Credit Union’s committee dissolved as Finance Dept. steps in-Government guarantees member deposits |05 July 2005

The Department of Finance, which is the regulatory body for the SCU, has formed a three-member interim committee – headed by CBS general manager Dr Peter Larose along with principal state counsel Ronny Govinden and accountant Louis Sham Hong – to manage the institution until the next annual general meeting, when additional committee members will be elected by SCU members.

Meanwhile the government has also issued a blanket guarantee on the R50 million in deposits belonging to the SCU’s more than 10,000 members.

Finance principal secretary Lekha Nair and CBS governor Francis Chang-Leng announced the dissolution of the committee yesterday at a press conference at Department of Finance headquarters.

Ms Nair said the CBS examination, which in March this year looked into the operations and performance of the SCU, revealed cases of persistent non-compliance to applicable laws, as well as weaknesses in the co-operative’s governance structure, internal controls and information technology systems.

The same findings were made in a similar examination in 2003, but recommendations put forward to the committee at that time did not lead to an improvement. “The existing committee was given a chance in 2003” to rectify shortcomings within the operation of the co-operative, Ms Nair said, but the committee was still found to be “astray” from its objectives in 2005.

The CBS findings had not indicated that there were any cases of misappropriation involving the previous SCU management, but Mr Chang Leng did not rule out the possibility. “We don’t know yet,” he said on Monday.

Ms Nair said that it was not necessary for depositors to worry about withdrawing their deposits or to have recourse to transactions which may incur losses to them. “The steps being taken are aimed at preserving and protecting the safety and soundness of the financial system as well as the interest of the members of the SCU. To this end, the government is issuing a blanket guarantee covering members’ deposits.”

Though the next AGM will allow SCU members to elect additional board members, the three-member interim committee will have a special mandate for two years, after which elections for the entire board will be held as in previous years.
Before its dissolution, the existing committee comprised Danny Poiret as chairman, Gerard Ah-Shung as vice-chairman, Gilbert Green as treasurer, Merline Volcere as secretary, and Bernard Elizabeth, Brian Julie and Serge Rouillon as ordinary members.

The objectives of the SCU include promoting thrift among members of the co-operative, creating sources of credit for the benefit of the members of the co-operative with fair interest rates, and providing the use and control of the savings of the members of the co-operative for their benefit.