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Not rocket science

It would be a rare piece of legislation that fails to provide any remedy to the general public in case something were to go wrong. The basic premise is that laws are for the protection of the ordinary man and there must be some mechanism by which he accesses and enforces his rights vis a vis the establishment.

If you are a cynic, then your thinking may be that no one tries to trample on the entitlement of the “haves” but the “have-nots” get more than their fair share of trouble and must be protected. The credit union movement has in large measure outgrown its more humble beginnings and the larger an organisation the more impersonal everything is and the greater the chance of abuse of power.

To wrap up our discussion we examine the mechanisms in the Cooperative Societies Act for the protection of the ordinary or any member of such an organisation.

There has been more than one story of money going missing or funds being inappropriately allocated or worst yet squandered by the board. The average man knows when the numbers on his pay cheque are not correct or when the cashier does not give him the right change, but it is a special individual who can actually grasp the concepts outlined in the financial statements presented at an annual general meeting.

It is a rare individual who without any formal training in accounting that can break down the gibberish and ask all the right questions. This however does not preclude us from knowing that something is not quite adding up.

In those situations “the lesser of 25 members and 10 per cent of the members” may apply under section 164 of the act to the Registrar to “appoint a person as examiner who shall make an examination of the books of the society and examine the affairs of the society and shall make his report available to the Registrar”.

Just in case any of the employees, officers, directors etcetera of the society wish to be smart and withhold information or refuse to supply books, materials or answer questions, they will outsmart themselves with a fine of $25,000 and/or five years imprisonment if convicted in the High Court or $5000 and/or two years imprisonment if convicted in the Magistrate’s Court.

This is not meant to be a fishing expedition or a weapon to be used by those who may have an axe to grind for political or other motives and the Registrar may “penalise” such persons who engage in an unwarranted exercise by making them pay the costs occasioned by the examination.

A forensic audit can be a long and tedious exercise and the fees will reflect this. On the other hand, where “substantial irregularities” are revealed then the registrar may not direct payment by the members at whose instigation the motion was brought.

If the registrar declines the request then the same application may be made to the court pursuant to section 165 without notice to the society. The court may grant the application on the grounds outlined in the section including but not limited to fraud in general, the fact that “the business of the society or any of its member societies is or has been carried on with intent to defraud any person;” the society is not being operated on cooperative principles or not fulfilling the purpose stated in its corporate documentation; or those in charge have acted in a manner that is “oppressive or unfairly prejudicial to or unfairly disregards the interest of a member or security holder”.

The last mentioned mirrors the oppression remedy available to minority shareholders, directors, creditors etcetera under the Companies Act and the remedies including compensation to an aggrieved person are similarly available and outlined in section 177 of the act currently under discussion.

Any other general disputes between members or former members, between the society itself and such persons or between societies may be referred under section 171 to the registrar for resolution either by herself or an arbitrator.

The procedure involves crystallising the issues in dispute, taking of evidence on oath if necessary and legal representation may be retained for the purpose. Appeals against the decision of the Registrar or arbitrator are to the Cooperative Societies Appeals Tribunal created by section 172 of the act.

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