Among other woes, the 67-year-old credit union had issued bad loans to 191 members to the tune of $1.8 million. The Central Bank of Belize has liquidated the credit union; 1,100 shareholders affected.
BELIZE CITY, Mon. Feb. 5, 2018– Last April, the Central Bank of Belize announced that it would be liquidating the Civil Service Credit Union in Belize City, which has been in existence since the early 1950s.
Today, Amandala spoke with the chief liquidator and accountant, Cedric Flowers, who provided an insight into the ongoing process. He said that due to mismanagement, the Central Bank ordered the credit union to close down its operation.
And so for now, the company isn’t functional, but hasn’t been declared bankrupt; instead, it is insolvent because it cannot pay its bills. For now, one part-time employee handles the administrative affairs of the business.
According to Flowers, the credit union had issued bad loans to 191 members to the tune of $1.8 million. He explained that by March 15, those persons and their co-signers would be receiving letters of impending court action if they do not settle their outstanding debts.
Instead of collecting the principal plus the outstanding interests, Flowers explained that he is asking those who owe the credit union to simply pay the principal amount outstanding on their loans.
However, if the matter goes to court, they would be asked to pay the principal plus the accumulated interest.
According to Flowers, after the judgments are secured, the credit union would then sell the debt to a collection agency which would then pursue the receivables. He did not reveal the name of the potential collection agency.
Amandala asked what would happen to the over 1,100 shareholders of the credit union who have no pending loans but are still unable to access their shares, which total an estimated $1.3 million.
Flowers explained frankly that the credit union had “zero dollars.”
Additionally, he explained that the credit union has additional debt, like a mortgage of more than half a million dollars for its office, covered by the Social Security Board (SSB). He explained that, figuratively, the SSB was like an innocent bystander who wasn’t even a member of the credit union but was still dragged into the meltdown.
Amandala notes that this morning there was an auction for the credit union’s building on Dean Street. However, we are unaware if any sale was made.
When asked what action could be taken for shareholders to recover their monies, Flowers said that the directors should be held liable. He hinted that shareholders could possibly pursue legal action against them.
When we asked if the Government of Belize (GoB) could bail out the credit union, Flowers considered that an impractical suggestion. He said that the Government of Belize merely acts as a regulatory body to ensure that there is good governance in the operations of credit unions.
“The best that GoB could do is to ensure that this isn’t repeated at another credit union,” said Flowers.
When Amandala asked if the loans had been insured, again Flowers said that he is not of the view that the union was up to date with paying its premiums to the Belize Credit Union League. According to him, the coverage of the insurance by the credit union extended only to the covering of loans after the death of a borrower. Beyond that, there was no other protection.
For now, the doors of the Civil Service Credit Union symbolically remain open until the Central Bank deals the final blow and deletes it from the records, as if it never existed.