Cooperative scandal in Nepal

Cooperative scandal in Nepal refers to financial misconduct and embezzlement carried out through cooperative savings and credit institutions, often involving misuse of public deposits. The issue has grown into a significant social and political concern, affecting thousands of Nepali citizens and exposing weaknesses in regulatory oversight and political influence.

Background

Cooperative institutions in Nepal, especially savings and credit cooperatives, have played a crucial role in providing financial services to low- and middle-income populations, particularly in rural areas. As of 2023, Nepal had over 30,000 registered cooperatives, with more than 7 million members.^[1]

These cooperatives operate under the Cooperative Act 2048 (1991) and are overseen by the Department of Cooperatives under the Ministry of Land Management, Cooperatives and Poverty Alleviation. However, regulatory oversight has been weak, leading to widespread mismanagement and fraudulent activities.

Major scandals

One of the most high-profile cases of cooperative fraud involved Dev Kumar Nepali, the former mayor of Dhorpatan Municipality in Baglung District. He was accused of embezzling over NPR 2.25 billion from depositors through the Image Savings and Credit Cooperative, which he founded and chaired.^[2] After evading authorities for several months, he was arrested in New Delhi in September 2024 and extradited to Nepal.^[3]

Another major cooperative, Oriental Cooperative, led by businessman Dipak Manange, was investigated for failing to return deposits worth over NPR 6 billion. Numerous similar cases have emerged in Kathmandu, Pokhara, and Butwal, leading to protests by victims and demands for government intervention.^[4]

Government response

In response to mounting scandals, the government formed the High-Level Cooperative Fraud Investigation Commission in early 2024. The commission is mandated to investigate large-scale fraud, recommend legal reforms, and ensure recovery of misappropriated funds.^[5]

The Department of Cooperatives has also started implementing stricter audit rules and mandatory reporting procedures for cooperatives holding deposits above a specified threshold.

Public impact

Cooperative fraud has deeply affected depositors, many of whom invested their life savings in such institutions. Victims have staged nationwide protests, accusing authorities of inaction and shielding politically connected fraudsters. The crisis has eroded public trust in Nepal's cooperative movement, which had previously been seen as a grassroots success story.^[6]

High-profile individuals involved in cooperative fraud in Nepal

Numerous high-profile individuals, including politicians, businesspersons, and cooperative officials, have been implicated in Nepal’s ongoing cooperative fraud scandals. Below is a list of key figures:

Politicians and Public Figures

• Rabi Lamichhane, chairman of the Rastriya Swatantra Party and former Home Minister, was found complicit in embezzling cooperative funds through Gorkha Media Network, where he served as managing director. Funds from cooperatives such as Swarnalaxmi, Suryadarshan, and Supreme were misused under his leadership.^[7]

• Dhanraj Gurung, Vice President of the Nepali Congress, had a complaint filed against him in relation to the Miteri Savings and Credit Cooperative fraud. His former spouse, Jyoti Gurung, is a key figure in the case and is currently absconding.^[8]

• Gita Basnet, a Member of Parliament from the Rastriya Prajatantra Party, had an arrest warrant issued against her for allegedly misusing cooperative funds to invest in Krishnasar Resort.^[9]

• Ichchha Raj Tamang, former Member of Parliament from the CPN-UML, was convicted of embezzling approximately NPR 8 billion from Civil Cooperative and is also implicated in banking offenses.^[10]

• Dev Kumar Nepali, mayor of Dhorpatan Municipality in Baglung District. He is the founder and former chairman of the Image Savings and Credit Cooperative, which has been at the center of one of Nepal’s largest cooperative fraud scandals, accused of embezzling over NPR 2.25 billion from thousands of depositors.^[11]

Cooperative Officials and Businesspersons

• Gitendra Babu (GB) Rai, chairman of Gorkha Media Network, is accused of orchestrating the transfer of cooperative funds to Gorkha Media and is currently absconding.^[12]

• Kumar Ramtel, director of Gorkha Media and former owner of Suryadarshan Cooperative, admitted to using cooperative funds to repay loans on behalf of Rabi Lamichhane. He is currently in custody.^[13]

• Chhabilal Joshi, former Deputy Inspector General of Police and director at Gorkha Media, has been arrested in relation to the embezzlement of funds from several cooperatives.^[12]

• Kedarnath Sharma, operator of Shiva Shikhar and Tulsi Cooperatives, was convicted of embezzling over NPR 14 billion from depositors and is currently serving his sentence.^[14]

• Chandra Bahadur (CB) Lama, former Nepali Congress candidate and operator of Kantipur Savings and Credit Cooperative, is in custody for misappropriating billions of rupees.^[12]

• Krishna Bahadur (KB) Upreti, former official of the Central Cooperative Department of the CPN-UML and president of Rashtriya Sahakari Bank, was imprisoned for misappropriating approximately NPR 6.27 billion.^[12]

• Raman Paudel, president of Mitramilan Cooperative in Pokhara, is in jail for misusing NPR 1.8 billion of depositors’ funds.^[12]

• Ajay Shrestha, president of Sacrifice Cooperative (Pokhara) and Siddhidata Cooperative (Lalitpur), is accused of embezzling large cooperative funds and is in custody.^[12]

• Shankar Karki, president of Prime Cooperative in Pokhara, and Surendramani Paudel, CEO, were jailed for embezzling NPR 597.2 million.^[12]

• Nunam Subba, president of Citizen Development Cooperative, is in Nakkhu Jail for fund misappropriation.^[12]

• Geeta Sharma, owner of Shivsikhar Cooperative Society, is in jail for embezzling NPR 9.58 billion.^[12]

• Tejvikram Thapa, president of Bhaktapur's Agricultural Development Cooperative, is in Nakkhu Jail for defrauding NPR 2.78 billion.^[12]

• Leela Bahadur (LB) Gurung, president of Kalyan Upkar Sahakari, is in Nakkhu Jail for misappropriating cooperative savings.^[12]

• Rabindra Chaulagai, president of Deurali Multi-Purpose Cooperative, is in Nakkhu Jail on similar charges.^[12]

• Dal Bahadur Ale, chairman of Arjan Cooperative Society, is serving time in Central Jail for cooperative fraud.^[12]

• Shivkumar Gurung (aka Mahendra Bhote), former director of Suryadarshan Cooperative in Pokhara, is imprisoned for misappropriating NPR 1.35 billion.^[13]

• Bhabishwar Aryal, software developer for Suryadarshan Cooperative, is in custody on charges of aiding the embezzlement.^[13]

• Ram Bahadur Khanal, shareholder of Gorkha Group and director of Nature Herbs International Pvt. Ltd., was arrested in relation to fund misuse from Surya Darshan Cooperative.^[13]

See also

• Economy of Nepal
• Corruption in Nepal
• Nepal Rastra Bank