Nepal: Duped depositors waiting to get their money back

KATHMANDU (The Kathmandu Post/ANN) -  The duped depositors of failed Oriental Cooperative have not received any relief even a year after the establishment of the Problematic Cooperatives Asset Management Committee.

Oriental owes Rs17 billion to its creditors including depositors, apartment buyers, the government and banks and financial institutions

 The committee was set up to identify and liquidate assets owned by Oriental Cooperative’s promoter Sudhir Basnet and distribute the money to its creditors, but it has not achieved any progress due to its slow pace of work.

The committee estimates that Oriental owes Rs17 billion to its creditors including depositors, apartment buyers, the government and banks and financial institutions. The seven-member committee is authorised to settle the liabilities of the cooperative by selling Basnet’s assets. According to the committee, it spent the past year identifying the assets owned by Basnet and his family.

Oriental Cooperative went bankrupt in 2013 after it disbursed loans haphazardly and allowing its key promoter Basnet to illegally invest depositors’ funds in the real estate market which later crashed. The committee has validated the claims of 7,545 applicants including depositors and banks that issued loans to Oriental.

The government declared Oriental a ‘troubled’ cooperative on November 6, 2017, following which the committee was formed in January 2017. Rewati Raman Pokharel, spokesperson for the committee, said their investigation had been delayed as they were fulfilling legal procedures.

Pokharel said they had confiscated the properties of 60 employees of Oriental and barred them for selling them. During the investigation, the committee discovered that Basnet had few assets in his name.

According to Pokharel, the committee has also identified Basnet’s assets that have been used as collateral at Prabhu Bank, NIC Asia Bank, Employee Provident Fund, Nabil Bank and Rastriya Banijya Bank to secure loans for the cooperative.

As per the committee, the banks are likely to auction off the assets to recover their money, which means there will be little left for the depositors. “The Employee Provident Fund has issued a loan against Vega City Apartment as collateral. The money received from the sale of the apartment building may exceed the amount owed to the Fund,” Pokharel said.

According to Pokharel, they have seized computer software and scrutinised the financial transactions carried out by the cooperative’s branches in Itahari, Biratnagar, Birgunj, Pokhara, Sankhu, Kathmandu, Lalitpur and Bhaktapur. The committee has also located large plots of land owned by Oriental Cooperative in Chitwan, Nawalparasi, Kaski, Morang and Syangja districts.

Last month, the committee had prepared to auction off shares in Global IME owned by Sudhir Basnet’s wife Niti Thapa Basnet, but it had to pull back following a Supreme Court stay order against confiscating the shares. The committee had planned to sell 136,233 promoter shares and 50,087 ordinary shares owned by Basnet’s wife, and distribute the money to the depositors of Oriental Cooperative.

Basnet owns 14 housing colonies and apartment buildings and hundreds of ropanis of land in the Kathmandu Valley. Oriental Colony, Chakrapath Heights at Basundhara, Dhumbarahi Apartments Phase 2, Bagmati Apartment at Sankhamul, Eastern Apartment at Kausaltar, Vegas City at Balkumari, Imperial Apartment at Naxal and Sanepa Height Apartment are among the key properties developed by the cooperative.

Several savings and credit cooperatives have gotten into financial trouble by not implementing good governance practices. There are more than 35,000 cooperatives in Nepal, among which 13,500 are financial cooperatives. They hold deposits totalling around Rs300 billion.

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  • Duped depositors waiting to get their money back

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