Harry closes the book on Hindu Credit Union; 9,000 out of work

Harry Harinarine is closing the book on the Hindu Credit Union (HCU) and the HCU group of companies. The president of the organization told reporters Thursday all the HCU assets are to be liquidated and promised that the 190,000 members would get their deposits within six months.

"I don’t think we can recover from this," Harnarine said yesterday, during a news conference at the HCU’s Edinburgh office, noting that liabilities amount to $776 million. About 9,000 people would be out of work.

On Wednesday, the High Court granted the Government full control of the HCU, freezing its assets and ordering the management to turn over all documents to chartered accountants Ernst &Young, which is conducting an audit of the HCU’s books.

At 7 p.m. on Wednesday night the board of directors ceased management of the HCU group. The legal move followed the HCU's reluctance or inability to pay depositors, some of whom had sought legal advice and taken legal action against the credit union.

In February 2007, a High Court judgment, in favour of an HCU depositor, criticized the Commissioner of Co-operatives, who supervises the country’s credit unions, for his failure to act promptly in the case of a customer who had made an application to withdraw his deposit from the HCU.

Harnarine said he takes full responsibility for the crisis and credit union's demise. Harnarine didn't want to look into the long-term situation but noted that, "At this point, we can only speculate. It’s hard to repair and rebuild credibility."

The HCU boss alleged political motivation behind the move and wondered, "Who is the watchman of these assets? It was a long battle just to sell assets for cheap."

Harnarine said the state of affairs was not a result of bad management. And he accused Finance Minister Karen Nunez-Tesheira of "double-crossing" the financially-strapped institution.

Harnarine said he had asked the minister for help but in her haste to go to Cabinet, she asked him to hand over the credit union's management to a Central Bank team headed by Wendy Ho Sang.

He said there was an agreement with Public Administration Minister Kennedy Swaratsingh for the purchase of HCU properties for $250 million. He said government reneged on that deal.

"The assistance I was led to believe that I would receive was that the Ministry of Public Administration would purchase properties belonging to the HCU for use by the Government of Trinidad and Tobago as negotiations were ongoing between the Ministry of Finance and the Ministry of Public Administration to that extent," he said.

He said based on the government's promise he was advised to forego the sale of HCU property on the open private market.

Harnarine was disappointed with the way the matter was handled by the finance minister, saying he was "appalled that the confidentiality and mutual trust agreed to by the Minister of Finance and myself for the benefit of the HCU was breached as I was assured that the sensitivity of the issue of illiquidity required confidentiality."

He said, "The effect of liquidity caused financial crisis as the institution was forced to pay depositors, lawsuits, satisfy judgments rather than service its corporate debts."

Harnarine said he had been working to "get the best option available" for HCU shareholders and charged that the minister did not give him a chance to set up an interim management team to deal with the crisis.

Harnarine explained that the HCU closed its offices to auditor Ernst &Young “not to avoid audit, but to protect the credit union’s assets that still provide service.” He said a liquidator had been appointed to get back money for HCU depositors.

The two radio stations it operates are on "auto-pilot", Harinarine explained. One of those - Massala 101 is owned by the HCU. The other - Shakti97.5 hotlikepepper - is by Upward - Trend Entertainment Limited, which sells air time to HCU.

He also blamed the HCU's failure on the negative criticism from head of the Sanatan Dharma Maha Sabha (SDMS), Sat Maharaj, from the media and the Congress of the People (COP).

Harnarine told the media while HCU was a Hindu-based organization it served the wider public and Hindus had no excluvie right as members.

He said the problem arose after all the negativity resulted in a run on the HCU's finances. “In so doing, we decided we are going to use up our reserve funds, slow down the loan portfolio of lending and sell off some of our loan portfolio for the larger loans we carry in our books.
And we also looked at negotiating time with some of the depositors with which to pay them," he explained.

"We were able to put a plan in place which allowed us to cushion and repay the cost in the shortest period of time. We did not go beyond nine months."