The league has had a difficult year: it is losing market share in personal borrowing; it has had to deal with changing over to the euro, the establishment of Special Savings Incentive Accounts and it faces the prospect of losing members

Although the Taoiseach, Mr Ahern, dissolved the Dáil yesterday, the most passionate and dirtiest election campaign currently under way is not a party political one.

Rather it is the one being run for membership of the board of the Irish League of Credit Unions (ILCU), the most successful co-operative movement in Ireland, with a membership of 2.2 million.

An example of how hard and nasty the campaign has become has been seen by The Irish Times. It is a threatening e-mail from an unidentified party who says he has dossiers about embarrassing personal matters concerning a senior figure within the movement. If the target of the e-mail does not do what the anonymous blackmailer wants, then he will, he says, circulate the information to which he has access.

It is against this background that the ILCU, which has 540 affiliated credit unions with deposits of €6.6 billion, making it one of the largest financial services organisations on the island, holds its annual general meeting in Killarney this weekend.

As well as the vicious in-fighting, the meeting also takes place against a backdrop of continuing fallout from the disastrous ISIS project, where €34 million was wasted on a failed attempt to develop a technology system to link the member credit unions.

Furthermore, the movement has had a difficult year in terms of its bread-and-butter role of supplying financial services. It is losing market share in its core business of personal borrowing. It has had to deal with the changeover to the euro, the establishment of Special Savings Incentive Accounts, and other new products such as medium- and long-term savings accounts. The movement faces the very real challenge of losing members and it is on this core fact that it should be focused.

"The market place is changing rapidly and we have to adapt to survive," says one source.

However the ISIS debacle has led to a huge loss of confidence. "You can replace the money but it is difficult to replace the confidence and the trust which has been lost," says another source.

"One of the misfortunes of the last year is that, at a time when it is facing such competition, the league board has been engaged in the bloodiest civil war seen since 1922."

This has led to a general loss of confidence in the board with the consequence that affiliated credit unions have "localised their focus" at a time when a national focus is required, according to the source.

Quietly and secretly over the past few months a number of credit unions, many of them of significant size, have discussed the possibility of replacing services currently provided by the ILCU. The Credit Union Development Association (CUDA) contacted the Registrar of Friendly Societies about forming a new co-operative body.

The association is looking at ways to protect and develop credit unions, says a source who is involved. However some fear the association could in time form the focus for a split in the movement.

In the wake of the ISIS debacle, a league review commission was established, headed by Mr Phil Flynn, and this week that report was circulated to ILCU affiliated credit unions.

The report, A Time For Change, "is the credit unions' Good Friday Agreement. Its the way forward," says a source.

Many within the movement held out little hope that the commission would come up with a report that would confront the scale of the problem. However the commission has proved the sceptics wrong, according to sources.

"Phil Flynn steered a very independent path. He jealously guarded his independence and came up with a report which has surprised everyone."

Members of the 22-member CUDA, which did not respond to a request from the commission that it meet with it, are also said to be impressed by the report. If the recommendations included in the report are adopted, according to a source, then the association may pause before deciding whether to continue with its agenda.

The association has managed to work without its existence becoming public knowledge until now. It is understood to have commissioned its own report into matters of concern such as insurance cover and other services issues that are the responsibility of the league, and to have met recently in Newbridge, Co Kildare, to discuss its findings.

"The expectation was that the bulk of them would disaffiliate and that would have been a big political or psychological blow to the movement". As many of the association members are understood to be larger credit unions, it would also be a financial blow to the league.

However the commission's report has created hope that the problems that exist at board level can now be addressed. The report is very hard on the board, quoting a submission that described the board as "entirely dysfunctional" and then adding: "Based on our examination it is hard to argue with that conclusion. 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."

Hard stuff but the type of language that may prevent a damaging split in the credit union movement.

A core purpose of the ILCU is to provide services to affiliates but there have been few positive developments in that regard over the past number of years. Massive rows within the board, which have become very personal at times, have distracted attention from the work that needs to be done. Heated discussions on agreeing the minutes of previous meetings can take hours, according to one source. Board meetings can last for entire weekends.

This scenario led to the departure of general secretary Mr Tony Smyth in December 2001. He has not been replaced and is now one of the candidates for election to the board at this weekend's meeting.

As well as providing services, the ILCU has a lobbying role but this again is one that is not being fulfilled, according to a source.

"We are bigger than the GAA. We're bigger than the Catholic Church at this stage. There's a general election but no-one has thought of sitting down with the parties. It's because they're too busy fighting."

A special delegate meeting is to be held in June to consider the commission's report. If the recommendations it contains are voted for, then a programme of implementation will begin, which in turn may be overseen by an implementation commission headed by Mr Flynn.

The credit union movement is an outstanding success story. It has grown from four credit unions in 1960 to more than 540 today, with total assets in excess of €6.6 million. Moreover, it is a non-profit financial services organisation with a social brief, one that has come to form an important part of the social fabric. Its members have created the movement and they must now make decisions upon which its future will depend.

THE FLYNN REPORT

Key Recommendations

The creation and filling of the position of full-time chief executive. (At the moment, the combined post of president and chief executive is a part-time post.)

Reduction in size of ILCU board from 16 to 13.

Change in the method of funding the league.

Ending the practice where deputy presidents invariably succeed presidents.

Examine the possibility of creating a treasury management function.

Improve communication and public relations functions.

Establish an implementation committee to oversee and report on the implementation of recommendations adopted by the league.