The former board of directors of the now collapsed Newbridge Credit Union presented a ‘wholly misleading view of NCU’s financial position’ in their last set of account delivered to the Cental Bank on November, 10, 2011,
According to the Special Manager’s report, which has been published in full by the Central Bank this morning, the board failed to identify the extent of NCU’s financial deterioration in their draft 2011 accounts, which reported an operating surplus of €2.6M.
It claims that it was only when the Registrar of Credit Unions (RCU) intervened on November 15, 2011 in its meeting with NCU’s auditors Grant Thorton and expressed concern about the level of provisions that an additional audit was performed. This resulted in the now controversial additional provisions of €16.4M being identified as was reflected in the amended draft accounts submitted by NCU on December 9, 2011.
As a result the reserve ratio for NCU fell to 5.4% leading to the appointment of the Special Manager in January, 2012,
The Special Managers report noted that prior to his appointment the board did not ‘accept the seriousness of the financial issues facing NCU over the last few years and in particular in recent times.’
It reports that the board refused to meet with the Registrar in 2008 prior to the 2008 AGM.
In 2009 the Registrar of Credit Unions wrote to the board regarding the high levels of loan rescheduling at NCU and the low level of liquidity. It also had concerns over several regulation breaches and loans for property development.
Arising from this the RCU appointed an independent consultant MKO Partners to complete a review of NCU. The review did not paint a pretty picture and noted ‘credit management and frequent control failures’ in all categories of loans reviewed.
The 2009 AGM went ahead and NCU’s treasurer resigned.
The board in its wisdom failed to make significant changes indicating that the ‘skills and resources in the lending credit control and finance functions were adequate’ so by December 2010 a Risk Mitigation Programme was brought in. This set out actions to be taken by the board to resolve all regulatory concerns. On December 20, 2010 NCU gave a written undertaking stating it would ‘address all outstanding matters in a manner that protects the Credit Union and is in the best interest of our members’. By July 29, 2011 the RCU had imposed limits on the business activity of NCU and the Board was directed not to convene the 2011 AGM.
That AGM never did happen and the rest, as the saying goes, is history.