Karen: HCU gave bad collateral

In Parliament yesterday, she said that the HCU on April 11, sought $74 million from her Ministry to stave off a “temporary liquidity problem” while the HCU had assured they had many properties which could be easily sold.

“The HCU identified the towers at Chaguanas as once such property, which they asserted, was available for purchase and free from all encumbrances.” She said her Ministry could only help if the problem was temporary liquidity and if the HCU allowed an independent audit and consented to a title-search of their unencumbered properties.

The HCU gave their property list to the Ministry of Labour on April 18, but, she lamented, in the first week of June 2008, the HCU told her the towers could not be sold because there was a co-owner, who refused to proceed with the sale.

“This was a direct contradiction of HCU’s previous representation that the property was free from all liens or other encumbrances”. She said on June 8, 2008, the HCU offered her Ministry another property at Calcutta Settlement in Freeport supposedly also free from encumbrances.

“However based on the title searches conducted by the law firm, it was established that the property was in fact encumbered.”

“The auditor’s assessment was that the Hindu Credit Union was facing not a liquidity problem but a solvency problem, and that all of the Hindu Credit Union’s assets were overestimated in value and encumbered,” she said.

In exploring all options, the auditors were refused access to the HCU head office to inspect files. “On Thursday July 17, 2008, the auditors were locked out of the premises of the Hindu Credit Union and on Friday July 18, 2008, the doors of the credit union were closed for business.”

She said a court injunction restrained the HCU on July 21, 2008 from blocking the auditors, tampering with HCU records or disposing of HCU.

Nunez-Tesheira said the Ernst and Young report found HCU had virtually lost $133 million in loans to HCU subsidiaries, plus $53 million in doubtful receivables from the subsidiaries.

She said that by contrast to the HCU, Clico in its MOU had given “tangible cooperation”. She vowed new credit union legislation by March 16.