the remaining amount still unaccounted for.
Shivshikhar Cooperative operated through 35 branches across the country, collecting funds from depositors. The Tulsi Cooperative faces a similar situation, with more than 1.45 billion rupees in deposit liabilities. The total number of affected savers in Tulsi Cooperative amounts to 21,154. Authorities have arrested several individuals connected to the fraudulent activities, and the investigation continues.
Pokhara, Nepal - The once-hopeful savers of Image Savings and Loan Cooperative in Sirjanchowk now find themselves in distress as the cooperative's chairman, Dev Kumar Nepali (former mayor of Baglung's Dhorpatan Municipality), and manager, Deepak Paudel, have absconded with an estimated 2 billion rupees. The fraudulent scheme has left numerous depositors, including hardworking citizens and Tibetan refugees, in financial ruin.
Victims recount their struggles to retrieve their savings, as the chairman misused funds to buy land, then sold it back to savers at inflated prices. A committee formed by the victims is leading protests against the fraudulent scheme, with over 394 complaints filed, claiming losses exceeding 65 crores rupees. Efforts to track down Dev Kumar and Deepak have so far been unsuccessful, with arrest warrants issued against them.
Pashupati Savings and Credit Cooperative has come under scrutiny as numerous savers have been deceived by a land plotting scheme. Chairman CB Lama stands accused of misusing the deposit money to buy land in the name of individuals and companies, then pressuring the savers to buy the land back at inflated prices.
One victim, Surjalal Tiwari from Chitwan, deposited 1.26 crore rupees. As the cooperative fell into crisis, they offered land as an alternative, but the land's actual value was far less than the price set by the cooperative. The cooperative department has sought assistance from the Central Investigation Bureau (CIB) to investigate the board of directors, including Chairman CB Lama.
Sumeru Cooperative owner Bharat Maharjan is accused of embezzling more than 10 billion rupees saved by common people. Bharat, who started as a normal businessman two decades ago, built an extraordinary business empire, including Sumeru Hospital, Sumeru City Hospital, Sumeru Medical College, and a dozen other companies—all funded by depositors' money.
According to a white paper jointly issued by the Board of Directors and savers, the total funds deposited by 34,778 savers amount to a staggering 10.347 billion rupees. Only a small fraction (1.098 billion) was invested in loans, while the remaining was siphoned off into Bharat's private companies. As the crisis worsened, Bharat abruptly left for Britain, orchestrating a fake divorce to divide wealth among his children.
The white paper highlighted the market value of company assets at 11.49 billion, with depositors' savings at 10.34 billion. Efforts to return savers' money face significant legal challenges as assets are registered in Bharat's family members' names.
The Crisis of Governance: A Nation Without Oversight
The series of co-operative finance scams in Nepal underscore the urgent need for stringent regulations and robust government oversight to protect depositors' interests. Without a functional government and effective monitoring by the central bank, the poor and hardworking citizens become vulnerable to fraudulent schemes. The Co-operative Act of 2074 prohibits the misuse of savings for purposes other than investing in loans among members, purchasing government bonds, or real estate investments—yet these provisions have been routinely violated.
The Nepalese government and Nepal Rastra Bank face scrutiny for their alleged negligence in addressing the financial pain and burden faced by the public. As the cases unfold, the nation awaits justice for the affected depositors and a thorough examination of the regulatory framework to prevent such financial crimes in the future.
Global Post Headline — Independent investigative journalism from Nepal. globalpostheadline.com
