Cooperative credit unions can, depending on their scope, end up handling very large sums of money which represent the savings of their members. It has been suggested that in the interest of protecting their members they should be brought within the scope of the Financial Institutions Act and under the supervisory powers of the Bank of Guyana. The reason for this is that the department that deals with cooperatives in the Ministry of Labour has neither the numbers nor the expertise to monitor such credit unions adequately and that they will in practice only take action if there are complaints by a substantial number of members. Even then, as a recent example has shown, the procedures for holding an investigation are cumbersome and time consuming and litigation can be used to string things out even further.

Cooperative credit unions are given certain privileges such as exemption from taxation because they do not operate like commercial banks, their main activity being to promote the economic interests of their members in accordance with cooperative principles, to preserve the funds entrusted to them by their members (often employees in a particular business or industry) and to lend money to their own members on the basis of certain prudent criteria.

Section 23 of the Co-operative Societies Act provides that no person shall be a member of more than one registered society whose primary object is to grant loans to its members.

In 2003 a cooperative credit union was formed with the name National Commercial and Credit Union Trust Limited. The word `trust' had to be dropped as it was not permissible. NCCUL held itself out as a national credit union operating throughout Guyana and without that common bond of occupation or interest envisaged by the Act. It sought by way of advertisements in the media to take deposits from the public (in other words, not limited to its members) and on the face of it there was nothing to distinguish it from a bank, except of course that it did not have a banking licence. After some public criticism, in particular by this newspaper, the department intervened and the common bond was declared to be agriculture and associated industries, itself a somewhat wide and unusual remit. It was ordered to amend its rules to restrict membership to workers in such industries, though the rules still permitted the acceptance of deposits from the public.

NCCUL began cashing farmers post-dated cheques from millers at a 3% discount. It claimed it was making loans to members. Section 30 of the Act does not permit loans to any person other than a member. However, its rules did not permit the acceptance of cheques as collateral. Moreover, it had not at the time been in existence for six months, also making the loans prohibited under its rules.

A very senior person had at that time told this newspaper that this credit union would not be allowed to continue to operate if they were found to be in breach of the spirit and intent and letter of the law. However, it is not clear what happened to the investigation being carried out by the Chief Co-operatives Development Officer and what changes have been made and it has proved difficult to get answers to questions from that officer at the ministry.

At a recent seminar organised by this credit union its Chairman Dr Fred Sukhdeo told Stabroek News that Leonora Primary School would be handing over $2.1 million from its credit union to the NCCUL. This does not appear to be permissible under its rules as even on the most liberal interpretation schools cannot qualify as members. And does the Ministry of Education have anything to say on this matter? The Minister of Education, Dr Henry Jeffrey, was present at the seminar but he may not have been aware of the issues involved.