Helpless victims of cooperative fraud await justice

cooperatives scam Prosperous Savings and Credit Cooperative Ltd
Cooperative scams, including cooperatives like Prosperous, have duped the money of tens of thousands of people in Nepal.

Sandhya Sharma had been saving money in a cooperative for three years without her husband’s knowledge. Her husband, a bus driver at Sajha Yatayat, always gave her money for lunch and miscellaneous expenses. She would collect the Rs 100 given to her and save it and deposit it at Prosperous Savings and Credit Cooperative Ltd close to her home in Pepsicola in Kathmandu.

She started collecting and saving when she was pregnant, hoping for a better future. She sacrificed many lunches and cravings to make sure she could send her kids to a good school in Kathmandu without having to rely on anyone.

“I saved all that money so I would not have to plead with anyone when the time comes to enrol my child in school,” she shares as she cradles and caresses her one-and-a-half-year-old son in her lap.

She had met the cooperative’s employees at a local grocery shop. Lured by all the talks, she decided to save money there. By April, she had saved Rs 120,000 in the cooperative. But when no one came to collect money in May, she realised something was wrong. The owner had fled and she was a victim of fraud.

“I feel cheated. How do I get the money back? This is distressing,” she says.

Cooperative scam leaves individuals like Sharma devastated, with tens of thousands of victims still awaiting the recovery of billions of rupees. The situation has sparked widespread fear and uncertainty, particularly among those who had entrusted their life savings to these cooperatives.

People cheated by cooperatives are currently gathering at Maitighar Mandala for the past few weeks. She too reached the gathering, with her son. While she is still hurt by what has happened, meeting others like her has provided some comfort as she hopes the government will do something about it.

The biggest cooperative scam

Following the high-profile embezzlement cases of Sudhir Basnet, involving Rs 4 billion in Oriental Cooperative Society, and Ichcharaj Tamang, involving Rs 6 billion in Civil Cooperative, this cooperative scam has emerged as the largest in terms of financial damage, causing five times more harm to the affected individuals.

shiv shikhar-cooperatives-scam-graphics
A look at the cooperative scam involving Shikhar Organization

Kedarnath Sharma Neupane stands accused of embezzling around Rs over 15.5 billion depositors’ funds through Shiva Shikhar Multipurpose Cooperative and Tulasi Multipurpose Cooperative Ltd. In addition, Neupane obtained Rs 5.5 billion from various banks under the guise of investments in different companies.

SP Navaraj Adhikari from the Central Investigation Bureau (CIB) has reported that funds from the Shiva Shikhar Multipurpose Cooperative were discovered to have been invested in 43 private companies affiliated with the Shikhar Organization, owned by Neupane and his family. It has been confirmed that the depositors’ money has been embezzled in this process.

Adhikari says Neupane invested a total of Rs 8 billion in these companies of which, Rs 6 billion was transferred to India where his multiple investments have also surfaced while the remaining amount is still unaccounted for.

Shiva Shikhar Cooperative, operating through 35 branch offices nationwide, has been implicated in embezzling funds. Additionally, the cooperative runs 18 marts in various locations, which have received loans amounting to over Rs 3 billion.

Tulasi Cooperative, on the other hand, has 21,154 account holders. However, specifically from its central office in Biratnagar, 1,307 depositors have lodged complaints regarding the embezzlement of over Rs 508 million from their accounts.

Neupane, who has been absconding for a long time, was arrested from India on June 26. CIB are expecting that he reveals more about his investment and the cooperative scam in interrogation.

Sharing the pain

victims of cooperative scam - shiva-shikhar-bachatkarta-kirtipur-1
Cooperative scam victims: People reach Shiva Shikhar Cooperative’s office in Kirtipur in hope to get their money.

Sharma is not the only victim. Rita Bhattarai, another victim, owns a small clothing store in Koteshwor. She also deposited money in the cooperative.

“My son said he wants to study science, so I deposited money in the cooperative. I had been saving for five years and had Rs 300,000,” says Bhattarai.

“They used to come to the shop to collect the money and even deliver the money whenever I needed it. However, they did not come to collect money around the end of April. When I asked, they told me that they were going to merge with another cooperative soon.”

After a few days, employees of Prosperous Cooperative informed her that the merger had been halted due to unpaid taxes. From that point on, every time she visited the office, Bhattarai would find it locked. That left her disturbed as she too faced the same fate as Sharma.

When she stopped hearing from the cooperative, Bhattarai went to the Koteshwor police office to file a complaint. The police told her to go to the ward office which assured her the owner of Prosperous Cooperative, Dipendra Shrestha, would issue a check on her name. But she still waits.

“I have not been able to pay rent. This has to stop. I need my money back,” said Bhattarai.

At Maitighar, the deep sorrow of losing their hard-earned money and the intense anger they feel towards the cooperatives are noticeable. However, finding solace in the company of fellow victims has provided some consolation. Presently, victims from 35 cooperative scams across the country have assembled at Maitighar Mandala.

Life at standstill

Cooperative scams including cooperatives like Shiva Shakti have duped the money of tens of thousands of people in Nepal.

For six years, Preeti Bade of Purano Thimi, Bhaktapur, had been saving her money at Swastik Saving & Credit Cooperative Ltd near her home. While pursuing higher education in Japan, Bade had assigned her sister, who operates a grocery store, the responsibility of managing her finances.

Her sister was diligently saving the money on Bade’s behalf, including not only her own savings but also those of other family members who were members of the same cooperative.

She had saved Rs 600,000 in the cooperative. But now she finds herself in a difficult situation, full of stress, as she is unable to recover her hard-earned money. 

After Bade returned to Nepal from Japan in 2020, she made inquiries about the money she had sent back home.

“At that time, there was a lockdown in place, so the cooperative had shared they were in a tight place too and asked to come later. Even after two years of the lockdown, Swastik has not returned the money,” she says.

In her quest to reclaim her money, Bade reached Suryabinayak municipality to knock on the doors of Ajay Shrestha, owner of the cooperative. However, to her dismay, its door was locked. This situation has led to daily conflicts and tensions within her family. Frustrated by the turn of events, Bade is now making preparations to return to Japan.

While Bade and leave Nepal for foreign employment, Gauri Lal Shrestha, 73, cannot. He feels elderly people like her have been hit by the cooperative scam the most.

Shrestha, from Bangemudha near Ason, is a retired agricultural engineer. Since 2017, he had saved nearly Rs 2 million at Shiva Shikhar Multipurpose Cooperative Ltd hoping it would help him when life gets tougher. 

Despite being a diabetic and having eye problems, Shrestha had been visiting the cooperative’s office since October 2022 to get his savings back, only to be sent back every time. When Shrestha last went back to the cooperative’s office, he found it locked. Now, he is at Maitighar sitting in the protest.

Bade tries to console him but at this stage of his life, he feels helpless and frustrated as the cooperative scam has taken away his hard-earned money. The constant thought of losing his savings keeps him awake at night, adding to his distress. Furthermore, his family also pressures him, reminding him of the money he lost.

This story was translated from the original Nepali version and edited for clarity and length. It is a part of the four-part series.

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Chand is an Onlinekhabar correspondent.

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