Credit union board 'dysfunctional' - report

The board of the Irish League of Credit Unions is "entirely dysfunctional" the Review Commission headed by Mr Phil Flynn has decided.

A series of "radical" changes to how the league is run have been recommended in a report from the commission which has been circulated to member credit unions. The recommendations include the creation of an implementation committee, led by Mr Flynn, to oversee the introduction of the fundamental changes.

Included in the recommendations are: the creation of the position of chief executive; a new system for how the league is funded; and the need for all members of a reduced board to resign every two years and seek re-election "from the floor" and by way of a postal ballot.

League member credit unions have 2.2 million members and deposits exceed €6.6 billion. The report recommends that a feasibility study be conducted on the appropriateness of establishing a professional treasury management facility.

Although this could be expensive "if the treasury unit can increase the return on the €1.5 billion surplus by just one sixteenth of 1 per cent, it would generate an improved return of almost €1 million per annum". It is anticipated that a far greater return could be achieved, the report adds.

A core aspect of the report is the call for changes in the structure and operation of the league board. Fundamental weaknesses identified in reports commissioned in the early 1990s have not yet been rectified.

The commission examined the minutes of every board meeting over the past four years. "The board functions not as a team but in a very fractured way; blame is spread around; suspicion is the order of the day; trust is absent. One consequence is that long periods of time can be spent approving the minutes of a previous meeting."

The report quotes from a submission stating that "the board and committee level is entirely dysfunctional" and adds: "Based on our examination it is hard to argue with that conclusion."

The board spends too much time on operational matters when it should decide policy.

"The time taken on the making of a number of reasonably straightforward decisions was tracked, as the issue moved from board to committee, back to board, often back to committee again and from board meeting agenda to board meeting agenda. By any standard the lead time was unacceptably long." Directors' expenses "generated a lot of heat" during the commission's inquiries, according to the report.

"We examined the expenses paid and found that the levels are not out of line with those paid generally in the public and private sectors or by credit unions."

The problem, the commission said, was the refusal to disclose information on expenses to the movement. It recommended that information on expenses, including the basis and level of payment, be published annually.

On technology, the issue which led to the creation of the commission, it says a technology solution still has to be found. It recommends that the league consider a proposal from An Post that member credit unions made use of its national network of post offices and technology.