The white paper on cooperative management has pointed out that the cooperative sector is in a serious structural crisis as cooperative organizations stray from 'self-regulation and self-control'. The white paper concludes that the core purpose of the cooperative movement is in crisis and that public trust in the cooperative sector is at risk of being seriously eroded if effective reforms are not made in a timely manner.

The ‘White Paper on Problematic Cooperative Management 2082’ issued by the Problematic Cooperative Management Committee states that a large number of cooperatives are at risk due to the arbitrary working style of the directors of the organizations and the illegal mobilization of savings in private companies and other businesses.

‘There is a lack of monitoring of cooperatives by cooperative members, weak good governance, opaque financial transactions, loan flow without or with poor collateral, loan flow without collateral or under pseudonyms, inadequate internal control systems, political interference, ambiguity in the scope of work between regulatory bodies, and lack of technology-based monitoring systems,’ the white paper states. ‘This is why the confidence of savers that their money will be safe is weakening.’ The white paper points out that the number of problematic cooperatives and the amount of claims are continuously increasing, making it challenging to pay them.

The federal government has so far declared 23 cooperatives as problematic. Of these, three cooperatives have already been managed and their assets and liabilities have been paid. These cooperatives are organizations with few savers and low total savings. Currently, the committee is responsible for managing the assets and paying liabilities of 20 cooperatives. 74,307 members of those cooperatives have demanded the return of savings of Rs 44.489 billion 5,626. Out of which, Rs 4.1266 billion 5,654 have been returned so far, according to the office.

It has been 8 years since the formation of the Problematic Cooperative Management Committee. During this period, most of the savers of the problematic cooperatives have not been able to get their money back. The white paper also points out the main problems and challenges of not being able to return the money. ‘During the period between the declaration of the cooperative as problematic and the declaration and the committee taking over the responsibility of the committee, due to the misappropriation of information documents and property related to the cooperative, it has become difficult to ascertain the liabilities and savings of the organization and to manage and pay the liabilities,’ the white paper states. ‘In the course of the committee’s work, most of the work needs to be done related to investigation and prosecution. However, the existing structure, jurisdiction and availability of manpower of the committee have made this task difficult. The white paper also mentions that it has been difficult to perform its work in an independent and impartial manner due to undue interference and pressure from vested interests and parties in the performance of the committee. The white paper points out that the committee's performance, lack of sufficient staff and budget, and weak record management system are also factors in the inability to return money to savers. 

It is also stated that there are problems in recovering loans and returning savings due to the fact that the details and documents of savers, loans and savings and loan amounts are not updated and accurate. The white paper mentions that the auction sale and recovery process could not be carried out due to the fact that the assets in the names of individuals and companies related to problematic cooperatives and organizations are frozen by banking institutions and courts. 

It is stated that due to insufficient capital of most of the cooperatives declared problematic and high non-recoverable loans, the deposit refund work has not been carried out as per the demands of the victim savers. It is stated that the delay in returning the savings of the savers is preventing the victims from getting justice on time, and distrust in the committee and the government is increasing.

 ‘During that period, interest groups misused false information and alliances by spreading misinformation and creating agitations and protests, and other means, and it is likely that the committee will find it difficult to perform its duties in the coming days,’ the white paper states. ‘When examining the details of the transactions, records, etc. of the cooperatives concerned as per the claim applications received, it was found that the details of all the debtors, supporting documents were missing/hidden, accounts were not reconciled, and even though the debtors claimed to have paid the loan, the cooperative system was not updated.’