Photo: Kareem Michael, Registrar of Credit Unions
The Registrar of Credit Unions, Central Bank Governor Kareem Michael is locked in a lawsuit with Corozal-based St. Francis Xavier Credit Union (SFXCU) over the appointment of the administrator
by Marco Lopez
BELIZE CITY, Thurs. Sept. 14, 2023
As far back as March 2023, St. Francis Xavier Credit Union (SFXCU) had retained senior counsel Dean Barrow as their attorney. This week, speaking on behalf of the credit union, Barrow delved into the lawsuit initiated by the financial institution against the Registrar of Credit Unions, Kareem Michael, the role of Registrar of Credit Unions being intrinsic to his position as Governor of the Central Bank. In early March he appointed Martin Marschelleck as the administrator to oversee and address identified deficiencies in the management of the credit union. The comment from Barrow to local media comes on the backdrop of a press conference held by the Central Bank last week, where Governor Michael referred to work at SFXCU (to bring that company in line with accepted standards) as having the potential of being a template for compliance for credit unions across Belize.
However, the Board of Directors and interim general manager of the credit union, Michael Riverol, feel that there was no need to appoint an administrator, and that the decision is disproportionate. Barrow stated that his clients are “greatly aggrieved by the action of the registrar”. They cite steps that were already taken by the Central Bank to supervise the progress of implementing the recommended corrective actions handed down by the registrar.
The appointment of the administrator came following a second investigation sanctioned by the Central Bank. By mid-March, Governor Michael pointed out at a press conference that “critical deficiencies in governance and risk management practice” were identified. He outlined that he engaged in extensive communication with the board to address the issues and uncover the shortfalls. The board of directors and GM of the company felt that the actions taken before the administrator’s appointment were sufficient. That appointment did away with the elected board, a move they feel should have only been taken by the Governor once he felt there was no other option.
In addition to this, Barrow states that the cost of the appointed administrator is around $16,000 (monthly in salary) and additional expenses have to be footed by the credit union. A second administrator, Marlowe Neal has taken up the role, following the departure of Martin Marshalleck. The credit union board contends that if the company should be subjected to cover those expenses the registrar must have been sure of its necessity. They maintained that that was not the only option, and claimed that the credit union was not afforded due process.
We note that suspended General Manager of SFXCU, Raphael Dominguez is still being paid his salary by SFXCU, according to Governor Michael. In last week’s press release he noted that the law does not provide for a next course of action at this time. Dominguez was dismissed but not terminated from the credit union; his contract, which was deemed “unsustainable” was not renewed. If that contract was renewed, he would be owed a severance package of $600,000 plus, according to a May 24, 2022 press release – each of the 30,000 plus members would have had to contribute about $20 to cover that cost.
Barrow cites that, while Michael was in communication with the credit union via written communication, at no time did he explicitly indicate that an administrator would be appointed unless they demonstrated a valid reason to avoid such an appointment.
In his comments last week, Michael shared that the administrator should complete his work by July 2024, after which control of the credit union would be handed back to the board. We reached out to the Registrar via the Central Bank email listed for further comment but the response from “The Office of the Governor” was that “This matter is under judicial review and we are unable to comment at this time.”