Former HCU boss says bailout plan illegal, no payout possible while legal matters pending

When the government announced a plan to help people who have suffered financial distress from the CL and Clico fiasco, it also said it would offer help to thousands of investors and depositors of the Hindu Credit Union (HCU).

The HCU bailout of similar to the CL plan: $75,000 in cash and the rest of IOUs over 20 years with no interest.

While most HCU member welcome the government's offer, the former HCU President thinks the plan is illegal and is suggesting that the government cannot make the payments.

Harry Harnarine told a meeting of shareholders and depositors Saturday that the HCU is being run by a liquidator whose responsibility includes collecting monies on behalf of the HCU.

Harnarine suggested that people would not be able to collect the money promised by the government because there are ten matters before the court. 

He said no payout can take place while these matters are pending. and suggested that the Government did not have "all its facts straight" when it made the bailout offer. 

Harrinarine said the HCU did not want any bailout from the state, just a loan to resuscitate the credit union.

He claims that some subsidiaries of the HCU are profitable addining that a loan would have allowed the credit union to make initial payments to shareholders and get the institution back on track without being a burden on taxpayers. 

He insisted that under the country's credit union laws the proposed bailout is illegal. He said he has written to the Solicitor General pointing that out.

Harinarine claims that when the HCU was placed in liquidation its assets were valued at $855 million. He said the $300 million loan would have allowed the HCU to discharge its liabilities.

Harinarine said large depositors in the organisation have invested $550 million and are willing to accept a divestment plan that would see assets placed in a new company called the HCUDG Co. Ltd.

Harinarine is also wary of an inquiry into the credit union. He is concerned about who would conduct the probe and what would be the terms of reference by which the commission will operate.

Harnarine hopes that the inquiry would reveal what caused the run on the HCU and predicted that in the end the HCU board would be cleared of allegations of mismanagement and misconduct.