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Central Bank vs. SFXCU: Round One

Mar 15, 2023

Central Bank vs. SFXCU: Round One

Tonight, we take a deeper look into the Central Bank’s decision to appoint an administrator to oversee the daily operations of Saint Francis Xavier Credit Union.  As we reported last Friday, the Registrar of Credit Unions has assigned Martin Marshalleck to provide oversight and straighten out the credit union’s affairs.  Since that the decision was announced, the board of directors and the general manager have been sidelined and they have been up in arms over the move taken by the Central Bank.  It succeeds a series of events that began last year with a protest by the membership of the credit union.  Tensions reached a high point when a member of the executive was physically assaulted inside the office.  Despite those incidents, the Central Bank had been conducting its own investigations into the management and administration of the institution.  News Five’s Isani Cayetano reports.

Isani Cayetano, Reporting

It’s the second largest membership-owned lending institution in the country; however, for the better part of the last ten months, St. Francis Xavier Credit Union has been in a dizzying tailspin.  Since a protest was held by its members back in May 2022, SFXCU has been making headlines for all the wrong reasons and the management of the organization remains at the heart of the controversy.

Sheree Smiling-Craig

Sheree Smiling-Craig, Central Bank of Belize

“Since the amendment of the Credit Union Act in 2005, credit unions were brought under the regulatory umbrella of the Central Bank and the Central Bank’s governor was designated as Registrar of Credit Unions.  Upon taking up this responsibility, the Central Bank has been examining the performance of each credit union to address any deficiencies and to generally strengthen the credit union movement in Belize.”

After keeping a watchful eye on recent developments at SFXCU, the Governor of Central Bank, in his capacity as Registrar of Credit Unions, has appointed an administrator to manage its affairs.  It’s the latest regulatory decision to resolve an issue that is seemingly difficult.

Everaldo Puck

Everaldo Puck, President, Board of Directors, SFXCU

“The Central Bank personnel came to down to us like with a vengeance.  It really appeared that they were not satisfied that we were elected into office.  There was some kind of agreement, even between the Belize Credit Union League, the Central Bank and the former board of directors to get rid of the general manager and have a new person appointed.”

Needless to say, the move to assign career banker Martin Marshalleck, in a decision that was formally announced by the Central Bank last Friday, has been met with criticism and disapproval by the board of directors for St. Francis Xavier Credit Union.  According to Everaldo Puck, president of the board of directors, when a new executive was elected in June 2022, its mandate was quite clear.

Everaldo Puck

“As soon as we entered office, we had two mandates: reinstall the General Manager, Mr. Rafael Dominguez and to conduct an audit into the credit union.  We did get our auditor, but this plan was frustrated because immediately Central Bank sent personnel for enhanced supervision and commissioned in the form of Sean Mahler to conduct a second investigation into the credit union.”

Despite the initial series of actions taken by the new executive, a draft report following the second investigation conducted at SFXCU outlined a number of deficiencies, including blatant disregard for the authority of the registrar, failure to implement internal audit recommendations, a deep culture of non-compliance and weak internal control environment.

Kareem Michael

Kareem Michael, Governor, Central Bank of Belize

“The information gathered, as a result of the said special examination and the examiners I appointed, uncovered what I regard as critical deficiencies in governance and risk management practices at St. Francis Xavier Credit Union.  In my capacity again, as the registrar and in keeping with my statutory duties I have, through written communication, engaged extensively with the board and management of St. Francis to ensure it addresses the issues and deficiencies uncovered.”

Contained within that nine-page document were several decisions taken by the board that were described as imprudent.  Chief among them was the general manager’s employment contract.  The decision taken by the board at its first meeting on June 27th, 2022, to renew Rafael Dominguez Sr.’s contract under the same terms and conditions stipulated in the expired contract flew in the face of Section 30(1) of the Credit Unions Act.  That decision, according to the draft report, supports the view that the board is not independent, and that Dominguez holds sway over its actions.

Everaldo Puck

“Mr. Rafael [Dominguez Sr.] had also gone to an attorney because he was illegally dismissed and after we were in office the bill came, because somebody had to pay the bill, the man’s character was damaged with all the interviews and releases and radio talks that were given, the man’s character was damaged and there had to be compensation to be paid.  And so the board agreed that we were going to pay compensation and pay for damages to the sum of seventy-five thousand dollars.”

Puck is on record stating that the registrar is seeking a recall of those funds, however, there is no mention by the board of directors of a decision to pay Rafael Dominguez Sr. a total of eleven thousand, two hundred and seven dollars in retroactive salary for the month of June 2022.  This was during the time when there was no valid employment contract between SFXCU and Dominguez.

Kareem Michael

“The board continues to disregard its fiduciary responsibilities under the Credit Unions Act to provide strategic direction to ensure that risks are properly managed and establish sound corporate values and conduct, thereby compromising the safety and soundness of the credit union.  The board’s noncommittal responses to address the grave issues uncovered during onsite examinations are strong indications that the board is not equipped or disposed to discharge its fiduciary responsibilities to members and depositors of the credit union.”

St. Francis Xavier, we understand, has retained the legal services of former Prime Minister Dean Barrow.

Isani Cayetano for News Five.