Could asset declaration end embezzlement among cooperatives?

In an effort to combat embezzlement of funds plaguing cooperatives, a new law is under review that would require leaders of cooperatives to declare their assets before assuming their roles. The new cooperative law, proposed by the Rwanda Cooperative Agency (RCA), is currently under review by relevant authorities and other stakeholders awaiting to be tabled in parliament. According to the Rwanda Cooperative Agency’s annual report in the fiscal year 2022/2023, inspection teams in collaboration with district and sector cooperative officers conducted inspections in 1,226 non-financial cooperatives and full inspections in 35 cooperatives. At least 85 embezzlement cases were identified during the inspections. ALSO READ: Gicumbi: Six cooperative leaders arrested over embezzlement In 2023, Rwanda Investigation Bureau (RIB) apprehended six leaders of Coopérative du Thé Villageois Mulindi (COOTHEVM) in Gicumbi District on charges related to the embezzlement of Rwf690 million in cooperative funds believed to have occurred between 2021 and 2023. Patrice Mugenzi, RCA’s Director-General, told The New Times that the proposed law will facilitate in preventing the unchecked mismanagement of cooperative resources by holding those in leadership positions accountable. “As part of the law, cooperative leaders would be required to declare their assets upon assuming office and periodically thereafter. This practice mirrors accountability measures observed in governmental leadership roles, where asset declarations serve as a crucial tool in detecting any unexplained increases in assets,” he said. ALSO READ: Govt launches probe to uncover ‘ghost and dormant’ cooperatives He added, “Such measures will be essential to ensure transparency and accountability among cooperative leaders.” Mugenzi emphasized the importance of prioritizing collective welfare over personal gain, saying that implementing these practices would mitigate the risk of financial misconduct and reinforce ethical standards expected of leaders in positions of authority. He underscored that misappropriation of cooperative funds is a danger to the country's development. “It robs communities of resources that are necessary for advancement. Leaders who embezzle money for their own benefit undermine group initiatives to reduce poverty and promote economic expansion,” he noted. Such acts, he added, reinforce inequality and a cycle of poverty, leaving people unable to break free from financial challenges, rather than encouraging cooperation to improve communities. Accountability, transparency Embezzlement has flourished in cooperatives in part because of lack of accountability and transparency in management of funds Ernest Nshimyimana, the Managing Director of Dukunde Kawa Musasa Cooperative, said it is also lack of compensation that inadvertently incentivize leaders to prioritize personal gain over the cooperative's financial integrity. “Implementing this law will instill a culture of integrity and ensure that cooperative leaders operate in the best interests of their members and the broader community,” he said. Some of the proposed leadership and structural changes in the new law includes granting legal personality to cooperatives, guidelines on how profits are distributed to members in the form of dividends, and allows for investing and placement of funds in activity deemed profitable. This approach of allowing cooperatives to operate as profit-making organisations could potentially incentivize leaders of these cooperatives to run them professionally since they would be driven by the goal to generate profit on behalf of their members. “We believe that the proposed law under review, will serve as a critical tool in promoting accountability and protecting the hard-earned money of members,” Colette Mbarushimana, policy and legal coordinator of Transparency International, said. This, she believes, improve government oversight, asserting that the law will streamline the government's ability to effectively regulate and monitor cooperatives. Mugenzi pointed out that the proposed cooperative law holds potential to facilitate job creation by promoting confidence among individuals seeking opportunities within cooperatives. “As cooperatives represent a vital avenue for job creation, the implementation of asset declaration measures offers a safeguard for funds, attracting more participants to engage in cooperative ventures,” he said. With the assurance of asset protection through such measures, he added, individuals are more inclined to join cooperatives, contributing to the expansion of employment opportunities and economic growth.

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Could asset declaration end embezzlement among cooperatives?