Following the publication of the Credit Union’s annual accounts and financial statements, there was widespread alarm in Claremorris, as locals began to fear for the safety of their investments. The annual general meeting of the credit union was fixed for Thursday night, March 6, at the McWilliam Park Hotel, but when a huge crowd turned up demanding answers, the AGM had to be adjourned for safety reasons, as the room that had been booked could not cater for the crowd.

The meeting was rescheduled for Wednesday last, March 12, and again, a massive crowd came looking for answers, with several hundred in attendance.

The Chairman of the Credit Union’s Board of Management, Mr Brendan Mellett, began the meeting by stating that the financial institution would continue to serve the people of Claremorris to a high standard - as it had done since its establishment in 1971.

“St Colman’s Credit Union is safe and solid, and all of the members’ money is absolutely secure and fully accounted for,” said Mr Mellett.

“The Credit Union has come through its toughest ever year, yet has added •7m in shares, earned

•1.5m in loan interest, accumulated nearly •7m in reserves, and is paying a dividend on deposits. Your money is safe and secure,” he assured the crowd.

Mr Mellett said he would be talking “hard facts” and explained that the reality bares no relation to the rumours.

“Every financial institution is having a torrid time, but we are strong and we’re getting stronger. Every •1 out on loan is backed by nearly •4 in assets. Reserves are nearly •7m. Over

•130m was transacted over the counter in the last financial year. We now have 11,000 members,” he said.

The main issues arising were the dividend to members, the granting of a loan in contravention of the Credit Union Act, and the return on long-term investments.

Dealing with the issue of the dividends falling to 1.2 per cent, Mr Mellett said that the Credit Union usually paid higher interest. He pointed out that the Financial Regulator has decided that the dividends be capped.

“We regret that the dividends cannot be bigger this year but it’s our firm intention that the dividend will be higher next year,” he said.

With regard the •2m loan granted to one individual, the Chairman noted that an application had been submitted by a member for a short-term loan, with the customer providing security in excess of the amount. He said that almost half of that loan has now been repaid, with •1.2m outstanding. Mr Mellett acknowledged that the granting of this loan was contrary to the conditions set out in the Credit Union Act 1997 and held up his hands, admitting that the Board had “made a mistake”.

Mr Mellett went on to point out that the Credit Union had already received •68,000 in interest on the loan and assured the members that it would be paid back in full by the end of the year. “We’ve taken steps to ensure that it won’t happen again,” he added.

In terms of investments, the Chairman went on to state that the Credit Union had taken a hit this year, with a •1m investment in ISTC turning sour. The Credit Union invested the money via the First Active Building Society and ISTC has now gone into examinarship by order of the High Court. Although the Board is hopeful that the investment will be recovered, a decision was made that a provision for the full amount be taken in 2007.

As well as this investment, the Credit Union invested funds some years ago in Perpetual Bonds. The bonds have since dropped in value. If sold, a real loss would occur but at present, interest is still being received and they are deeming the drop in value as a “paper loss”. Nevertheless, the Board has adopted a prudent approach and made a provision of

•681,000 on these investments.

The Credit Union also wrote off over

•600,000 in bad debts last year, in accordance with league guidelines. Mr Mellett assured the meeting that all steps, including legal action, is being taken to recover these loans in full.

Concluding, the Chairman admitted that the Board had made some mistakes but were now making amends.

“I feel certain that your money is secure and it’s not just Brendan Mellett saying that, you can ask the Financial Regulator. Your money is safe, secure and strong. I’m not taking my money out and I’m asking you all, as members, that you trust us with yours,” he pleaded.

When the time came for questions from the floor, there was a mixed reaction to what the members had heard. Some stood to applaud the Credit Union for their commitment to the community, while others raised pressing concerns.

One man asked who exactly was responsible for the decision to hand over •2m to a person and querying as to whether the person at fault would still be on the Board after the AGM.

John Timothy, Treasurer, explained that a request for any loan over

•50,000 must come before the full Board of Directors for a decision. He said that before making the decision, the Board had given it a lot of consideration and were satisfied with the considerable security that was put in place by the individual.

“The Board were elected and, I for one, certainly intend to stay and keep my voluntary position with the Credit Union,” he said.

Another account holder asked if there is insurance in place to protect members’ shares in case anything goes wrong, questioning whether funds are guaranteed through the Credit Union League. At this, the representatives from the League who were in attendance began to shake their heads. Con O’Brien, a Director with the League, explained that there is a Savings Protection Scheme Fund of •110m, which the League uses to stabilise credit unions that get into trouble, to bring them back to a healthy position.

Another member pushed a little further, asking if the League could give every member a written note to say that every one of the members’ shares is safe. Mr O’Brien said he would give a verbal assurance, but not a written one, stressing that no credit union had ever lost one cent in 50 years. “We will make sure that your credit union never goes under. That’s our job,” he assured.

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