The report of the extensive loans made to members of the coop, and the huge salary advances, was brought to light when the Ministry of Fisheries initiated a review of the legislation that governs the cooperatives, he said. The objective of the review was to amend the legislation so that it could act as an effective corrective tool within the cooperatives.

The Department of Cooperatives filed the report to the Ministry in July of this year. The report showed that there were financial problems in the other cooperatives, such as National Fishermen Cooperative, which recently fired 26 of its employees on the charge that there were stealing lobster tails from the cooperative.

Tewes said, however, that the problems that were found because of the outdated legislation were common among the various coops, but that the financial irregularities found at the Northern Fishermen Coop were the most alarming.

Dr. Tewes discussed the issue of loan guarantees, citing that there was no apparent collateral for the loans to Northern Fishermen Coop?s members, which amount to approximately $10.7 million, because the Cooperative Act does not explicitly allow it. He said that the Coop Act, written nearly 40 years ago, specifies that the coop could not accept collateral from its members, except in the form of produce. Therefore, the members who received loans from the Northern Fishermen Coop could only have given collateral in the form of seafood produce.

The Ministry?s concern arises not from loans being given to the coop?s members, said Dr. Tewes, but the amounts for which the loans were granted, and the apparent lack of collateral in the form of produce, coupled with the members? inability to repay the loans.

The largest loan seems to have been given to the chairman of Northern Fishermen, for $1.3 million.

In the case of salary advances, these were securitized by the staff?s gratuity payment, said Tewes. Again, the Ministry?s concern arises because of incidents in which staff personnel were given salary advances that could not be covered by their gratuity payment.

The salary advances to staff amount to approximately $1 million, and were granted in amounts for as much as $552, 732. 83, given to the accountant, Modesto Samos, and as little as $5, 632.50, given to the plant manager.

A peculiarity that the Ministry could not overlook, and in fact will be looking into, is that it took a number of years for these financial irregularities to come to light, said Tewes. He noted that it seems likely that coop officers neglected to address the financial issues at the different cooperatives, and should share in the blame for the problem that has gone uncorrected for years.

Since the Ministry has become aware of the financial irregularities at the Northern Fishermen Coop, they have implemented several measures to correct the problem: a total moratorium to all staff personnel and executive members, meaning that this coop can not issue any more loans until adequate changes have been made to the Coop Act. This measure is meant to control the coop?s debt (currently $10.7 million); establish an active collection policy, to ensure that the loans and salary advancements are repaid in a satisfactory manner; and formulate an oversight committee made up of members from the Cooperative Department, Fisheries Department, Northern Fishermen Coop, and banking institutions.

Northern Fishermen Coop?s assets are said to be $19.8 million, and their liabilities are $12.6 million.

The coop?s quarterly meeting has been set for September 24, 2004, at Bird?s Isle.