The Irish League of Credit Unions must avoid a split over the findings of a highly critical consultant's report, its outgoing president said yesterday. Mr Jim McMahon also said the league would press ahead with a new computer project to integrate the systems at almost 540 branches.

Stating that motions adopted at a special meeting in June would be implemented in full by the league, Mr Jim McMahon defended the movement, said depositors' money was safe, and claimed the league's standing would be undiminished by the latest examination.

The report will be discussed at the league's annual general meeting next weekend and Mr McMahon accepted that the gathering was likely to be "tough".

Citing a confidentiality clause, he declined to comment on the departure in January of the league's general secretary, Mr Tony Symth.

Despite his resignation, Mr Smyth is standing for election to the league's board next week. He was not a board member when general secretary, on secondment from the Department of Finance.

The league will invest heavily in a new computer system after a multimillion project ran aground last year.

A €34 million write-off last year was one of the factors that led to the appointment of a consultant, Mr Phil Flynn, to examine the structure of the league's board, which represents almost 540 credit unions.

Among numerous conclusions in his 106 page-report, Mr Flynn said it was hard to argue with a submission, which said the board and its committees were entirely dysfunctional.

The report called for radical change at the league and warned against cherry-picking or shelving any of its recommendations. Proposals will be put to a special delegate meeting in June.

Mr McMahon said: "There never was a conscious attempt not to implement anything in the past. Events would catch up on plans. I believe whatever is decided on June 9th will be implemented."

Warning against a split and stating that there was strength in unity, he said there were "several" credit unions which had survived trading difficulties because they had access to a €60 savings protection scheme managed by the league.

He said: "There are rumours that certain credit unions are going to leave the league and I believe it would be very short-sighted of them. It is difficult to estimate how many there are or if they will leave."

Mr Flynn's report said there had been problems securing information about expenses paid by the league and called for the publication of the sums claimed by board members.

Responding, Mr McMahon said: "Expenses have been gone through and there's nobody making money out of being on the league board. If they are out of line, then every single civil servant and every local government official is out of line."

He added: "There's always been a tradition within the credit unions that individual amounts would not be published ... At the board, we have made an amendment to be put to the a.g.m. in which the level and rates of expenses would be declared."

Mr McMahon said the league had money to invest in a new computer system, although the plan and the expenditure it required had yet to be finalised. He said "absolutely" when asked whether it was crucial for the league's credibility to be seen to deliver the system after the last initiative - named ISIS - failed.

Asked whether depositors would have to pay up to fund the new system, he said: "They won't have to pay for setting up the system but it is quite possible they will have to pay for using it."

Referring to the €34 million lost on ISIS, Mr McMahon said he did not want to diminish the sum but said it had "totally overshadowed" the movement's other successes. He cited special arrangements for credit union members in relation to DIRT among those achievements, adding that the league was hoping to secure agreement with the new single regulatory authority for a form of self-regulation for credit unions.

A retired secondary school-teacher, Mr McMahon did not agree with a suggestion that the league should recruit board members with specific professional experience in the financial services sector. Such a development would not reflect the spirit of the movement, he claimed.

"I think it would be wrong to interfere with that particular structure. The league board is simply the pinnacle of the democratic structure of the movement."

Stating that expertise would be recruited to specific special-purpose companies set up by the league, he added: "Any organisation needs a supply of new blood. No organisation can exist by simply turning over the same people."