The Malaysian Cooperatives Societies Commission is set to selectively compel cooperatives to contribute to the Central Liquidity Fund.

In an incomplete gazette, gazetted on Aug 30, the Malaysian Cooperative Societies Commission has set Sept 1 as the implementation date of this controversial ruling. The gazette gives wide powers to the executive chairperson of the Malaysian Cooperative Societies Commission to selectively snare cooperatives to forcefully contribute to this Fund any amount of monies he deems fit.

The gazette notice is in contempt of court as two legal suits are pending at the Court of Appeal and the Shah Alam High Court, initiated by Koperasi Rel and jointly by the Cooperative Union of Malaysia and the Midlands Cooperatives Union of Malaysia, respectively.

In the past twenty years, laws have been legislated to compel cooperatives to contribute 2% to the Cooperative Education Fund and 1% to the Cooperative Development Trust fund respectively. Contributions to these funds have been made from the annual profits of cooperative societies.

Though these funds are statute trust funds, the Cooperatives Commission has been using these funds at their whims and fancies without transparency and accountability.

These mobilized funds have been used as sourced funds and have been depleted accordingly in contravention of the Trustee Act. These funds belong to the cooperatives legally but they have been expended selectively.

In the past, the Cooperatives Commission has set up numerous apex organizations, namely Koperasi Nasional Sekolah, Koperasi Pembangunan Negara, Koperasi Perumahan Negara, Koperasi Pembangunan Industri Daerah and other cooperative organizations which are now in limbo.

The recently launched Koperasi Bela Rakyat (Kobera) nicknamed ‘Cobra’ is a duplicate of the defunct Koperasi Pembangunan Industri Daerah. The existence of these apex organizations and other apex organizations is a mystery.

To recapitulate, legislation was enacted in 1993 to compel cooperatives to contribute to:

(a) The Cooperative Education Trust Fund

(b) The Cooperative Development Trust Fund

In 2008, an enactment was implemented vide the Malaysia Cooperative Societies Commission Act to compel cooperatives to contribute to:

(a) The Cooperative Central Fund

(b) The Cooperative Development Trust Fund

c) The Cooperative Societies’ Liquidation Account

(d) The Cooperative Central Liquidity Fund

(e) The Cooperative Deposit Account

and to any other funds to be implemented by the Malaysian Cooperative Societies Commission.

Over and above vague laws were made to compel cooperatives to contribute a percentage of their share capital to the Malaysian Cooperatives Commission. All those funds were to be managed by the so-called agents to be appointed by the Malaysian Cooperative Societies Commission.

These draconian laws have to be scrapped. It is hoped that our Prime Minister Najib Abdul Razak would initiate an emergency session of Parliament to suspend the controversial Cooperative Societies Act and pave the way for an operations director to steer this movement.

The government should vary its role as a registrar, regulator and enforcer. Private sector initiatives should prevail.