NOT only will Newbridge Credit Union have to cover the mounting costs incurred in its own six month rescue operation but it is also VAT exempt and as such cannot claim back the 23% VAT charged on all fees invoiced by the hour.
Despite a cut in the hourly fee for the special manager appointed to run operations last month from €423 to € 375 per hour following an application from the Central Bank to the High Court, the hourly rate increases to € 468.75 when the VAT is applied.
The reduction to chartered accountant Luke Charleton’s hourly fee, which came into effect on Monday, February 13, was ‘noted’ by the current Board of Directors who declined to comment further on the issue.
To date the special manager, who is employed by Ernst and Young, will be eligible to charge the credit union a whopping € 20,280 for just four weeks work based on the calculation that Mr Charleton has worked a 39 hour week since his appointment on January 13 last and earned € 423 per hour plus 23% VAT at € 97.29.
The Leinster Leader understands that the credit union is not entitled to claim back the VAT charged for this service.
“In terms of any fees incurred to date, under the terms of the Special Management Order the Special Manager is required to apply to the Court for the approval of his and his team’s fees before any payment can be made,” said Press Officer Peadar Hayes of the Central Bank.
“No such application has been made to date.”
Mr Charleton, who is due to provide the Central Bank with a report on the Credit Union loans book as well as a plan to restore the institution’s financial position, also has a team working along side whose hourly rates have been reduced this week.
The special manager is aided by colleagues who will carry out similar restructuring processes for the next five months. These include a partner whose hourly rates has been reduced from €423 to €375, a director from €339 to €300, a senior manager from €279 to €247, a manager from €216 to €191 and a senior from €150 to €135. A rate of 23% VAT per hour can also be added on to all these figures.
The Central Bank can apply for an extension to the initial six month appointment under the Central Bank and Credit Institutions (Resolution) Act 2011.