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Millions missing from credit unions

Dec 16, 2008 News

By Nadia Guyadeen

 

Labour Minister Manzoor Nadir yesterday said that there are tens of millions of dollars unaccounted for in Guyana’s credit unions.

Credit Unions, like banks, give loans to members who would have bought shares and made special deposits.

However, frauds have reportedly been occurring in many of these credit unions.

Minister Nadir told this newspaper that his ministry has found that many of the credit unions in Guyana have been mismanaged, poorly managed, and fraudulently managed.

“We have a very sad state of affairs in terms of the management of many credit unions in Guyana,” the minister said.

According to him, it is not a situation that would have appeared overnight. “To some extent, as the supervisors of credit unions, we have to take some amount of responsibility for the situation we are in.”

Minister Nadir added that, earlier this year, the ministry embarked on an exercise to get co-operatives, of which credit unions are a part, and friendly societies to bring themselves and their operations up-to-date with respect to the laws of co-operatives and friendly societies.

He also said that they had to order the cancellation of the NAACIE credit union on October 13.

According to the minister, the Chief Cooperatives Development Officer, who is the Registrar of Cooperatives, after prolonged investigations into the operations of the NAACIE credit union, and after consultation with the management of that credit union, ordered its cancellation.

This newspaper has learnt that the closing of that credit union was a result of more than $11M of members’ dues and contributions being unaccounted for.

“As it stands today, as we liquidate that credit union, persons may only be able to recover one-fifth of what they put into that credit union; and in many instances, you are speaking of persons’ lifelong savings.”

Minister Nadir noted that the ministry has a number of other credit unions under the microscope at this time.

He also stated that there has recently been an $11M fraud in the GDF credit union.

“We have just had another meeting with another credit union, where their assets, which reflect loans and deposits, are less than 60 percent of what the members’ contribution on record is…It is not a nice situation. We have our own financial crisis here, and the Registrar of Cooperatives is very concerned about the management and the performance of credit unions, and also the misappropriation of funds.”

Minister Nadir issued a strong plea to those who have credit unions and who are in the management position of the credit unions to operate the entities for the benefit of the members, by adhering to sound principles of governance, transparency and accountability to the memberships.

“The Registrar of Cooperatives would not be averse to exercising the prerogative of cancellation.”

He encouraged members of credit unions to ask their management committees for periodic reports on the finances.

“Any member of any credit union has the right to seek information on the credit union from the management or from the Chief Co-ops Development Officer.

“We are urging any member of a credit union, if they are not getting information from their management body, to contact the Chief Co-ops Development Officer. We cannot allow the hard-earned savings of workers to be squandered by a few.”

There are 48 credit unions in Guyana, and about 38 of them are functioning at some level. One dozen of them are said to be in good shape.

Credit unions have an asset base of close to $3 billion.

 

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