Every work day, Kumari would leave her house at BP Chowk in Itahari-1, at 10 am and head to her office, Ambekoshi Saving & Cooperative Limited at National Galli. A collection agent, Kumari, 36, who spoke on condition of anonymity, would then spend the day visiting clients in around 50 shops in Itahari.

She would collect money from depositors and go back to the office to hand over the day’s collection and her clients’ passbooks to the accounts department. She would be done at around 6 pm. This had been her daily routine for the past four years until September last year. A crisis had been brewing for over a year at the cooperative and in August 2022 the cooperative capped withdrawals to below Rs30,000.

For the next six months, Kumari and other staff at the cooperative reiterated the cooperative’s assurances to the clients that their money would be returned by August 2023, in instalments. But by then the cooperative’s chairperson, Phanindra Bahadur Magar, had gone out of contact. Soon after, around 1,225 complaints of fraud were filed against him at the Provincial Cooperative Registrar Office, Inaruwa. The cooperative owed a total of Rs287.5 million in depositors’ money.

On November 29, 2023, the District Police Office sealed the cooperative’s office. Magar is currently in police custody for a preliminary investigation into the fraud case following a January 4 District Court order.

However, Magar’s incarceration would neither serve the depositors nor the cooperative’s employees who have been left to face the brunt of the backlash against the cooperative.

“At first I tried to convince my clients that they would get their savings back. But as the months progressed, it became clear that that was not to be,” said Kumari. “People were angry at me and accused me of duping them into depositing their money at the cooperative. I couldn’t leave my job as I was waiting for my salary to be cleared and because I had also deposited my money with them, I had no choice but to wait. I also felt morally obligated to stay and help the depositors recover their savings.”

But on November 15, a group of 10 people surrounded Kumari and verbally abused her. They even threatened to harm her husband and their 10-year-old daughter. That was the last time Kumari went to her office.

Kumari had saved around Rs200, 000 for her daughter’s future. She has stopped sending her daughter, who was in grade two, to school since she hasn’t been able to pay the tuition fees. “My savings are gone. I did not get my six months’ salary. The depositors have turned me into the enemy, but I am also in the same boat as them. I was a collection agent and was only doing my job.”

Despite being a depositor herself, Kumari has yet to file a complaint against her employer. “There were 22 of us employed at the cooperative. None of us have filed complaints because we don’t have passbooks in our name,” she said.

In May 2022, 30-year-old Dalli (name changed) was promoted to the role of marketing officer at Shivashikhar Multipurpose Cooperative Society Limited at Dhangadhi after working in the company as a collection agent for almost six years.

As a marketing officer, she promoted financial services, attracted new members, and boosted member retention through strategic marketing and outreach events.

She was eight months into her new role when news of the regional head of the Sudurpaschim branch of the company, Hem Raj Joshi, being on the run started circulating.

Joshi had gone missing since January 31, 2023. By the first week of February, depositors had started gathering at the cooperative’s office demanding their money back. On February 6, around 300 depositors reached the office and started asking for answers from the staff. “There were seven of us in the office. If the police hadn’t got there on time, the angry mob would have attacked us,” said Dalli.

For the next two months, Dalli did not step out of her house. The locals, including her extended family, had started turning against her and reached her mother’s house accusing Dalli of cheating them. “I am not a fraud. I worked for a company that was involved in fraudulent activities. The cooperative’s clients were not willing to listen to me. If I was working in cahoots with Joshi, I wouldn’t have deposited Rs900,000 of my mother’s savings in the cooperative just two days before Joshi fled,” said Dalli.

Employees like Dalli who have their own money deposited at the cooperatives they worked are caught between a rock and a hard place. Unlike the customers, most of them do not have the needed paperwork to file an official complaint. “We didn’t take out our passbook, postponing it for later as we were working in the company,” she said. “That was our biggest mistake. Now I don’t have anything to show to prove that I also deposited my money there.”

What transpired at the cooperative not only left her in financial ruin but also spelt disaster for her personal relationships. “My husband filed for a divorce soon after things started going down at the cooperative. He is now seeking custody of our daughter. I am at my wit’s end,” she said.

