The Guyana Public Service Cooperative Credit Union (GPSCCU) recently held its first annual general meeting for five years. At the meeting, copies of the annual reports for 1995 to 2001 were circulated to the small gathering (about 125 out of a membership of 13,000). In the report on the 2001 accounts, the last audited accounts, dated 16th January, 2004 the auditors said that the balance sheet included as an asset $849 million for loans to members but management had not carried out an evaluation of the portfolio to determine which loans were inadequately secured or not secured at all. They had also detected several cases in which the borrowers had defaulted and some of the loans had been refinanced. They said, therefore, that they were unsure about the collectibility of the loans to members and could not voice an opinion on this massive balance sheet item. This amounts, of course, to a serious qualification of their report and in the case of a public company would have led to many questions being asked and certain steps being taken.
The auditors also said that they could not verify capital amounting to $731 million because of the absence of supporting documents, nor could they vouch for $54 million listed as cash on hand at the bank since no verification was provided.
The Chairman of the credit union Mr Veecock told the meeting that it was seeking to write off $55.6 million in delinquent loans for the period 1992-2003. He said the credit union had been deficient and blamed the previous delinquency officer. He said most members were not being deliberately dishonest in not repaying their loans as many had lost their jobs due to the downsizing of the public service. He said that the main problem was the quality and quantity of staff in addition to the inappropriate conduct of certain senior staff members and some members of the management committee. He said the malfunctioning of computer programmes had compounded the problem. He said the committee of management hopes to considerably improve the service over the ensuing years and that because of the growth of the credit union the committee had moved towards obtaining the services of an internal auditor on contract. The internal auditor would report to the management committee as the credit union had outgrown the services of the Supervisory Committee which was made up of persons who have full time jobs.
As Mr Veecock himself noted, this is the largest credit union in the country. It is handling hundreds of millions of dollars of the savings of public servants, which puts it in the category of a major financial institution. There is an overwhelming case for it to be classified as a financial institution under the Financial Institutions Act and to be placed under the supervision of the Bank of Guyana, as is the case with other financial institutions. With the best will in the world the Chief Cooperative Development Officer and the staff of that department does not have the resources nor the expertise to supervise the operations of this and other credit unions adequately.
If this or any other credit union performs inefficiently and substantial funds are lost it will be difficult for the members to secure an effective remedy under the present law. In the present case, the annual accounts are years out of date which the Bank of Guyana would not tolerate for many recognised financial institutions, annual general meetings had not been held for several years and other problems have been shown to exist as the result of an investigation carried out previously on the order of the Chief Cooperative Development Officer.