Credit Union searchlight
In the last decade a few rogue credit unions got bolder and while the 40-year-old Co-operative Societies Act was adequate enough to drag them into line, it was not done. The critical questions relate to illegal investments and the failure so far to identify wrongdoers. If taxpayers and co-operative society members must underwrite the clean-up of any illegality, they should have the details before them.
In the last four years two High Court judges ruled on significant
credit union matters. In 2007 Justice Aboud penalised the Commissioner
of Co-operatives in legal costs for a few months' delay in dealing with
the HCU's non-payment of a matured deposit. HCU's refusal had become
standard business practice and was repeated hundreds of time. But each
refusal by the HCU was an indictment not on that entity but on the
office of Commissioner of Co-operatives.
In the clearest language his lordship set out the role of the Commissioner: "These societies hold deposits from vast numbers of working people, which, in most cases, represent their sole cash savings. The Commissioner must therefore be decisive and vigilant in exercising his statutory powers".
In December 2010 Madam Justice Jones found a $6 million loan by
the First National Credit Union to a non-member so tainted by illegality
that the credit union could not enforce its repayment. Her ladyship
lamented the fact that the membership would bear the loss unless the
co-operatives legislation forced someone else to pay up.
The current Commission of Enquiry is expansive and to cover the terms of reference more than two years is needed. Better known as the CLICO and HCU enquiry it also covers British American, CL Financial, CLICO Investment Bank and CMMB, the money market firm now a subsidiary of First Citizens.
The Commission's long arms come from its duty to enquire into the circumstances leading to the 2009 intervention in CLICO, CIB, CMMB and British American. To do so the Commission will have to go to the roots of these entities and their deviations. But the Commission is not about these entities only.
In the last decade a few rogue credit unions got bolder and while the 40-year-old Co-operative Societies Act was adequate enough to drag them into line, it was not done. The critical questions relate to illegal investments and the failure so far to identify wrongdoers. If taxpayers and co-operative society members must underwrite the clean-up of any illegality, they should have the details before them.
 |
| Justice James Aboud being sworn in |
In the clearest language his lordship set out the role of the Commissioner: "These societies hold deposits from vast numbers of working people, which, in most cases, represent their sole cash savings. The Commissioner must therefore be decisive and vigilant in exercising his statutory powers".
 |
| Justice Judith Jones |
The current Commission of Enquiry is expansive and to cover the terms of reference more than two years is needed. Better known as the CLICO and HCU enquiry it also covers British American, CL Financial, CLICO Investment Bank and CMMB, the money market firm now a subsidiary of First Citizens.
The Commission's long arms come from its duty to enquire into the circumstances leading to the 2009 intervention in CLICO, CIB, CMMB and British American. To do so the Commission will have to go to the roots of these entities and their deviations. But the Commission is not about these entities only.
No comments:
Post a Comment