From time to time, reports on corruption in cooperative societies are revealed. Consequently, the Ministry of Social Affairs issues decisions to dissolve their boards of directors and refer some members to the Public Prosecution on suspicion of embezzlement and numerous other violations. First and foremost, we must consider the history of these cooperative societies and how they became institutions with a vital role in the Kuwaiti society.
The idea behind establishing cooperative societies is based on the ‘owner-consumer’ principle, meaning that the consumer is a shareholder and receives his share of the profits. HH the late Sheikh Jaber Al-Ahmad, may God have mercy on him, was inspired by the cooperative societies idea when he visited Beijing, if I remember it right, accompanied by Minister Abdulrahman Al-Ateeqi, may God have mercy on him, who enacted the Cooperative Societies Law in 1979. Since then, cooperative societies have become institutions serving the people in the area where they are located.
The law defined the responsibilities of cooperative societies as providing social, cultural and health services to the residents in the area who are shareholders, such as supporting schools, organizing summer activities, distributing annual profits to shareholders, and contributing to the cleanliness and beautification of the area. This is why cooperative societies initially performed their role without any illegal practices. This is why they thrived for years.
However, when personal interests took hold, the cooperative societies changed direction. Instead of serving the shareholders, they started serving the personal interests of certain board members. Board elections became a means of creating political figures and influential individuals. Then, corruption became rampant in cooperative societies, as it is in most government institutions, due to weak oversight and lack of ethical considerations, especially after the liberation of Kuwait from the Iraqi invasion and the resulting erosion of national trust.
The efforts being exerted by Minister of Social Affairs Dr. Amthal Al-Huwailah to combat corruption in cooperative societies are clear, commendable, and can be considered a legal correction. Nevertheless, there are several important questions. Is it enough to hold the board members accountable? Up to what extent can the Ministry of Social Affairs continue dissolving the boards of directors of cooperatives and then appoint new ones?
Will the replacement be better? Answering these questions requires thinking outside the box, so that these institutions can continue to play their vital role and serve the people, and until corruption is eradicated and cooperatives are developed. I believe there is a good example -- a privatized cooperative society. Why not transform cooperative societies into large joint-stock companies?
They could become one giant corporation covering the entire of Kuwait, while ensuring continuous service provision, making the citizen both the owner and shareholder. Historically, the so-called ‘socialism’ had been proven a failure and encouraged widespread corruption. Membership in the boards of directors of cooperatives has become so attractive for whoever is seeking illicit and rapid enrichment. The annual income of cooperative societies is estimated at KD1.5 billion, with profits of about 25 percent, according to reports from the Union of Cooperative Societies.
These substantial profits tempt those who are willing to break the law to exploit loopholes in regulations and abuse their authority to amass wealth through fraudulent means. Amending the law alone is not enough, as per the legislative rule that no matter how comprehensive a law may seem, it will always contain loopholes, which can be exploited by thieves, corrupt individuals and criminals. Thus, if the cooperative societies are transformed into a joint-stock company covering the entire Kuwait or several such companies, oversight will be more rigorous, while they continue to serve the residents in their respective areas. This could also lead to more profits, as a result of eliminating corruption and corrupt individuals.
