Co-operative Credit unions have a long and honourable history. They have been described as unique depository institutions, created not for profit but to serve members as credit cooperatives by the provision of loans at low interest rates. They are traditionally democratically governed, each member having one vote with a member-elected board of directors and membership is voluntary. They have been described as people’s banks. In Guyana, they have provided a means whereby workers can contribute an amount each month to a fund administered by a committee appointed by those workers and that committee from time to time on application by workers makes loans to them from the fund.
Perhaps the biggest credit union in this country, the Guyana Public Service Co-operative Credit Union Limited, was established in 1963 and is registered under the Co-operative Societies Act. Its official loans policy is described in a document which prescribes criteria for making loans that include the members’ record of participation in the services of the credit union, the amount and regularity of his income to be used for the repayment of loans, the credit history of the applicant as verified by his personal loan record, the types and levels of security offered, the purpose of the loan and the prospects of advantage to the borrower. This credit union has a membership of about 10,000 persons and receives millions of dollars a month in contributions.
In the year 2000 as a result of a large number of complaints from members the Chief Co-operative Development Officer, Lilian Miller, appointed a retired public servant, Claude Muller, to carry out an investigation into the affairs of the credit union. The committee had at that time held its last annual general meeting in 1998 and the accounts had not been audited since 1995. Mr. Muller said in his report that he received no cooperation from the officers of the credit union but that he had researched the records, interviewed members and sent out a questionnaire. In his conclusions Mr. Muller found as follows:
“The Guyana Public Service Co-operative Credit Union has been doing a fair job in encouraging thrift and providing low interest loans to its members as well as Bursaries to members’ children. The same could not be said of its administration, particularly over the last decade or so. So acute has been the administration shortcomings that there has been a reduction in the quality of service to members and perception that the society was veering away from being co-operative.
There is an abundance of evidence which support complaints/observations of illegalities, irregularities, inadequate systems, unacceptable levels of staff performances - all compounded by personality problems on the part of some members of the Committee of Management.
In all of the above, the Committee of Management has shown either an inability or unwillingness to deal with situations on a basis of principles rather than personalities regardless of how injurious such could be to the financial health and image of the society as a whole. Rather, they have exhibited an aggressive attitude of non-co-operation and turned a deaf ear to entreaties and well-meaning advice.
Despite the incomplete nature of the Inquiry, substantiated findings are enough to warrant proposals for serious remedial action which hopefully, would stem an obviously deepening crisis.”
Mr. Muller recommended that a new management committee be appointed as, for most of the existing committee, “the mandate to manage would long have expired and, in light of findings of fact, to do otherwise would be to reward incompetence.” He also recommended that the new committee should be persuaded to appoint a task force to bring the accounts up to date up to the point of audit, secure the services of suitably qualified staff without interventions by committee members, update computer and other relevant systems, establish a comprehensive and enlightened set of personnel policies and refer to the police for investigation and any necessary action all matters which seem to be criminal in nature.
Acting on this report, Ms. Miller made an order under the powers conferred on her by Regulation 56(2) of the Co-operative Societies Act that the committee of management had become incapable of managing the affairs of the society, assuming control herself of the affairs of the society and appointing a committee with Mr. Roy Mc Arthur as Chairman. That order has never been put into effect because the committee applied to the court for an injunction. When that application was dismissed they applied again and when the second application was dismissed, in what appears to constitute a clear abuse of the process of the court, they applied for a third time for an injunction.
The result is that the old committee is still in charge, the order of the Chief Co-operative Development Officer has been frustrated by legal manoeuvres and the audited accounts are now several years out of date. An investigation into members’ loans has shown that there is a substantial number of defaults. Members of the society have the right under regulation 16 of the Co-operative Societies Regulations to demand the convening of a special general meeting.
There are several credit unions in the country and given the fact that many of them are handling very substantial sums of money deposited by workers the suggestion by Mr. Christopher Ram in a letter in this issue that they be brought under the supervision of the Bank of Guyana as a prescribed financial institution under the Financial Institutions Act is worthy of serious consideration by the government.