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PKF: No irregularities

Published: 
Wednesday, March 2, 2016
Auditors complete probe of ECU project…

There were no irregularities in Eastern Credit Union’s (ECU) purchase of 16 acres of land at Las Viviendas, Valencia, for a housing development programme. These were the findings of auditors Pannell Kerr Forster (PKF) following investigations of the $5 million real estate transaction.

ECU president Wayne Estrada told the T&T Guardian the final report from PKF was handed in to the credit union on January 20. He said the ECU board has also received an interim report on the transaction from the credit union’s supervisory committee and is awaiting a report from the Commissioner of Co-operatives. These followed investigations commissioned last year after questions were raised about the land deal.

Estrada said the PKF report contained recommendations, some of which the board has already addressed, while others are currently being addressed.

“The project is now awaiting approvals from the Commissioner of Co-operatives and the Board of Inland Revenue,” he said.

The Las Viviendas project has been mired in controversy for several months after allegations of irregularities were made. It stemmed from a mandate to the ECU board in 2013 to acquire land for a housing programme. A housing committee was established in March 2013 and in November of the following year the Las Viviendas land was purchased. It was initially offered to the ECU for $14 million, but after negotiation the credit union was able to purchase it for $5 million, as well as drawings to the value of $4 million. 

Feasibility studies and a business plan have projected a profit of at least $20 million from the project. Estrada said the purchase was approved by the board with the exception of one member.

Following elections last March, ECU’s board of directors changed and Alana Blackman became president. Subsequently, concerns about Las Viviendas were raised by the board member who had previously objected to the project. That member submitted a report and PKF, ECU’s supervisory committee and the Commissioner of Cooperatives were asked to investigate. ECU’s internal auditor was also asked to look into the transaction.

“It was during the process that the board got word, from a senior manager of Eastern Properties Limited (EPL), a wholly owned subsidiary of the credit union, of irregularities there involving the award of contracts,” Estrada said.

“Information came out about another property ECU had decided to purchase for $14.5 million, with conditions, including that due diligence was to be done before any payment was made to the vendor. However, the procedure to verify and to ensure conditionalities were met were not followed.”

As a result, he said, EPL’s Corporate Secretary refused to give approval for the ten per cent downpayment on the property.

That development and other controversies led to the convening of a special board meeting last November at which Blackman was removed as president and replaced with Estrada following a no confidence motion. Eight of the ten board members voted in favour of the motion to have Blackman removed, while one voted against the motion and the other abstained.

Former ECU president Gloria Rolingson, a member of the current board, said energies are now focused on the annual general meeting on April 16 where a report on the matter will be presented. “We are focused on stability and are concerned that the personal grouses of a few are being aired publicly—and they are indifferent to the threat to the institution,” she said.