By Vicki Weller
THE Board of Directors of Newbridge Credit Union has moved to defend its position following the High Court appointment of a Special Manager, stressing that it has acted “in good faith at all times”.
In an open letter to all members, issued yesterday, the board noted that its members did not understand why the High Court action had been taken against it and expressed doubts about “shortcomings” in the legal approach taken.
It also hit out at “inaccurate and sensationalist” comments made about the Newbridge Credit Union operation in the past couple of weeks.
Saying that the board has always acted in the best interest of the members, the statement reiterated the financial position of Newbridge Credit Union, commenting: “We have prudently grown the reserves and provisions up to €46m, against total assets of c. €210m at our 2010 year end. This is an accumulation of operating surpluses that have been earned and set aside to meet any unknown risks that might occur in the future rather than being paid out as dividends, and members have been very understanding of this prudent approach.”
In relation to the move to appoint a special manager, the statement said: “We don’t fully understand why these previously unused and untested powers have been imposed on us, when there are many other avenues available to them.
There appear to be shortcomings in this approach, for example your board’s legal authority is now vested in the Special Manager, while we maintain responsibility to you, the members.”
Saying that the board was given just 48 hours’ notice in respect of the appointment of the Special Manager, and bound to confidentiality, the statement added that the credit union was given no opportunity to be represented at the hearing or explain its business model.
The statement also controversially addresses the wider issue of how the credit union movement as a whole is to be treated in terms of financial regulation and control.
“We are concerned that your credit union may be used to facilitate as yet undisclosed plans for the wider credit union sector restructure, or indeed may be preempting the recommendations of the Commission on Credit Unions, established by Government in May 2011, and due to report to them with recommendations in March 2012.”
While it was granted 14 days to appeal the High Court decision, the statement notes that the board decided against this course of action. “While retaining very strong reservations about this order and process, we had to recognise that it would be a difficult and costly process to challenge the Central Bank of Ireland, particularly when the new legislation allowed for the Special Management Order to be made without affording us a right of representation in court.”
In the weeks since the appointment of the Special Manager, there has been considerable local speculation about Newbridge Credit Union’s actual financial position, accompanied by comments on the internet and elsewhere. Some of these related to alleged loans for property development and other business ventures.
Stressing that the organisation is solvent – a fact acknowledged by the Central Bank – the statement from the board notes that many comments made have been “inaccurate and sensationalist”. The board is also keen to point out that it is “business as usual” at the credit union.