Dalli now works for Sangam Savings and Credit Cooperative in Kailali. Despite her bitter experience in her previous job, she had no choice but to join another cooperative. “I have no money. The only job I could beg my way into was this one. I started working here in December last year and I can only hope that this cooperative won’t turn out to be like the last one,” she said. “My colleagues from the previous office are still unemployed, so I feel grateful for this job.”

Dalli is now trying to find ways to get her money back from Shivashikhar Multipurpose Cooperative Society Limited. “I can’t fill out the online form to claim my money. The Problematic Cooperative Management Committee asks for the passbook to be able to fill the form, but I don’t have my passbook. I am trying to see if other documents will work as proof of my deposit.”

The government declared Shivashikhar Multipurpose Cooperative Ltd as ‘problematic’ on September 11, 2023. It owes Rs14 billion to depositors across Nepal. The former president, Kedarnath Sharma, among others accused, is currently in police custody for investigation.

“The ones who should be responsible have run away. Compared to us, even those in jail, like Sharma, enjoy better facilities and security. They're comfortable while we've lost everything,” lamented Bhumi Sarah Shahi, a collection agent at now-defunct Shivashikhar Multipurpose Cooperative Ltd. The 35-year-old joined the Kailali Branch of the cooperative in Lamki on 18 October 2022. Rumours of trouble at the cooperative surfaced a month later. By August 2023, the office was shuttered.

“I deposited money from the Women’s Club in my village into the cooperative for easy transactions and security. The club has Rs356,000 with the cooperative. The club members wanted their money back so I mortgaged some of my gold jewellery, but that wasn’t enough,” she said. “Everyone now sees me as the enemy. I don’t know how I will get through this phase of my life.”

Tulsi Saving and Credit Cooperative Limited in Siraha in Madhesh province owes around Rs8 million to the locals of Golbazar in Siraha. The government declared the cooperative problematic on September 11, 2023, and the District Police sealed the cooperative. The employees were left in the lurch and hadn’t been paid for two months when the cooperative was shuttered in November of the same year.

According to the Problematic Cooperative Management Committee, 5,381 online demand forms have been filled by the cooperative’s victims from Koshi and Madhesh provinces, totalling an estimated amount of Rs1,564,318,000.

Under Section 104 of the Cooperatives Act, 2018, the committee handles the assets and liabilities of 15 cooperatives labelled problematic by the Ministry of Land Management, Cooperatives, and Poverty Alleviation.

Keshav Prasad Poudel, the committee’s member secretary, says several more cooperatives should be declared problematic, but the government has so far declared only 15.

According to him, the committee has been facing problems returning money to depositors as the government has yet to declare many defaulting cooperatives problematic. “When a cooperative faces a crisis, its lender, the National Cooperatives Bank, auction the cooperative’s property (land) based on its own policies disregarding the Cooperative Department Policy. When that happens, depositors have less chance of getting their savings back,” he added. “The government should ensure that property auctions of cooperatives align with the Cooperative Department Policy rather than the bank’s policy.”

The quagmire in which employees of cooperatives find themselves in has more than just financial repercussions. Personal relationships have been put at stake with neighbours and family members fighting each other for a lack of trust. As they grapple with lost savings, unpaid salaries, anger, and threats from desperate depositors, their lives highlight the collateral damage of a broken cooperative system.

Following two months of protests, a seven-point agreement was signed in August 2023 in the presence of Minister for Land Management, Cooperatives and Poverty Alleviation Ranjita Shrestha and representatives of the struggle committee formed by the victims. As per the agreement, the decision was made for the ministry to coordinate with the office of the Problematic Cooperatives Management Committee to chart out a clear action plan.

For Ankita Para, a 28-year-old former employee of Tulsi Saving and Credit Cooperative Limited, the government’s promises of resolution of the crisis do not mean much when she still deals with calls from angry depositors asking her to refund their savings. “Although I left the company in March 2023, when I heard Utsab Khadka, the office in charge, was on the run, I still get calls from my previous clients,” she said. “ They want their money back and they hold me responsible for the fraud.”

According to Poudel from the Problematic Cooperative Management Committee, there has been little progress in resolving the issue. “So far, victims of only three cooperatives out of the 15 declared problematic have got back their savings,” he said. “The delay in declaring defaulting cooperatives problematic on time, a lack of proper documentation of the depositors and the adoption of the bank’s policy over cooperative policy during the time of auction has created several hurdles.”