Monday, August 05, 2013

Did The CCCU Board Of Directors Make A Fopar?

A reliable source has informed this blog about issues surrounding the purchase of a building and lot in the town of Soufriere by the Choiseul Credit Co-operative Credit Union (CCCU). According to this source, the building being purchased is close to 60 years old and in poor condition. It is being purchased at a cost of $630 000.00 and based on a report by Herbert Peter ( not proven) will require at least another $430 000.00 to bring it to a state of repair in addition to planning and drafting costs. This means it will cost the Credit Union about $1 100 000.00.

   Unfortunately, in spite of the manager’s advice against the purchase, the source continues, this decision was taken although the structural engineers report has indicated that the structures of the building will be good for only about 30 to 35 years. This means that by the time the building is paid for it would have to be demolished unless major structural redevelopment is undertaken which will significantly increase the stated cost. Additionally, if one takes into account the real cost of the venture to the Credit Union it will be noted that by the time it is paid for the amortized will be about $2 400 00.00 ($1 100 000.00 x 7% interest over a period of 25 years) By the end of this period the question which needs to be asked considering the engineer’s report is “What will the value of the building be after it has been fully paid for.

  Additionally, this source revealed, that the branch in Soufriere cannot afford the cost of the building because its operations are being subsidized by the Choiseul to the tune of $97 500.00 in 2013, over $90 000.00 in 2014 and $60 000.00 in 2015. The expectation is that the branch will break even in 2017 and surpluses will be realized from 2018. Remember, the amortized cost of the building at a rate of 7% per year over a period of 25 years is estimated at $2 400 000.00 after which its structure will be at risk.

Here are some pertinent questions which this blog thinks need immediate answers

1. Shouldn't the Board consult the membership on such a large investment before committing to this deal. After all, the society belongs to the members and no decision of this magnitude should be made without the approval of members?

2. Are the owners of the building related to or connected to any member of the Board (their Surnames suggest this (it is being rumored on the ground that a board member has a family interest and it is interesting that of all the owners carry the surname? (family surname withheld)

3. Why should such an investment be made if the Branch is already being subsidized since this will further drain the returns (profits) of the Credit Union and this can result in the reduction of interest to members? (It will cost the members a further $5 000.00 monthly to pay for the building when one deducts the projected rent from the monthly amortized cost of $8 500.00)

4 Considering the age and condition of the building isn’t this putting the member’s funds at risk?

    Efforts to get a response from the Credit Union,s persons in-charge, since there seems to be no general manager, proved futile.( An issue that needs urgent attention)  Therefore it begs the question whether the Board of Directors are really working in the interest of the members and by extension the institution.
   There have been other subservient activities going on at the Credit union, like abuse of cell phones, favoritism towards delinquent members, and the list goes on. It is alleged that a certain member on the board had a phone bill of over $500.00 for a month for the cell phone provided to him/her, whereas other board members bills were a mere $150.00? But that is for another show.

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