Extension granted for credit union special manager

The President of the High Court has extended the appointment of a special manager to Newbridge Credit Union to next summer, raising to €1.25 million the cost to members of the Central Bank appointment.

In response to concerns of NCU’s directors about what plan is being pursued for it, Mr Justice Nicholas Kearns also asked special manager Luke Charleton to deliver a report to court next April outlining the strategy being pursued and progress made.

The judge was giving his decision on an application by the Central Bank to extend the appointment of Mr Charleton for another six months to July 2013.

€9,500 weekly fee

He was appointed last January under the Central Bank and Credit Institutions Resolution Act, 2011, amid concerns about the credit union’s financial position. His appointment was extended last July, on consent of the directors, to mid-January next.

The court heard Mr Charleton, of accountancy firm Ernst Young, had said he would cap his fees at €9,500 weekly unless additional work had to be undertaken. With that cap, his fees, paid by the credit union’s 37,000 members, will be some €250,000 over the next six months, plus €1 million paid since January last, the court heard.

‘Face-saving exercise’

Paul Gallagher SC, for the Central Bank, said Mr Charleton had done considerable work justifying his appointment but, while the position at NCU had stabilised, the conditions that required the appointment “unfortunately” continued. The Minister for Finance also supported the extension.

The bank rejected the credit union board’s claim the extension was “a face-saving exercise”, he said. The bank’s intervention in NCU was justified, it would not countenance the return of the NCU board and believed “the best and only way” of dealing with the problem was via the special manager.

Bernard Dunleavy, for the directors, said they were “very unhappy” that, almost a year later, another six months was being sought.

That extension would commend itself if the directors felt there was a plan to address the credit union’s difficulties but there was not, he said.

He was not saying there was no work done but there was “still no solution”.

Mr Gallagher said the directors’ suggestions were “unrealistic”, “won’t work”, ignored compliance issues and appeared to assume the problem could be addressed by presenting figures in a different way.