Public Service Credit Union
No AGM since 1998, accounts last audited for 1995
Order declaring committee incapable of managing its affairs made by Chief Coop Officer in 2001 has been stymied by repeated court proceedings
Stabroek News
February 16, 2003
The Guyana Public Service Cooperative Credit Union (GPSCCU), probably the largest credit union in the country, has not had an annual general meeting since 1998, its last audited accounts were for the year 1995, and it is owed millions of dollars on delinquent loans to members.
By an order made under Regulation 56(2) of the Co-operative Societies Act on May 31, 2001, by the Chief Cooperative Development Officer Lilian Miller, she expressed the opinion, based on an investigation that had been carried out, that the members of the Committee of Management had become incapable of managing the affairs of the society and appointed a committee to be headed by Roy McArthur to assume control of the affairs of the society with effect from June 1, 2001, until an annual general meeting was held. However, this order has not taken effect yet. The committee applied for an injunction. That application was dismissed. Another application was filed and that was also dismissed. A third application was then filed, despite the dismissal of the first two.
The last Annual General Meeting (AGM) of the GPSCCU was held on Sunday, June 28, 1998, and according to some members signalled the end of a democratic system in the society's history.
Over the past month Stabroek News has been seeking an interview with members of the committee but to no avail. Eventually the newspaper wrote Chairman of the Committee Maurice Veecock, as follows:
"I am preparing a report for publication based on certain information but would like to interview you for your response on various issues before publication.
"I have made many attempts to contact you by telephone but have failed, hence I am writing this letter. The key questions are:
1. Was the last annual general meeting held in 1998? Why has no AGM been held since then?
2. The last audited accounts were for the year 1995, why have there been no audited accounts since then?
3. What are the total outstanding loans to members, how much of these are delinquent?
4. How many members does the credit union have and what are the monthly contributions?
5. Why was Mr Hardy re-employed after his services had been terminated?
6. Are guarantors being obtained for all loans to members or other forms of security?
7. The Chief Co-operative Development Officer had made an order on 31st May, 2001 that the members of the committee of management had become incapable of managing the affairs of the society and assuming control of those affairs.
"I understand that applications for an injunction were filed on two occasions but were dismissed and a third has been filed.
"I hereby request an early appointment to discuss these matters with you."
There was no response to this letter and subsequent efforts to contact Mr Veecock and make an appointment were in vain.
The credit union was established in 1963 and was regarded as the most prominent of its kind in the country. While membership, share capital and the number and value of loans grew, it appears now, based on investigations and records on hand that all is not well with the society's affairs.
A progress report by a delinquency officer Sharon Gentle dated August 20, 2002, said that during the period September 4, 2001 to August 20, 2002, the delinquency department identified 1,800 defaulting members. The total amount owing by these members amounted to $135.7 million.
Gentle noted that of those 1,800 members only 556 had responded to requests to liquidate their outstanding loans. At the time salary reduction had resumed for 60 members and 59 had liquidated their outstanding balances. Thirty-two letters were returned by the post office because of members' removal without forwarding addresses, and guarantors were notified by way of letters. Some $12.4 million was recovered based on requests for a transfer of their shares for the purpose of liquidating outstanding balances.
Stabroek News has been informed that in some cases prescribed loan procedures have not been followed. These involve taking into account the capacity to pay and character of the loan applicant and the provision of collateral. Interviewing procedures have also left a lot to be desired.
Due to the receipt of a large number of complaints about the society's operations, retired public servant Claude Muller was commissioned by the Chief Cooperative Development Officer Lilian Miller in the year 2000 to conduct an inquiry into the operations of the GPSCCU. In an interim report Muller said that a group of experienced, long standing members had complained that the society had thrown away all the rules under which it had once operated. He said that the committee's response could variously be characterised as turning a deaf ear, aggressiveness and discourtesy towards any bent on helping to arrest the downward slide and resort to legal manoeuvres in respect of provisions designed to protect all stakeholders. Officers and senior staff members had made clear a stance of non-cooperation during his investigation. However, he had researched records, interviewed members and sent a questionnaire to members in Georgetown and in five other regions.
Muller found in his report, among other things, that of the personnel constituting the committee two had had periods of suspension from office, three were employees of the Guyana Public Service Union, most were retirees, one had established a reputation for presenting `slates' to attendees at General Meetings along with a warning to either vote for the individuals slated or run the risk of non-representation if a problem was encountered on the job; and one (closely associated with another) was contracted to provide services for a government programme.
Muller found that "end of year honoraria have taken flight" and members on the committee of management now receive monthly fees, in addition to sums for specific tasks.
He found that between 1995 to 1998 the then secretary/manager, Edward Hardy's handling of the society's finances lacked several of the ingredients of good management such as transparency, conformity with rules and policies, unauthorised and questionable expenditure including gratuities allegedly given to public sector functionaries. Following unheeded warnings, a four-member disciplinary committee was appointed to examine the officer's conduct and to make recommendations. Three months' suspension without pay was recommended and the disciplinary committee also expressed concern about other associates. As a result of the investigation the services of the secretary/manager were terminated and the treasurer was removed from office. These actions were subsequently overturned by the committee, the two officers were exonerated and paid the sums of $384,387 and $50,000 respectively.
In relation to membership, Muller found that following an amendment to the membership rules in 1979 that allowed the society to accept persons as members who were not public servants, membership grew from 3,549 in 1980 to 9,500 in 1994 and included members from the Guyana Telephone and Telegraph Company and the CARICOM Secretariat.
The last general meeting was held in 1998. The law stipulates a quorum of a quarter of the membership. This would require some 2,500 with the current membership. However, for years, Muller said, the society had been unable to satisfy that requirement and in order to avoid it had sought to rely on a power vested in the Chief Co-operative Development Officer under Regulation 14 of the Co-operative Societies Regulations to convene annual general meetings once accounts had been audited, and had treated that as dispensing with the quorum requirement. Attendances at meetings had been poor.
In finance and related matters, Muller found the society was reasonably solvent but with cash flow related problems. "The degree of solvency ought however to be viewed with some reservations given recurrent inability of the Auditors to effect all verifications for arriving at a fairly accurate total position."
Muller gave an example of lax management in which a member who ceased employment on April 1, 1997, while indebted to the society, despite having defaulted still secured another loan in November the following year. The member secured a loan of $154,731 to liquidate the earlier one while accessing a further sum said to be for medical expenses. In June 16, 1999, the applicant received another loan via the refinancing route, of $186,731. It was noted, Muller said, that in this case, the regulations were not observed; documents signed as having been prepared by and authorised by the appropriate functionaries, including credit committee members, were defective as guarantors' names on the loan bond and ledger differed and proved to be fictitious; interest/fines were inaccurately computed; and the system permitted upliftment of a cheque drawn in favour of the applicant by the treasurer, on the basis of an authorisation. The case, he said, pointed to the questionable nature of some refinancing arrangements entered into, especially when they could have as two consequences loss of funds belonging to the society's members and the denial of loans to other genuine would-be borrowers.
In dealing with the current problem Muller referred to the early 1990's when, faced with severe lags in the society's accounts, the Committee of Management mobilised its members and staff and successfully reduced the backlog to a minimum. Members of the committee of management were not then in receipt of generous stipends/allowances as is the case now. He said the split in secretarial/managerial functions had not worked.
As a result of the failure to hold an annual general meeting for four years there has been no new appointment of officers and the existing committee has been carrying on without any further elections, despite the order made by the Chief Co-operative Development Officer in May 2001 holding that they had become incapable of managing the affairs of the society, based on Muller's report. The accounts have not been audited for seven years. (Miranda La Rose)
