What’s behind the attack on Newbridge Credit Union?
by Terry Moore
On Friday 15th January the High Court appointed Luke Charlton, Partner at Ernst & Young, as Special Manager to Newbridge Credit Union. At that hearing the board was silenced by the High Court under pain of a fine of €100,000 and/or a three-year jail term. They were not allowed to speak with the workers, the members, the media or the public. I cannot understand why the same rules did not apply to the Central Bank, the Regulator and Dept. of Finance, one of which broke the news to KFM as Luke and his 11 suits marched into the Credit Union. The Directors were given seven days to appeal this decision.
What is most interesting about the actions of the Central Bank is the law that was chosen to investigate this perceived problem in Newbridge. This is the first time that Commercial Company Law has been used in this manner. There are sections of the Credit Union Act which could have been used by the Regulator or the High Court to examine Newbridge Credit Unions books.
What is not being reported in the media is that the high wages being paid to the 15 “suits” are being paid by Newbridge Credit Union, from €150 to €423 per hour! If my sums are correct and based on an 8-hour day, 5 days per week, the highest earner, Luke Charlton, will be paid €439,920 for six months. Since then the number of people from Ernest & Young have increased to 15.
In his letter to Credit Union members Luke Charlton stated that it was his intention to carry out business as usual, to provide an initial report to the Central Bank, to ascertain the role of the directors and to develop a business plan. He went on to say that all functions of the directors are vested in him and that Newbridge Credit Union cannot be wound up without the consent of the Central Bank. He reminded members that they own the Credit Union and yet all democracy has gone out the window as the owners had no say in his appointment or his wages. The owners still do not know why he was appointed in the first place, needless to say the speculation is rife.
Newbridge Credit Union is one of the largest in the country, with 30,000 members. It has steadily reduced its dividend to savers over the last few years since 2008 when it paid out a generous 4.5 percent to mark its 40th anniversary. At the end of 2010 that figure was reduced to 1.5 per cent while the figure for the end of the year 2011 remains to be seen. Three years ago the regulator imposed an auditor, at the cost of €100, 000 to the Credit Union; if there were problems surely this auditor would have known about it?
The most serious issue for the Credit Union Movement as a whole are the following questions that need to be answered:
• Would the action in Newbridge have anything to do with the €15 Billion in savings in credit unions throughout the country?
• Would it be anything to do with the Credit Union Regulator’s intention to consolidate the 430 credit unions in the country to 100?
• Finally, the Credit Union Movement is one of the last bastions of democracy in this country. Each Credit Union has a distinct and important role in Irish society and has close links to local communities in which it plays a vital role:
- Giving people access to affordable credit.
- The loans and dividends paid out are spent in the local economy.
- The board of directors of each credit union stems from their local community.
- They support their communities through sponsorship and donations to clubs and organisations.
- Provide employment in their locality.
The trade union movement must protect the credit unions from any changes that the Dublin government would impose on them.