The public at large and especially the members of AFIC want to know where and how things are regarding the situation of their ‘cooperative’.
The Office of the Registrar of the Cooperative Business Development Services (ORCBDS) and the Reserve Bank of Vanuatu (RBV) have provided crucial answers to questions about the AFIC situation as an update to the members and the public at large.
In a release to the media, ORCBDS and RBV stated: “We are working as quickly as possible to assess the financial situation and determine options for going forward.
“We cannot state at this time when members might expect to be able to access their accounts. We are aiming to have further details to members later this month,” part of the release stated.
On the question of why and how is the Government (ORCBDS and the RBV) involved? The answer given was that the Office of the Register for Cooperatives and Business Development Services and the Reserve Bank of Vanuatu, have the authority to monitor the affairs of financial institutions in Vanuatu, on behalf of the members of financial cooperatives, and the public in general.
It further states that the RBV monitors all financial institutions in Vanuatu, including savings and loan cooperative once they become large.
In 2007 both the ORCBDS and the RBV identified serious governance concerns and other irregularities in the operations of AFIC.
AFIC’S Executive Director, Barnabas Tabi was asked to both explain and address the irregularities. In October, November and December members complained to the ORCBDS that they were unable to withdraw their savings from AFIC.
The Executive Director of AFIC did not respond as requested to reported irregularities in the time given. By law the ORCBDS was left with no alternative other than to take responsibility for the overall administration, including the management, of AFIC.
Such actions were entirely within the law and were for the protection of members of AFIC.
The ORCBDS is not at liberty to expand at this time on the irregularities, except to state that they involved aspects of alleged mismanagement and breaches of various governing cooperatives.
There is also the question of what is being done by government to address this situation, and when can members expect to get their deposits back?
The answer provided by the ORCBDS and the RBV is that on January 5, 2018, the Executive Director of AFIC was removed from his office, by the ORCBDS.
At that time various measures were taken to secure AFIC as a cooperative and as a financial entity. At the direction of the Register of the Cooperatives, and with ministerial approval, no new committee or board of directors have been appointed.
Such an appointment will not occur until a full investigation into the state of the financial conditions of AFIC is known.
Immediately, an Interim Manager of AFIC was appointed. The Manager reports to the ORCBDS.
Second, the reasons for the major cashflow problems were investigated.
In summary, AFIC had moved much of its cash assets into longer term fixed assets, thus leaving it short of funds (liquidity) for daily withdrawals, loans, and expenses. There also appeared to be various other financial problems.
Given the severity of the matter an outside financial services technical advisor, with deep knowledge of financial cooperatives and situations such as this, was brought in to assess the situation, and to recommend measures to ORCBDS for going forward.
That work was started in mid-February and is expected to continue until later in April. Given the many distant AFIC branch locations verifying member account details will take some time yet.
It is very important for everyone to realize member loan repayments still must be made, the statement said. Repaying a loan is simply retuning money neighbors had put into savings for others to use, while they were able to earn interest on their money. When loans are not repaid as agreed, funds are not available for lending and for withdrawals.
“We are working as quickly as possible to assess the financial situation and to determine options for going forward.
“We cannot state at this time when members might expect to be able to access their accounts.
“Equally important we wish to state that all cooperatives at this time operate independently.
“That is one of the strength of local cooperatives.
“Problems within one cooperative do not mean that there will be problems in other cooperatives.
“We are aiming to have further details to members late this month.
“Once the full extent of the situation is known and course of action has been decided membership meetings will be organized.
“However, if audited statements cannot be available until later in March, then further announcements and member meetings may not be possible until April sometime,” part of the statement says.
With well over 10,000 members, and with records of multiple locations, there is a significant amount of financial data to be collected, reviewed, verified, and then summarized before any informed decisions concerning AFIC’s future can be made.
“We recognize everyone wants answers. We do too! Here are our high-level targets.
- Progress report of work completed (later in March)
- Solid audited financial information on AFIC (April 15)
- AFIC Members’ Information Meeting (late April-early May)
“ORCBDS can make no promises except to proceed as quickly as possible and to provide further facts once they are known and confirmed.
“ORCBDS commits that we will do our best to inform the general public, AFIC and ORCBDS staffs (so they can inform you) and others in this regard.
“Your patience and your understanding are appreciated,” the Office of the Registrar of Cooperatives and Business Development Services concluded.