Beware the wolf in sheep’s clothing

Further, at the end of the day when fraud is committed, the Ministry of Cooperatives and SMEs knows about the scandal only after the 'time bomb' has exploded. At this point, the hundreds (or even thousands) of victims (members and non-members) have already lost trillions of rupiahs. Sadly, they cannot get their money back.

For these reasons, we would like to conduct research investigating how far large S&L cooperatives in Indonesia apply sound cooperative principles like promoting autonomy and independence, self-regulation, transparency, equality, caring for members, and democracy. If they don't apply these principles, then they are prompted by the profit motive, with the aim of making a quick buck.

In-depth research needed

Our question is, to what extent do large S&L cooperatives in Indonesia apply a profit-oriented business model but using unfair and pseudo-democratic practices? These businesses display a lack of transparency, but we detect a tendency to prolong managerial terms of office, a high percentage of dormant members or non-members, managements that misuse funds by issuing loans to friends and relative. A cooperative may be involved with political parties, they may collect a great deal of money but only disburse a small amount, and they may offer higher interest rates than the rest of the market offers. Pseudo-democratic practices include voter suppression and kickbacks.

Research on this question will give invaluable insights for policy makers, regulators, practitioners, academia, donor countries and international institutions to help them determine a proper policy framework to regulate and supervise large S&L cooperatives in Indonesia.