The Eastern Credit Union Co-operative Society and its subsidiaries are on an upward path of growth for 2017 even though T&T is in a recession, says its new group CEO Conrad Enill. The Business Guardian interviewed the former Minister of Finance on November 30, at the La Joya office, St Joseph headquarters of Eastern Credit Union.
Enill said the credit union's growth strategy includes partnerships with other companies.
A recession impacting the credit union's operations is not something that cannot be managed, Enill said, adding that history has shown that in times of a recession credit unions generally grow. The reason for that growth, he said, "is that in difficult times other financial institutions adopt a cautious approach. And what we have found is that the member's ability to repay loans is ranked higher in many instances than other institutions because this is the one that they belong to."
According to its consolidated financial statements for the year ended December 31, 2015 the group increased its assets position to $1.9 billion in 2015 compared to 2014 when it reported assets of $1.8 billion.
In its statement of comprehensive income, the group reported a net surplus for 2015 of $40.64 million, compared with 2014 when the group reported $61.32 million in net surplus.
The credit union alone has nine branches, one in Tobago and eight in Trinidad. The group employs more than 300 employees and has an ATM network at its locations.
Enill, who has been a member of the ECU since 1980, said he brings to the position his experience both in the private and public sector as well as with the World Council of Credit Unions which is similar to IMF and World Bank in terms of being affiliated with countries, and in terms of its membership.
"I am a part of the same kind of organisation that I am accustomed working with; it's just instead of being in government I am in a credit union."
Stating that he brings global experience to the group, the parent of one said credit unions in T&T are going through some "peculiar" challenges with legislation, with changes in the banking system as well as changes in the regulatory system.
He said, for example, that credit unions have to cope with changes that come with being compliant with Foreign Account Tax Compliance Act (FATCA).
"I can lend some leadership as to how we might be able to manage this new mind field of regulatory and other new compliance issues in order for the group to be relevant and in order for it to be able to withstand that level of scrutiny," said Enill.
Credit unions, like all other financial institutions, have to become compliant with the legislation governing the Financial Intelligence Unit (FIU) because if they see a suspicious transaction it must be reported.
Asked if he has had to change anything in his operations to become compliant with FIU and FATCA he said: "Higher levels of scrutiny for members, re-engagement with members to ensure that what the law says needs to happen and tweaking the information technology system to make sure it can flag individuals who are on the international list for people of interest."
Addressing the issue of credit unions being regulated by Central Bank of T&T and the ongoing debate, he said:
"Eastern has a bureau de charge, which deals with foreign currency and is now regulated by the Central Bank of T&T. So, we have had the opportunity to have to deal and interact with the CBTT.
"The real issue in dealing with the CBTT is that your compliance timeframe is different. When the CBTT says it wants something by 11:45pm on Friday that's not how credit unions normally operate. Credit unions normally operate with a more leisurely pace; the CBTT has a different dynamic in terms of its regulatory compliance mandate."
He added that in order to keep up with the Central Bank's deadlines, credit unions need to change their systems to keep up.
"The question of how information is stored would have to be revised. How credit unions are able to access data would have to be changed because their requirement would force you to do that. Working with the credit union would force them to become more compliant in that regard."
Specifically referring to the legislation being proposed, which the Credit Union League has expressed concerns about, Enill disputed the legislation's description of credit unions as deposit-taking institutions, which is similar to a bank.
"The credit union is not a deposit-taking institution in that sense because a credit union member transacts business with the credit union and is also an owner. In other words, I cannot become a credit union member to transact business with the credit union unless I am an owner of the credit union," said Enill.
It means, he said, that a member of the public cannot come off the street, enter a credit union and leave with money. Enill added that once an individual joins a credit union it means that they are governed by the "rules of engagement," and by the "structures that we have put in place," and it is this membership that selects a board of directors.
The board of directors then employs the management to provide the services for the organisation. Noting the difference with deposit-taking institution, he said with a credit union, every single customer will share in the surplus of the credit union, thereby getting money as an owner. The owners also participate in a patronage refund which means that the customer's loan interest is reduced as a result of the profits.
Transparency
Enill's appointment on October 1 2016, came after Alana Blackman in November 2015, was ousted from the position as president after the calling off a special meeting during which a resolution was passed expressing a loss of confidence in her leadership.
Earlier, then incoming President Wayne Estrada said at a news conference that ECU's board had become aware of allegations of impropriety in the award of contracts by EPL Properties Ltd, a subsidiary of the credit union, for a real estate development at Las Viviendas in Valencia. The 16 acres of land had been sold to ECU for $5 million in 2013.
Estrada also said reports of that land transaction had been requested from an independent auditor, ECU's internal auditor and the credit union's supervisory committee. He had said board members saw a full-page notice in a daily newspaper which referred to "irregularities" surrounding the purchase of Las Viviendas.
Commenting on the torrid period the credit union has faced, Enill said: "If what the membership asked for was an audit and the audit was done and the results of the audit were made available and you don't agree with the audit, I am sorry but as I am concerned, requirements for accountability and transparency have been met.
"The fact that you don't agree with it is not my business. You are free not to do that. I think what happens, in some instances, people bring their own individual judgement on the basis of limited facts or facts as they see it and they draw a particular conclusion from that."
He added that an independent auditor came in, looked at the facts and made certain comments. He said the issue was wrapped around payment for a particular property.
A special meeting is expected to be held on December 12 where further discussions are to be held.