THE IRISH LEAGUE OF CREDIT UNIONS A.G.M: A new computer system to link the island's 535 credit unions is crucial to the future of the movement, its outgoing president said yesterday.

Mr Jim McMahon also expressed hope that a rift which has emerged will be healed following a special meeting in June to deal with the findings of a commission under consultant Phil Flynn.

Mr Flynn's report recommended radical change.

Amid divisions in the league, Mr McMahon appealed to breakaway groups to remain within the league.

Conceding that rumours of a breakaway "were more than just rumours", he considered a split would be "disastrous" for the union.

He also warned delegates against leaks to the media of "selective, one-sided information".

Several motions to the conference, which was closed to the press, called for investigations into its expenditure of €34 million on a failed attempt to develop an IT system. "Confidence will take a long time to win back, whatever the system," Mr McMahon told reporters during a short briefing.

The money was spent on contracts with UK and Canadian firms. This time "all options would be looked at", Mr McMahon said.

Irish firms had not had the expertise at the time and this was the reason they had not been appointed to develop the system.

The ILCU did not see the provision of cheque book facilities as a priority, he said.

"In the current world cheque books are highly unlikely," Mr McMahon said.

Plastic cards were what customers wanted and individual unions such as Tipperary were already on their way to providing a cash dispensing system of their own.

With 4,000 delegates the annual meeting is the largest annual conference in Ireland.

Representatives from all the credit unions - 104 of them in Northern Ireland - including disaffected unions, took part.

Mr Flynn presented his report at the conference, calling for radical structural change of the league.

The report recommends the appointment of a full-time chief executive, a reduction in the board's size and improved communication.

However, no discussion would take place until a special general meeting in June to discuss the findings of the commission under Mr Flynn, delegates stressed.

Mr McMahon hoped the recommendations would heal the rift between a breakaway group of around 22 member unions - the Credit Union Development Association - and the league.

He appealed directly to those branches intent on leaving the league to remain within.

"If unions were to break away it would have serious implications for the movement as a whole.

"A fragmented movement will never carry the same weight, either politically or commercially, as a movement showing a united front," Mr McMahon said.

Credit unions are run on a voluntary basis, primarily, with each credit union managing its own affairs through a board of volunteer directors.

These directors and others make up an estimated 16,000 volunteers who run the unions with the help of 1,000 paid staff.

The World Cup in Japan was leading to increased demand for loans from credit unions, delegates said.

Already holiday loans account for 12 per and more of total loan business. The World Cup, however, is expected to prompt a huge increase in this percentage.

The average size of loans advanced by the credit union movement has gone up significantly, according to the annual report for 2001.

The average loan in 2001 was €7,280 the report said, a €2,000 increase on the previous year.