KATHMANDU, MAY 19 -
Promoters of many troubled cooperatives never invested a penny of their
own money but poured billions from public deposits, advance payments
and bank loans into dubious housing projects in high risk investments,
said the High-Level Commission formed to probe cooperatives in distress.
The report submitted by the probe committee to the government has
included a separate section on the problems of housing projects launched
by promoters of troubled cooperatives even though it is primarily
focused on the cooperative sector.
Savings and credit cooperatives including Oriental, Guna and Bagmati
raised billions of rupees from doctors, engineers, high government
officials, lawyers, judges and economists with the lure of high interest
rates but without following cooperative principles. They didn’t invest
so much in other projects but spent big money on buying land to start
housing projects. The money paid by new depositors was used to pay
interest to old depositors at the cooperatives.
“Even a small shock in the financial market would naturally push such
investments into risk as there weren’t other investment portfolios,”
said the report. “People’s savings were put at risk not with the
intention of managing their money but with the intention of becoming
rich overnight.”
The usual practice was to buy land using public deposits and then
establish a housing company. The money was raised from those who booked
housing and apartment units, but it was not deposited in the name of the
cooperative or the housing company.
All the money thus collected was not spent on developing the housing
project. It was used to show equity to get loans from banks. “They
became billionaires without making an investment,” the report said.
An estimated 23 banks have invested in the troubled housing projects.
Gauri Bahadur Karki, chairman of the commission, said cooperative
prompters have been found to have invested the people’s money in their
own housing, airline and other projects, without keeping a transparent
account.
“For example, Sudhir Basent has purchased 700 ropanies of land in
Chhampi, Lalitpur, and 200 ropanies of land in Gundu, Bhaktapur,” he
said.
The promoters of the housing projects didn’t keep their transactions
transparent deliberately. “There is clarity regarding assets and
liabilities, but there are no employees to look after administration,
accounting and marketing,” said the report.
After Nepal Rastra Bank imposed a cap on realty lending, land
transactions went down and prices dropped, but the chairmen of the
cooperatives could not sell their land and they had no cash to repay
bank loans.
“As they could not repay their banks, they went into hiding and their
housing projects collapsed like a house of cards,” the report said.
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