All credit unions must be audited or face severe penalties – Nadir

Labour Minister Manzoor Nadir yesterday issued an ultimatum to the management of all credit unions that have not had their financial affairs audited by an auditor assigned by the Labour Ministry’s Co-operatives Division within the last four years, that they have two weeks to report to the division or face severe penalties.

The minister said that the two-week time frame will begin on Monday and suggested that if the management teams do not comply, these credit unions may even be closed.

Speaking yesterday following a meeting with members of the now defunct National Association of Agricultural Commercial and Industrial Employees (NAACIE) credit union, Nadir explained that this stand had to be taken to deal with the general problem of credit unions being mismanaged across the county.

The minister, Acting Chief Co-operatives Development Officer Kareem-Abdul Jabar and the appointed liquidator Heston Rodrigues met the handful of NAACIE credit union members who gathered, to outline the way forward.

The credit union was dissolved last year, following consultations between the Labour Ministry and the NAACIE leadership. This was officially done on October 13, when Jabar issued a statement that the union had been closed under Section 38(1) of the Co-operative Societies Act, Chapter 88:01.

Meanwhile, at yesterday’s meeting Rodrigues announced that the members of the credit union may only receive 20 percent of their contributions made to ordinary savings, when payouts are eventually made as part of the liquidation process.
Rodrigues described the situation as an unfortunate one but said that it came about because of a “plethora of management problems” with the union.  He pointed out that that the credit union had been severely affected by poor accounting.
The financial affairs of the NAACIE credit union were never officially audited in its 25-year-old history, until recently, when the credit union was left to the Co-operatives Division.

Rodrigues said that as of Jan 16, 2009, the credit union had $2, 276.51 in its Savings Account when it should have had $7 million. Its current account had only $995,864.73 when it was believed to have $1.4 million. He said that when the sums from these two accounts were totalled there was only about $998,000 available to make payouts to the members. However, some of this money may be needed to cover some of the costs incurred during the liquidation process.

Nadir, however, promised that his ministry will offer assistance in covering some of these expenses.
During the meeting it was highlighted that two members of the last management team had taken loans amounting to a total of $500,000 and had refused to pay. These members will be officially notified of these financial obligations and if they do not comply, they will be brought before an arbitrator, Jabar said and may even face legal action. This method may also be applied to other offending members of the credit union. Jabar said that a list of persons who owe the credit union will be drafted and distributed among the members. The hope is that these persons will choose to fulfil these financial obligations thereby increasing the residual cash assets of the credit union.

Meanwhile, it was emphasized that the payouts would only be made following a verification process.  A period for members to make claims has been identified, and this phase will commence on Monday and will end on February 20. Members of the credit unions are asked to take their pass books and other documents they may have relating to transactions conducted with the credit union to Rodrigues who will be located at the Ministry of Labour, during  this period.

A clerical worker at the LBI sugar estate was adamant that it was unfair that the members had to suffer as a result of the selfish actions of these defaulting individuals. She pointed out that she and other workers never knew that the credit union was in

Another member of the credit union, Dempsey Rodney told Stabroek News that he was a member of the union since 1990. He said that he regularly made deposits and withdrawals with the union until up to 2006 when he heard that things were not well with the credit union.

He welcomed the decision to close the credit union since it clearly was not serving any purpose but at the same time he wanted to have all his money back. According to him, he had between $50,000 and $ 60,000 invested in the credit union.
The disbursement of the cash to members may begin early next month.

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