Graft and cooperatives

The news that graft is ruling the roost in the country's cooperative societies is unlikely to stir up any major reaction at the policymakers' level. Where there are cooperatives, there must be irregularities - financial or otherwise. Such is the popular perception about cooperative movement in the country. Despite having all the potential to work as a very important vehicle for improving the socio-economic conditions particularly of the poor and low-income people, the cooperative movement has thus failed to gather pace because of the people's lack of confidence in it. Widespread allegations of irregularities and fraudulence are largely responsible for making the cooperative movement unpopular among the people.
But the principles of cooperatives are being successfully replicated by the registered non-governmental organisations (NGOs), primarily involved with microfinance. The NGOs are disbursing loans worth billions of takas every year among their members; the loan-repayment rate by their clients is more than 90 per cent. But in the case of normal cooperatives both borrowers and office-bearers are found to be at fault while dealing with money or anything valuable. The main problem lies with monitoring and supervision. The NGOs do normally keep a close watch on the use of funds borrowed by their members and always remain extra-vigilant over the matters of loan recovery. But the lawful regulator in the case of cooperatives, the Department of Cooperatives (DoC), has turned out to be an over-indulgent entity.
Thousands of allegations, sent reportedly in a written form, generally against the office-bearers of the cooperative societies, remain piled up with the DoC. In most cases, the DoC officials ignore the allegations while in some selected cases they tend to be hyper-active. But speed money, allegedly, does influence the course of their action or inaction. The DoC, however, blames the shortage of manpower for the delay in taking actions against errant cooperatives or their officials. True, the department has severe shortage of manpower and logistics. It is not at all possible for the department to oversee 0.17 million primary cooperative societies and 1,300 central cooperatives that, according to an estimate, handle funds worth over Tk 50 billion.
The laissez faire approach of the DoC has given rise to some major financial scams. Fraudsters from time to time floated the so-called multi-level marketing (MLM) companies and cooperative banks and made use of the multipurpose cooperative principles to cheat innocent people, financially. The 'Destiny' is a glaring example. For years together, a number of MLM companies swindled funds worth billions using the cooperative societies as conduits. But the DoC, in most cases, did not bother to look into their activities, deliberately or otherwise.  Definitely, the DoC is an under-staffed public sector entity given the charter of its activities. However, one cannot be assured of better services from it even after raising the strength of its staff and improving the logistical situation if one goes by its past track record.
Only some days back, the National Cooperative Day was observed with much fanfare. Strong resolve was made in public by the top-level policymakers to achieve transformation in the rural areas be generating more resources through cooperative societies. But words need to be complemented with appropriate actions to get the desired results. In addition to increasing the organisational strength of the DoC, the government should beef up the latter's regulatory role and update the cooperative laws and rules in the light of the recent scams involving the MLM companies.