Pointing out a number of flaws in the activities of the Department of Cooperatives under the Ministry of Local Government, Rural Development and Cooperatives, a Transparency International Bangladesh (TIB) report has termed 47% of the cooperative societies ineffective.
The report titled “Cooperative society management: Challenges and solutions for good governance” was revealed at a press conference held in the capital’s Mohakhali, yesterday.
Addressing the conference, Iftekharuzzaman, executive director of TIB, said: “We divided corruption in cooperative societies into two parts – corruption of officials under the cooperatives department and that of members of different primary cooperative societies. We’ve found that 47% of the cooperative societies are ineffective.”
“Clients of these institutions are being cheated by members of the managing committees who are greedy for more profit. The members are also taking additional money as interest, violating the policy of taking a maximum of 18%. People have been deceived many times by many cooperative societies like Destiny,” he added.
An additional Tk7,600-9,600 is charged for registration of cooperative societies whereas the actual fee is around Tk400, mentioned the TIB report. Besides, officials also charge for inspection and transfer, though there is no provision that permits this. The amount of money varies according to area.
According to the law, around 10% of the money or a maximum of Tk10,000 from the profit should be given to the department as survey fees every year. Officials, however, are charging Tk15,000-Tk20,000 from primary cooperative societies operating in divisions and Tk25,000-Tk30,000 from Dhaka Metropolitan Police-based ones. Besides, officials hide the real profit figures and show less to top officials in order to pocket money illegally from managing committee members.
It was stated in the report that a section of officials take transport expense from the members without actually inspecting the offices in person. They prepare inspection reports by talking to the members over the phone, though they are supposed to carry out inspections once a year.
The report said Destiny Multipurpose Cooperative Society was registered in 2005 and collected Tk2,058 crore from over eight lakh clients. Of them, around 30% were fake.
TIB deputy programme manager (research & policy) Mohammad Hossain said: “Members of the managing committees take 30-45% of interest on loans in violation of the policy that permits a maximum of 18%. On the other hand, they give 18-30% to clients against investments of the latter. It means they take more from clients but give less.”
The members maintain two account books – one for themselves and the other to be presented to the higher officials of the department.
The reasons for corruption are the lack of competent people, the lack of leadership, the lack of training, the lack of logistic support, the greed for more profit, the ignorance of the departments and the concealment of information by the managing committees to members of the primary cooperative societies.
“Cooperative societies are now less important but could play a vital role in our economy,” TIB Chairperson Sultana Kamal said.
The speakers made around 12 suggestions toward solving anomalies existing in cooperative societies and one of the key solutions was the formation of an “ethics committee” by the department to inspect the institutions with a view to reducing corruption and ensuring accountability.
Besides taking actions against the corrupted, coordination between the department and the ministry, budget allocation for the sector according to the demand, forming a survey section under the department, providing adequate training to officials, increasing logistic support like computers and Internet connectivity and digitising several processes of the department, including online registration of the institutions, were also suggested.
