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.
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. After evading authorities for several months, he was arrested in New Delhi in September 2024 and extradited to Nepal.
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.
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.
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.
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: