ACUHKM1 9 FEBRUARY 1994: RICHARD RAXWORTHY TALKING TO KEITH MANNIX
I will ask you first Mr Mannix, whereabouts were your parents living when you were born, and what year was that?
KM: Well I was born in 1942, during the War years. My dad was in the airforce. I was born in Sydney and my mother was here in Sydney with her family. Not long after I was born we moved to Maryborough where my dad was stationed with the airforce. I was born in Sydney but my parents were a little separated at that time because of the War.
Did you grow up in Maryborough?
KM: No, I was only there for a while. Dad was then sent to New Guinea and mum came back down here to Sydney to live with her family. When dad returned from the War we lived in Sydney and have ever since.
You sent to school here in Sydney?
KM: Yes, except for a very brief period when we moved up to the Blue Mountains for a period of about three years and I went to school in Katoomba, Katoomba High School for a couple of years. Then I returned to Punchbowl High School.
What sort of influence do you think you got from your parents?
KM: Very strong influence, especially from my father. He was a very strong community-minded person. He involved himself in a large range of community functions, including Labor Party politics. He had quite a profound influence on me.
What about school, was there anybody at school that particularly influenced you?
KM: Not really. My favourite teacher that I ever had in school was a music teacher. He was a chap that I really enjoyed being with. I was a bit of a rebel at school but this chap coerced me to join the choir and the school band, because I used to play the trombone, and he had a great influence on me. It was only for a short period of my life but he is a guy I will never forget. He is now the Head of the Conservatorium of Music. I had a very happy childhood and school life, I enjoyed everything to the full so there is no one thing that influenced me dramatically.
Nor the way you went in work later?
KM: No, not really. I think I was a late maturer. After leaving school I joined the Commonwealth Bank and I worked in the bank. I also played football and in my early years my football career was much more important to me than my work career. I ended up leaving the bank for my football career to move to Queensland.
Did you work in a bank up there?
KM: No, I couldn’t get a transfer up there, that is why I left the bank. But I moved up to Queensland to play football.
Who did you play for up there?
KM: Played for Wynnum-Manly in Brisbane, Canterbury-Bankstown in Sydney. On my return to Sydney, I had had a range of jobs after leaving the bank, my desire was always to return to the finance industry mainly because I suppose the basic education in finance I got from the bank interested me in that particular facet of life.
So when did you find credit unions or when did they find you?
KM: At the beginning of 1974.
Was that the first job you had back in Sydney, or the first proper job?
KM: No, I was the Customer Services Manager for Crown Corning. I was working there and I saw the advertisement for the position of a Field Officer with the New South Wales Credit Union League. I had a very small understanding of credit unions and realised that they were strong community organisations but also financial organisations. Both of those interests interested me greatly in the position so I did quite a lot of research for the position before I made the application.
Had you been in the credit union at the Commonwealth Bank, or hadn’t it started then?
KM: It was just forming as I left.
So when you arrived at the League where was the office? At Burwood was it?
KM: Yes in Burwood Road, Burwood, above the shops in that Arcade there. I started at the beginning of April 1974 and we moved into the Burwood Building in Railway Parade in November 1974.
Who interviewed you? Who took you on?
KM: I was interviewed initially by two people, Geoff Cambridge and Lindsey McKeckren. Then my subsequent interview was with Les Robinson and Ron Swanson, big tall Ron. They were the two that finally appointed me.
Geoff Cambridge was still working at the League at that time?
KM: I had known Geoff in the Commonwealth Bank of course. After about eighteen months at the League Geoff and I then worked very closely together with the Stabilisation team working for the Savings Protection Fund.
Is that when he left the League to form his own consultancy?
KM: No, he left the League to form his own consultancy in May 1978.
That is when the Reserve started up.
KM: That is exactly right, and that is not coincidental. You see the Savings Protection Fund was responsible for the maintenance of the protection of deposits in New South Wales credit unions who were affiliated with the League at that time. Unfortunately, there were a lot of credit unions that weren’t affiliated with the League which were falling over and the Savings Protection Fund was picking them up. But everybody realised there was a need for an overseeing organisation to do that. In those intervening periods from 1975 to 1978 the Savings Protection Fund did a fantastic job of stabilising a very large number of problem credit unions. But then with the advent of the Savings Reserve Board, that role then transferred from the Savings Protection Fund to the Savings Reserve Board so the old Stabilisation team really didn’t have anything to do. So Geoff formed his own consultancy, with a view to carrying on doing the same work for the Savings Reserve Board.
Which is what he did. He was mainly doing it for the individual credit unions and the Registrar, wasn’t it?
KM: That is right, but only in relation to credit unions where he had been appointed as Administrator. Not in a general sense, just in those specific credit unions that he was appointed Administrator of.
Now perhaps we could go back a little bit, because what sort of job was it when you first arrived at the League as Field Officer?
KM: Well it was very good. I was very fortunate because at that stage, that was in 1974, the credit union movement was really exploding growth-wise, numbers of credit unions and that. My very first job, I remember this clearly because it really gave me a tremendous footing in the movement, was to go around and do a series of mini-surveys of credit unions. So in the first three months of employment, or six months say, I visited some ninety credit unions and did a survey of their operations. It was something which gave me a tremendous insight into the operation of credit unions from day one. These mini-surveys also gave the management of the League tremendous insight into the financial strength of the credit union movement. So that was my very first job. I was intended to move from department to department as training and my next job was as a Development Officer. I became involved in the formation of new credit unions and the development of community credit unions, which were a new thing at that stage. Again. I then had an involvement in forming credit unions and seeing them develop, so that was again very interesting. Then the financial crisis that we had in Australia in late 1974 and early 1975 really then pushed me into this area of stabilisation of problem credit unions. It really was a very difficult time for all New South Wales credit unions because at that stage, and I remember this very clearly, on 1 January 1975 when the newest credit union in New South Wales was formed, that was the Northern Mineworkers Credit Union I remember this well because Steve Birt and myself were the two that actually formed it, made the five hundred and fourth credit union registered in New South Wales.
Doesn’t mean to say there were five hundred and four going at that time, it was the five hundred and fourth registered.
KM: That is exactly right. But there would have been well in excess of four hundred in operation and I would say that two hundred of those credit unions were financially sick. So there was a massive job which needed to be done to survey those credit unions, assist them if there was a chance of them becoming viable in the future, or making a decision and assisting with the carrying out of that decision as to rationalisation of the problem credit unions. In that period of time there would have been well in excess of more than one hundred credit union mergers or amalgamations at that time, in the year of 1975.
What had been the main problem? Had they got into trouble over deficit budgeting, not understanding what it was, or were there many different problems?
KM: Well deficit budgeting, of course, is the easy blame for it but the fact of the matter is that any credit union that has ever been formed will take eighteen months before it reaches the point of break even. Therefore, for the first eighteen months all new credit unions go into deficit. Now the large number of credit unions that were being formed meant that there was a large number of credit unions with deficits. Now the things that led to that were financial management inexperience, the bonds of areas of credit unions being too small, the rapid changes to the financial climate at that time which credit unions just couldn’t cope with, vis a vis there was a very large increase in interest rates at that time. I’d say the going rate went from six per cent to eighteen per cent in a period of nine months but credit unions appeared to be locked into their one per cent per month charging mechanism and really it was too big a step for them to increase interest rates. That lack of change with the rest of the financial environment created major problems for them. But then also with their growth came other problems, especially the problem of bad debts. As they became larger and larger their lending expanded and the close knowledge of their borrowers started to dissipate.
How much was this due to community credit unions or other credit unions expanding into the community?
KM: Well again, I know that there have been statements made like that but I don’t put it down to that at all. Whilst I know that there are greater risks in community credit union operations, if the standard of management is such that it can handle it there is not a problem. As we can see today, our most successful credit unions are community credit unions and they have been able to manage through those difficulties. Now some credit unions did go out into the communities with management that wasn’t able to cope with the higher demands of the community and there were failures in that area for sure, but bad debts were created by not very good lending.
There were a couple of cases that I was told about by other credit union people, there was the case particularly at Bankstown. When they were formed, I believe that Owen Townsend, who was later the Chairman, he met Beresford Calverley shortly after they had founded a credit union at a Newport School and on the nod Beresford Calverley lent ten thousand pounds, I think it was, to his credit union to start them off so to speak. That seems a very casual way of doing things. Was there much of this going on?
KM: I honestly don’t know, I was probably a little bit after that. But I knew Beresford Calverley very, very well and Beresford, or Berry as we called him, had a tremendous influence on me. Actually his total commitment and dedication to the movement inspired me in conjunction with Steve Birt. Every Friday evening we used to have a few beers after work and they really inspired me and I will never forget either of them and the impact they had on me.
What about Ken Miller, had he left at that stage when you arrived or was he still at the League?
KM: Yes he was Chairman of the League in my Annual General Meetings, the fiery Annual General Meetings that the League used to have in those days. I used to sit in awe of Ken Miller’s Chairmanship because they were very difficult meetings to Chair but they were absolutely so exciting that you listened to every word.
You weren’t at the 1972 one when they had the insurance split though?
KM: No, unfortunately. The first one I ever attended was the 1974 one.
Well maybe you are lucky.
KM: Well I saw plenty of the aftermath of that 1972 meeting and the problems it created in the area of insurance.
What about dealings with Dermot Ryan at AFCUL, did you have anything to do with him?
KM: No, unfortunately, I had very little dealings with Dermot. I had heard all of the stories about him but I only met him once or twice and never really had any long conversations with him. I am really sorry about that because I have enjoyed the company and philosophy of all the people from the Sydney Credit Union, including Kevin from Punchbowl, used to be Dermot’s assistant.
Yes. I can’t remember either, off-hand. He was Executive Officer of AFCUL after Dermot left.
KM: Yes, I have enjoyed Kevin’s company. I really enjoy Jack Coyne and Maurie Daly and David, little David ????? I enjoy their company and philosophy.
Who else were Field Officers at the Credit Union League when you were first there?
KM: Well the Field Officers of note were, I am having a bad morning for remembering names.
Was John Porter there at that time, or had he already gone?
KM: No, actually, John had gone at that stage. He had gone to manage Blacktown Credit Union. Blacktown Credit Union was the first credit union that I ever managed. John left Blacktown and I went out and managed Blacktown for a period of about nine months and then it was finally merged with a credit union called Central Mutual Credit Union, which is now Metropolitan. But I followed John into managing that credit union at Blacktown.
What about the operation of what is known as the Common Board? Was that the Committee, the Stabilisation Fund Committee?
KM: Yes, that was put in place by the Savings Protection Fund Committee. The Common Board was put into place by the Savings Protection Fund. These were for real problem credit unions that were really in a lot of strife. We were finding that keeping the existing Boards in place was proving to be a bit of a problem for us because they kept on opposing some of the changes that we tried to introduce to those credit unions. Not being financially aware, they tended to make their decisions on a political basis rather than a financial management basis.
A political basis, you mean political within the credit union movement?
KM: Yes.
Was this over the insurance split again?
KM; No. It was probably credit union versus the League and also a strong commitment to the protection of their members, what they thought was a strong commitment. For example, not wanting to increase interest rates on loans, that was quite a good thing and they thought they were acting in their members’ interests. But when you really examined it they weren’t acting at all in members’ interests because they were creating a real problem for the depositing members in as much as the credit union wasn’t generating enough income to pay the interest on deposits. Things like that. So they put a Common Board in place. One Board of experienced credit union people to oversee the policies of all these credit unions. It did not work, it just did not work. It was from that step on that we moved to appointed administrators because that was a much better step in those credit unions that were in diabolical circumstances.
Now in New South Wales, two credit unions managed to go down without any proper protection and members lost money. It didn’t happen in other States in spite of the dire circumstances that different ones got in to. What do you think was the problem there?
KM: Well, I think probably it was quite unusual that one. There have been other credit unions in other States go down with losses, but they were such a tiny insignificant amount that it never created any news. But both of those were significant credit unions at the time, the Kurri Kurri Workers Credit Union and the Shop Distributive and Allied Employees Credit Union. Neither of them were affiliated with the Association and therefore did not have any of the normal movement protection and that is a lesson that should never ever be forgotten, of course. They were both of significant size so they did attract publicity and I would hope that these days that is a lesson that should never be forgotten. So maybe, in the long long run, the bad publicity might do us some good because it helps us not to forget what can happen.
An observation from myself. It seems to me that it happened because there was a split in the movement in the State.
KM: Oh, there is no doubt about that. There is no doubt about that at all. But I have been fortunate to travel overseas quite a bit and had a look at the operations of movements in other countries and I don’t think I have ever found anywhere where there is a completely unified movement. That is probably because of our strong philosophical base. But there is no doubt about that. Both of those cases, those credit unions belonged to the breakaway organisation.
So you were no longer a Field Officer. Were you sent out as Manager to Blacktown? When did that come? You weren’t an Administrator at Blacktown were you?
KM: No, it was never under administration in those days. It was purely under the Savings Protection Fund and it just had no future. I managed for that period of nine months to really have a look at it to see if anything could be done, but it couldn’t, so we merged it with Central Mutual. That was late 1974 that I went out there and mid-way through 1975. It was part of this community development program too. But of course it was part of my training program because it allowed me for the first time to physically manage a credit union to see exactly what happened. I learned a lot. I could see all the good things that happened in the financial management of an organisation and I could clearly see all the bad things as well.
Did you have a Board at that time?
KM: Yes, we certainly did.
Did you have trouble or differences with them?
KM: No, not really. That Board was very good. They were under a lot of pressure from the Registrar at that time, which was good to see. We had active Registrars in those days. They did realise that that was the situation and they understood it and we never had any problems with them.
Now the operation of Central Mutual, I suppose what papers there are of it, do you know where they are? Were they inherited by Metropolitan?
KM: Yes, they were inherited by Metropolitan.
We were working out a little while ago that there were one hundred and fifteen credit unions that were amalgamated into Metropolitan, what became Metropolitan. Now that must be an awful lot of records. If they have still got them I shall be very surprised.
KM: Well I don’t know what they have done with all of those.
I think they have got plenty.
KM: Well I think I know, because I was involved in just about every merger of those credit unions with Central Mutual as it was called then. It was an absolutely fantastic thing, that Central Mutual. I think it was Les Robinson’s idea to set it up. This was a credit union which was created just about purely for the purpose of receiving problem credit unions. That allowed the Savings Protection Fund to manage the deficits of all those credit unions under one roof. I think it was a major step in the saving of the movement at that time by allowing all those problem credit unions to be channelled in there without fuss. Pretty quickly, pretty streamlined and as I say it formed the major foundation for now a very successful credit union which has assets in excess of one hundred million dollars.
Now during that time, during that period when Central Mutual was operating, and during the time that the Registrar was putting credit unions under administration, I heard stories about the Registrar turning up with an Administrator on a Friday afternoon taking possession of the credit union, so to speak, changing the locks and the Administrator operating on the Monday morning. Do you know anything about that? It was very extreme, it never happened anywhere else.
KM: Yes, well the emphasis just needs to be adjusted a little bit. Every time an Administrator was appointed, an inquiry had been held into the operation of those credit unions and those credit unions were all aware of that inquiry and ninety-five per cent of them participated in the inquiry. So that was exactly what the Administrators did, the Registrar did, and actually I was in attendance in practically every case where the Administrator arrived on the door and that. We did change the keys and that because it was a major change and it was a natural thing to do. It was never a surprise that today they were working away and all of a sudden the Administrator arrives. There had been a formal inquiry held into the operation of every credit union that had it. I think there were about fourteen credit unions altogether who had Administrators appointed and I was involved with every one with the exception of the Shop Distributive and Allied Employees one.
Did that have an Administrator appointed?
KM: Yes, Geoff Cambridge was appointed Administrator of it, but only for a very short period of time. He stated that the credit union was unsaveable, as I said it was not part of the protected movement the umbrella of the movement, so therefore he recommended the appointment of a liquidator.
Did you have anything to do with Stan Arneil at any time?
KM: Unfortunately no. Never met him and never had anything to do with him.
On the day that he finished up at Central Mutual someone actually had lunch with him at the Marine Club which he was a member of from when he was a young kid. He was more philosophical that day than he was on some of the others.
KM: Yes, well obviously it is quite easy to see that he did a tremendous amount for the movement. His enthusiasm and that is spoken about by many, many people. Of course as I say those early 1970s, late 1960s, early ’70s when the movement just exploded, the formation of all those credit unions. People do criticise and say too many were formed but I personally don’t because what they did by having all those credit unions formed, they covered the major proportions of the population. Then when the rationalisation came, decent credit union services had been provided to all of those areas of the population.
Were you ever an Administrator of any of the credit unions?
KM: No, I was never appointed an Administrator. I was Liquidator of a couple of credit unions.
Do you remember which ones they were?
KM: Yes. Barwon-Namoi, United, that is United New South Wales. There is another one, I just can’t remember it off-hand.
What about some of the other Administrators then?
KM: Yes, Pat Taylor was appointed as Administrator of a couple of credit unions, Amicable Credit Union and also Armidale Credit Union. I was usually the first one that arrived on the scene when the Administrators were appointed. I can remember one where the Administrator was appointed at Maitland Credit Union but as the credit union was holding its Annual General Meeting. Before the documents could be signed as far as the appointment of the Administrator was concerned, so Geoff Cambridge wasn’t right at that moment the Administrator.
End Tape 1A: 4910 Words: 1 hour 45 minutes.
ACUHCKM1 9 FEBRUARY 1994: RICHARD RAWORTHY TALKING TO KEITH MANNIX
So where did you go next?
KM: Well as I say, in 1978 when the Reserve Board came into being the role of the Stabilisation team at the League had virtually come to an end. With the Administratorships that Geoff Cambridge held a new consulting company was formed with the idea of continuing to administer those credit unions under administration, but also to do the work for the newly formed Reserve Board for stabilisation of problem credit unions that they were sure to encounter. So Geoff Cambridge, Les Robinson and Pat Taylor formed a new company called CU Consultants and I left with League with them to go and work in that organisation.
Les Robinson had already left the League ????????? or not?
KM: Well yes I think that was the reason he left, but it coincided with that. Reg Elliott had started as the new General Manager of the League in February 1978 and this was three months later when as I say our traditional role was ending.
One other thing that came up, nothing to do with you, but I don’t know if you have any memory of it, I have interviewed Les Robinson and he talked to me about the time he was involved with GCS in Western Australia and bringing the computer service over here. Then of course it got taken away from him by the arrangements that the League took. Did you have anything to do with this or did you see anything of it?
KM: Yes, actually I was right in the middle of all that. Innocently, very innocently, not having a deciding role in it but having a facilitating role. We went out to set up a consultancy in May but it was clear we weren’t going to get any of the Reserve Board work and I did not see myself having any future with the organisation and in November of that year I gave my notice from it. I subsequently left in January 1978.
Did you get involved with the Sydney County Council Credit Union?
KM: Yes, I was involved in that. That was a job that came up and I was involved with that.
Ken May seemed to have some doubts as to whether you got to the bottom of exactly how much was taken in that defalcation. Did you?
KM: Yes, I think that is a pretty fair comment. The records were in such poor shape that that would be pretty well right. We had to reconstruct about ten years of operations of that credit union and there was no way in the world anybody could say that in that ten year reconstruction we could account for every cent. I think we wrote off something like thirty thousand and there was about two hundred and eighty thousand which could be attributed to the fraud that had occurred during that. However, when Ken May came to work there everything was in balance and all of the accounting for any of the losses had already taken place.
What about the reason for that? I know somebody decides they are going to defraud a credit union and they are in a position to do so, but how come that the Treasurer managed to be in a position to do so?
KM: Well it was very early days of computerisation and this was a type of a computer system that allowed one.
They didn’t have one did they? The credit union didn’t have one did they?
KM: Oh no, I think it belonged to the County Council yes. But the computer system, as I say, was early days and it was a system that allowed one-sided entries. Now everybody in the computer world knows now, and in the accounting world know that one of the prudential saviours of accounting is double entry bookkeeping. But that allowed one entry into the computer system. Of course the understanding by Boards of Directors and staff and that of computer systems were so low that anybody that had any knowledge of computerisation could do whatever they liked without fear of retribution virtually. Except if they got sick.
That is how he was found out wasn’t it?
KM: I was going to tell you about the GCS. So I left CU Consultants in the January of 1979. The League heard about that and approached for me for a job to be involved with the formation of the financial computing services with the system that they had just bought from GCS. Now I knew that Les Robinson had been negotiating with GCS and I subsequently found out also the New South Wales League had. As a result of that the New South Wales League bought the rights to the system and set up FCS, Financial Computing Services, and actually I was the very first employee of Financial Computing Services. The General Manager of FCS at that stage was a chap called Malcolm Mackellar, who was still employed by the League at that time, and also Tom Kinane, who worked there virtually from day one, he was still employed by the League too. I was the first fully employed FCS guy and I had to sit down and find out how the whole system operated. After about a month of doing that and playing with the whole system the programmers from GCS came over and I sat down with them and I tailored the total system to the New South Wales standards and legislation.
Were you involved with putting in the system into any of the credit unions, Sydney County Council for instance?
KM: No, not Sydney County Council. I did the first seventeen conversions that FCS did. But Sydney County Council was done by CU Consultants. The system was in three credit unions before FCS was formed. Firstly there was AWA Credit Union, John McIntyre’s credit union, SGE Credit Union, which was Helen McIntyre’s credit union, and Sydney County Council. Then CU Consultants also put it in Earlwood Credit Union. But the very first one that was done by FCS was Gilbarker Credit Union, the second one was Atomic Energy Commission and then they went on from there. So I had eleven months in FCS. It was probably the hardest eleven months of my life, but boy was it satisfying. Extremely hard but tremendously satisfying. It really put the movement on its feet as far as being able to provide up to the minute financial information to the members.
Did you have anything to do with the negotiations or the changeover from DPMS?
KM: Oh yes. Well a lot of those credit unions that we converted, converted those first seventeen, the majority of them were on DPMS. So yes we did the conversion of them off DPMS on to ours.
You didn’t have anything to do with the committee that was negotiating the withdrawal from DPMS?
KM: No, I wasn’t involved.
Reg Alexalar and a number of other people, including Roy Bounds I think. There were a number of them.
KM: Paul Bounds. No, I wasn’t involved. My title at that stage was Systems Consultant and I just worked on tailoring the system. I also developed a lot of training courses and I also wrote an Audit Guide for the benefit of auditors in auditing the system which stayed in place for many years.
Have you got any stories about your time with the League, about different people?
KM: The people that worked at the League were just absolutely fantastic people. They were really brought up in the co-operative sense and it was exhilarating to work with all of those people. Everybody worked very hard but they all pulled together and the achievements that were made were just absolutely fantastic. It was certainly the happiest period of my life. I didn’t want to leave the League when CU Consultants was formed, but I really had no choice because there was nothing for me at the League, or appeared to be nothing for me at the League. Of course the work I was doing in stabilising the problem credit unions was very enjoyable and worthwhile. I took a lot of convincing to leave the League and I didn’t want to and after six months to get the opportunity go back again, I was really pleased about that.
When you applied to join the Reserve Board, to become the Assistant Executive Officer wasn’t it?
KM: Yes. Well there is still a bit of water to flow under the bridge before we get to that stage. You asked me a question before about the Field Officers that were at the League in my early days there, well one of them was Geoff Whalan, who has had a tremendous contribution to the movement. He is now the Manager of the Northern Territory Credit Union. He helped with my training. He assisted me and took me around to credit unions and showed me their operations in the early days. Of course Geoff also worked on the system of introducing checking to credit unions. A very good operator. Steve Birt of course was a Field Officer at that time. Reg Fowler was heading up the banking operation in those days. Heather Russell was one of the support staff for the Field Officers. She is will Bridges Consultants now. Tom Kinane of course was there then. Tom was a very, very good fellow to work with and made a tremendous contribution to the organisation and the movement. Malcolm Samuels was another one. He is still a Director of Reliance Credit Union. Actually I went to their Annual General Meeting this year when they celebrated his thirtieth year as a Director, which is an absolutely fantastic achievement. Always had a lot of time with Malcolm. Malcolm was probably politically off-side quite a lot but I thought he was a very clear thinking guy, full of new ideas and a real co-operator.
That is a credit union that I should do some history for. Because apart from Gilbarker and Malcolm Samuels has written a little history of Gilbarker but there is all the rest of it. There is Torrens and the other bits and pieces.
KM: That’s right. The Lands Department. Malcolm is a history in himself with thirty years as a Director, that was a tremendous achievement.
I interviewed him for the League, because he was a League Director.
KM: That’s right. David Loring who is now the Marketing Manager at the Teachers Credit Union was also a Field Officer at the time of the League. Brian Gooley who is not with the movement anymore.
Well he is with Manchester Unity isn’t he?
KM: No, that is Bob Goldie. So they were really good. And Ollie Rozmeta of course, Ollie Rozmeta was the Education Officer of the League at the time and now the Manager of Resources Credit Union. Well, what happened when I was at FCS though, about the November of 1979 the Reserve Board were all of a sudden experiencing a lot of problems with credit unions going off the rails. The Hawker de Havilland Credit Union problem had arisen and a number of others and they were finding that it was difficult to cope. So I was approached by Reg Elliott if I could form a team to assist the Reserve Board with the associated problems. I transferred from FCS back to the League to form a division called the Management Services Division of the Association. The catalyst for this was the Cooma-Monaro Credit Union which got into a lot of trouble and I was asked to go down and stabilise that organisation. But a number of other credit unions came out of the woodwork at that time, the Lakes Power Associate Credit Union, Punchbowl Credit Union, quite a few others at that time. We set up ourselves in Management Services and put together a team which was very similar to the old Stabilisation team and virtually did the same thing. We didn’t appoint Administrators because the Reserve Board had all the powers that an Administrator had. So we worked under the powers of the Reserve Board on a consulting basis to them and we did the stabilisation of those problem credit unions. We had a fantastic success rate. It was a really good period and I stayed there from November 1979 as Head of that department until April 1981. It was at that time the Reserve Board offered me the position of Second-in-Charge of the organisation. They called it Assistant Executive Officer. It made a lot of sense.
Who was the Chief Executive Officer?
KM: It was a chap called Brian Sharpe who had formerly been the General Manager of the Waterside Workers Credit Union. It made a lot of sense for me to go to the Reserve Board at that time because I was just working exclusively for them but with my knowledge and experience I could really see that if we had a pro-active role at the Reserve Board we could head off a lot of these problems before they became major problems. So I again left the League with some regret, but not a great deal because I knew I was going to do a good job and it would be beneficial for the total movement and the League to have all of these problems nipped in the bud rather than saving them at the last hurdle. So I went over there as Second-in-Charge in November 1981. As a result of that, as I said to make it pro-active, my first job was to institute a system of inspections. The Reserve Board at that stage had never done any inspections and relied upon quarterly return forms to indicate the problems of credit unions. As I say, that was really the last hurdle. We instituted a system of inspections of credit unions and we really started then to find out the problems in credit unions before they became disasters.
Did you give them a warning when you were coming for an inspection?
KM: Yes we did. It was never our policy or role at the Reserve Board to catch people out. The role of the Reserve Board was to protect people’s deposits, so therefore the role of inspections was to ascertain the problems. By doing surprise inspections that did not assist in anyway in ascertaining whether people’s deposits were being protected. In fact it was always a benefit to give notice because the credit unions tended to make sure they had all their books in order by the time we came, so therefore it was much easier to analyse the financial strength of the organisation with all of the books being up-to-date.
When we had the break there you mentioned the matter of the setting up of the Reserve Board. What did you know about that?
KM: Quite a lot actually. As I said, in late 1974, 1975 we started to experience all of these problems. As the Savings Protection Fund only covered those credit unions that were affiliated by the League and the contribution rate of credit unions to the Savings Protection Fund was two per cent of their assets, or two per cent of their deposits, that was quite a large cost for those credit unions to bear. Actually when a lot of them got into trouble they decided to resign from the League and therefore the Savings Protection Fund to save themselves the contribution. Of course they were usually the first ones that became a major problem.
There were quite a number of credit unions that objected to the amount of money spent by the League and they objected to the amount of dues. I mean there were some very large and very safe credit unions that were amongst those, one I can think of was the Electricity Commission one. They always objected to the size of the due and they also objected to the Savings Protection Fund financing the building at Burwood.
KM: Yes, well I can understand that completely. If you are managing and running a sound financial institution yourself, one of your major objects is to reduce the costs of operating that. If your costs of being a member of the League and contributing to the Savings Protection Fund are high and you see that they could be lower, well then obviously you would complain about it. That is the job of the League of course, to manage the organisation so that it is as efficient as it possibly can be and therefore the dues are lower. What also has to be borne in mind in just a little bit outside your own organisation. Credit unions are part of the credit union family and therefore some contribution should be made to the movement because it has an overall protection role. That was recognised by the League at the time and that is why the move for a Reserve Board occurred prior to that time. Actually there had been some very far-sighed people in the movement at that time. I am talking about Les Robinson and Ken Miller in particular because I know that they had put together approaches for a Reserve Board in the early ’70s. Those approaches were to a Country Party Minister of a Coalition Government and had fallen on deaf ears. Then in 1975, as I say, the problems really got quite bad and again approaches to the Liberal Coalition Government had fallen on deaf ears, so we made approaches to the Wran Opposition Labor Party, the League did. I wasn’t involved in those approaches but I did a lot of the preparation of the submission by providing the figures for credit unions and things like that so I was fully aware of the submission. The Wran Labor Opposition agreed as a part of their platform to incorporate a Savings Reserve Board. In late 1975 when they were elected they immediately put in place their election promise to form a Savings Reserve Board, Sid Einfeld being the responsible Minister for putting that in place. I can tell you it was a very bitter fight to get the Reserve Board in place. The people who were not affiliated put up a very strong fight against having the Reserve Board formed. I can remember on the tenth anniversary of the operation of the Reserve Board we invited Sid Einfeld along to the function and he refused to come because he could still remember the bitter disputes he’d had in setting up that Reserve Board. We were so intent on having Mr Einfeld come because of the fantastic role that he had played that we gave him five separate invitations and he finally accepted the fifth one. But with great trepidation because he still had a lot of scars from the bitter battles that were fought over the formation.
Do you remember Tom Hanson?
KM: No I don’t.
He was one who was very much against it.
KM: Which credit union was he from?
What is City Coast now.
KM: Well I know City Coast were very strongly opposed. They were members of the Southern Association.
He was the Chairman of the Southern Association.
KM: Oh well I knew the next Chairman.
His attitude was this, and he still states it, that if the Registrar was doing his job properly he wouldn’t need any of this.
KM: Well that is not entirely right. I think we were fortunate in those years that we had a very good Registrar. David Horton, I thought, did a fantastic job. But a Registrar’s job is purely that, to see that credit unions comply with the Act, the legislation and all of the rules and regulations. They are not geared up or equipped to oversee the viability of financial institutions. They haven’t got the resources of the Reserve Bank or Reserve Board and they realised that. That is why they supported the Reserve Board knowing all the time that some of their power and authority would be diluted with the operation of a Reserve Board. But that Registrar supported it and his replacement, Ron, I forget his name and I don’t know why because he did a fantastic job as well. But just back to the formation of the Reserve Board finally. Sid Einfeld had played a phenomenal leadership role through all this and had decided that a Reserve Board was to be put in place in 1976 and gave two years notice to that effect. The legislation was drawn up in 1976 with the Reserve Board to take effect from 2 April 1978. So all credit unions had plenty of warning that a Reserve Board would be coming into place. As a result of these bitter disputes because of the claims of these people that said a Reserve Board shouldn’t be formed and that it would be run badly and would do this and that, Sid Einfeld appointed all of the people that had this view to the Board to ensure that exactly what they were saying didn’t happen. It was a brilliant move on his part and I think it stood the Reserve Board in good stead because it eliminated from day one political interference. The only ones who would have provided the political interference were appointed to run it. That proved to be very effective.
Some of the others objected to this, saying that there are all these people who are in the minority on the Board, whereas the majority people only had a very few by comparison.
KM: That is quite right. Out of the Board of seven, only two came from nominations from the League. But as Sid Einfeld quite rightly said, and as events proved, they were getting exactly what they asked for and therefore on the balance they were getting the benefit. Now the majority of those people who opposed the setting up of the Reserve Board it wasn’t too long before they were seeing the benefits. Whilst I can sit in an ivory tower and say my credit union is going very well and there is no need for a Reserve Board for me, while all of those other ones out there were crashing they were certainly having an affect on your credit union. They all came to see that in the long run and I will quote the CBOA Credit Union who in that context were very strong opponents of the Reserve Board and in the not too distant future probably became the strongest supporters of the Reserve Board.
Now what happened. Did your previous Chief Executive Officer at the Reserve Board die in office?
KM: Yes, he did, he passed away in August 1988. The Board appointed an outsider to the role of Chief Executive Officer, a chap called Ken Middleton, who stayed there for about fifteen months. Then he moved on and I was appointed Chief Executive Officer in June 1990 until the end of the Reserve Board days on 30 June 1992. That was the advent of Fincom starting up on 1 July 1992.
Were you involved in any of the negotiations towards Fincom?
KM: Yes, I certainly was in a number of ways. Just to recap the history of Fincom, what happened. 1990 was a year of financial crisis again for Australia with a large number of bank and non-bank financial institutions crashing. We had the collapse of the Victorian State Bank, we had the collapse of the South Australian State Bank, we had the collapse of Estate Mortgage, we had the collapse of the Pyramid Building Society, we had the collapse of the Moe Credit Union, we had the collapse of the United Credit Union in Western Australia. It was a dire time. But the collapse of the Pyramid Building Society was the one that had the biggest effect. It had the effect of alerting the Federal Government who said, ‘We have had enough of this State Government supervision of these non-bank financial institutions, we are going to take it over.’ There was an immediate cry-out from the States who said, ‘This is the States’ area. Commonwealth Government or Federal Government back-off.’ Unfortunately the Federal Government did. But what happened was that the States then put together a National Inquiry inquiring into the operation and supervision of all non-bank financial institutions and the results of that was the formation of the Australian Financial Institutions Commission. Now I was involved in this because I was the Chief Executive Officer of the Reserve Board and we had input into these inquiries and investigations into the operation of the non-bank financial institutions industry.
End Tape 1B: 4116 Words: 1 hour 35 minutes.
9 FEBRUARY 1994: RICHARD RAXWORTHY TALKING TO KEITH MANNIX
KM: So from the time of the starting of the inquiry to the time of implementation over AFIC was a period of some two years. So my involvement in the first twelve months of that was negotiating and making presentations and submissions to the All States Working Party which was set up to investigate the operation of supervision, stating what was necessary from a supervisory point of view and providing a lot of facts and figures on the operation of the industry. This group had agreed that there was a need for a national system of supervision, however it was to be maintained it was State-based. There was certainly a need for a uniformity of approach, uniform legislation, uniform operating standards and uniform supervision techniques. So I was involved in that and that group were mainly involved with one the decision making and then writing the legislation for all of that to take place in. Subsequently I was appointed to the Steering Committee, the AFIC Steering Committee, to put that national body in place, the national organisation in place, but also to draw up the operating standards that all credit unions and building societies in Australia had to comply with for prudential operations. In addition, as the system was a national system but State-based, each State had to have a new Supervisory Authority to oversee the operation of these non-bank financial institutions in conjunction with the national body. I was also appointed to the State Steering Committee for the setting of the State-based Supervisory Authority, which of course was Fincom. It was a very hard twelve months being on those committees, especially the AFIC Committee, and putting all of the Standards together. Subsequently I was appointed to the Board of the Australian Financial Institutions Commission from the Steering Committee.
Why were the based in Brisbane?
KM: The major reason was that Queensland is the only Parliament in Australia that has one House. Therefore it is much simpler to get legislation through, bearing in mind that this is a national system but it is all on State-based legislation. The way it works is you put the legislation through one State and then it re-produced in the Parliaments of all the other States.
So it was a pilot scheme in actual fact?
KM: It certainly was a pilot scheme. Yes the first of its type, but a very successful type of legislation. It has now been copied in a number of other areas especially the uniform credit legislation which is now just about to come into place.
Now perhaps this is an appropriate time to go back. We didn’t really cover the time you were on the Reserve Board yourself. What were the outstanding things that you remember over the years?
KM: Well again, all of that was exhilarating. Actually I really enjoyed working there for the whole time of it. The reason the Reserve Board was put in to place was to protect the money the members’ of the community placed in credit unions and that is exactly what the Reserve Board did in its total life. Not one member of one credit union lost one cent of their money in a credit union in New South Wales whilst the Reserve Board was in place. That was done in a number of ways. As you know there was a Reserve Fund which was formed. In the early days, with the problems that the Reserve Board inherited, some payments had to be made out of that fund so that members did get one hundred cents in the dollar back. But as the Reserve Board matured and grew up, we got ahead of the problems. We found the problems a long time before they became disasters. The effect of it was the last money that was paid out of the Reserve Fund to protect people’s money was in 1983. So between 1983 and 1992 not one cent of money was paid out to protect people’s deposits. It was all done by finding the problems first and correcting them before any financial assistance was necessary. That was a tremendous achievement, one which was really good to be a part of. Because of the Reserve Board’s knowledge and experience in working with credit unions and finding problems we then were able to contribute to the movement in a lot of other ways, because of the valuable experience we gained in those areas. We channelled a lot of that information to the movement as a whole. We certainly concentrated on not being political in a lot of areas. We refused approaches from the affiliated movement, to assist the affiliated movement, where we saw that would be not even or not compatible with the unaffiliated movement, we didn’t participate in it. Exactly the same on the other side of the fence. We treated unaffiliated credit unions very, very fairly and evenly and did not give them any assistance which would be detrimental to the affiliated movements.
What about your dealings with the Registrar and the Registry Office?
KM: They were very, very good. Brian Sharpe, who was a very, very good Chief Executive Officer of the Reserve Board, was an expert in maintaining relations and negotiating. As I said the Registry had a fear that the Reserve Board would take some of its authority in some of its areas of operations, but because of Brian’s ability to negotiate and co-operate with the Registry, we always had a first class relationship with the Registry and maintained cordial relations with them through the major years of operation after that. Unfortunately, towards the end of the Reserve Board’s reign with the introduction of Fincom, again the Registry appeared to start to fight for ground and authority. I would say that the relations with the Registry, who at that stage were completely different personnel to the ones that we operated with for the majority of that time, relations did deteriorate. I think the major strategy was to gain authority of operational grounds.
Or to hold their own ground against Fincom as it was coming.
KM: Well it was known that the Registry would go out of operation and the Reserve Board would go out of operation to form this new supervisory body. Therefore trying to achieve the upper ground in the new organisation seemed to be the name of the game.
Well, I have got two questions there. One comes before the other I suppose. But on this immediate subject, I mean they couldn’t have gone out of business completely because there are a lot of other co-operatives who are not financial ones which they, the Registry, are responsible for?
KM: Well again, as I say, I don’t know too much about that area. But it is hard for them the way those Government departments are set up and they way that the employ people for them to take over all responsibility for viability. They have compliance responsibilities and they are major ones, so obviously they should protect the people, but I have got great sympathy with them. They can’t be financial wizards and legal experts all in the one.
This comes to the other question that I immediately wanted to ask you. During the period from when the Reserve was set up, the practical dealings with the Registry. The Registrar’s office was responsible for putting somebody under direction and they did an inspection themselves. Now did the Reserve Board and the Registry co-operate on inspections or did they have their own separate inspections?
KM: No, we did co-operate. We had a monthly meeting with the Registrar. We mapped out inspection programs and they told us of their inspection program and what we tried to do was share the resources. So if the Registry was going to credit union A we wouldn’t go there, we would go to another credit union. So we overcame the problem of two supervisory organisations walking in to the one credit union at the one time. The Reserve Board had the responsibility for placing credit unions under direction, not the Registrar. The Registrar also had those powers, but the records will show that from the time the Reserve Board was put in place the Registry did not take action against one credit union, that was all left to the Reserve Board. But again we had two very good Registrars through that, David Horton and Ron, I still can’t think of his name. He was a very fine man and he was probably the longest serving Registrar of the two of them anyhow. But David was there in the formative years and Ron was there for the major part of the operation of the total Reserve Board. A number of times the Reserve Board had to call for the Registrar to hold the inquiries into the workings and operations of credit unions. They did that very fairly and very objectively. We had a monthly meeting with them and communicated very well.
Some of the credit unions that went under direction had a lot of kicks about the fact that they were put under direction. Some of them were perfectly stable but they had got into deficit through some mismanagement of some description. They felt they could have been left alone so to speak to solve their own problems once it came to light.
KM: Well that may have been their opinion but our experience showed that that wasn’t right. As I say that experience went over a large number of years. One there was never a credit union placed under direction that didn’t have a warning, so for them to be placed under direction that meant that they had not heeded the warning. Secondly, if they thought that they were stable and went into deficit, well that is a contradiction in terms. They were definitely unstable to have gone into deficit. Some of those credit unions, as I say, had gone into deficit and they had been given a warning, given advice on how to turn it. They hadn’t heeded that advice, hadn’t been able to achieve the turn around so eventually we have to put them under direction. I know of no credit union that went under direction that didn’t have a warning.
Several of the ones I am thinking about actually, were before the Reserve Board took over. They claimed that they didn’t get any warning. That they had in fact informed the Registry that they had the problem and the next thing they got jumped on.
KM: That was before the Reserve Board you are saying, with the Administratorships?
Well some of these didn’t have Administrators put in, they were allowed to carry on. I had better not comment on names unless we are going to go into a confidential tape.
KM: Yes well again, I don’t know of them. But there would have been one or two situations where the situation was so serious, for example when a major fraud was discovered in a couple of credit unions. You had no time, bang you just had to act.
These that I am talking about were cases of Manager fraud, even if they weren’t financial, somebody actually taking money. They were fraud in the sense that somebody had fraudulently adjusted the books.
KM: Well, if the degree of that fraudulent behaviour was such that the protection of the members’ deposits were at risk, we would not have hesitated in moving in quite quickly. It all came down to that. If it was a small fraud, ninety-times out of a hundred we were out there to visit them, identify the situation, give recommendations on how to fix it and if the credit union went that way, that was that. That happened in by far the majority of cases. If we found problems we would make recommendations to those credit unions and they accepted those recommendations they therefore never came under the direction of the Reserve Board. But just about every credit union that ever came under the direction of the Reserve Board did not heed the recommendations of the Board, or the problem was so serious that action had to be taken immediately.
If a credit union goes into deficit one year, makes a profit in one year and makes a loss in one year, is that sufficient, even if they are aware of the problem in the first place? Was that sufficient to put them under direction?
KM: Yes, under the rules of the Reserve Board, the Reserve Board had the right, had the power, to place them under direction. But again I will repeat there were a large number of credit unions that had short-term deficits at one time or another that didn’t come under direction because the Reserve Board had deemed that the problem was of a short-term nature. It didn’t represent a threat to the members’ deposits and the credit union was completely in control of the situation and therefore there was no on-going basis. All of those were investigated by the Reserve Board and analysed and then a decision was made as to the extent. Now what happened also, we had another practice of the Reserve Board where we used to place credit unions under notice. That notice was where they had a particular problem which wasn’t deemed serious enough to be placed under direction, but it was a problem that could be of concern. The credit union then reported to the Reserve Board on a monthly basis. A large number of credit unions were placed under notice in the history of the Reserve Board so they reported to us monthly, but we took no active role in correcting the problems, the credit union corrected them themselves. That was a very successful avenue to take as well.
Can you remember any occasions where the Reserve Board objected to the employment of some particular Manager, or the continued appointment of some particular Manager?
KM: Yes, well, in a large number of cases where the credit union was under direction, only where the credit union was under direction, a direction was made to the credit union for the Manager to go from the credit union. Yes, that did happen a number of times for pretty obvious reasons. Where a credit union was in serious trouble some Managers failed to see that it was serious trouble, some Managers saw it as an intrusion on their operations and some Managers didn’t have the ability to change their style of operations to correct the problem that had arisen. So that happened. But again, after a lot of warnings and perseverance, because it was certainly our philosophy that an experienced existing Manager was in a much better position to correct problems than someone who came in brand new or from the outside who had to be completely trained.
How about the removal of Boards?
KM: Well, this was really one of the tremendous success factors of the Reserve Board. In the whole time of the operation of the Reserve Board not one credit union Board had to be removed. A couple of times it was threatened because under the legislation as it was at the time, if a credit union failed to obey a direction of the Reserve Board well then the formal direction was breaking down and therefore the Reserve Board could ask for an inquiry to be held with a view to appointing an Administrator to operate that and remove the Board. But in all of their years of operation, we were able to achieve the co-operation of all Boards in correcting the problems. That is not to say that all Boards really liked the Reserve Board, there are still a lot of Boards that were placed under direction who are pretty unforgiving as far as the Reserve Board is concerned. But I think that that could only be expected. That was our role and it was a pretty hard role and we just had to do that in the interests of the depositors.
What about the period when you took over as Chief Executive Officer, was it different? What were the extra duties you had to perform once you were in charge?
KM: None really. Actually I had played a very active role, especially in the early days when Brian and myself, and we had a very small staff there, we virtually did everything together. So I grew up with the organisation in that respect. So taking over as CEO did not really make a lot of difference. Actually when Brian was ill too, Brian took ill in the February and passed away in the August and his replacement was appointed in December 1988, so I acted as Chief Executive Officer for a period there approach nine months. As I say it has always been a very close role, there was no real major change in activity or role.
Thinking of 1988 makes me think of 1979, of the World Council in Sydney. Were you involved in that at all?
KM: Yes, I attended it. At that stage I was working for FCS. I remember it quite well. But I attended it as an employee of FCS in between conversions and other things. A very busy time in my life, 1979.
Well 1988 was probably a bit busy too?
KM: Yes it was and as I say, that was held in August 1988 and I was in attendance at the World Council in Melbourne and it was there that I received news of Brian’s passing. So I immediately came home from the World Council meeting so I only spent a couple of days there. The World Council meeting in Melbourne also instituted a new thing where we organised Regulators, an International Regulators for Credit Unions meeting in conjunction with the World Council. That is now part of the fixture. So I also attended the 1991 World Council in Madison because in conjunction with the World Council meeting as an International Regulators meeting. They proved to be quite beneficial. We struck up very good relationships with regulators in other countries, especially the US. Had very good relations and communications with that organisation which helped. Actually I was very fortunate. Brian sent me on a investigative tour of Canada and the US in 1983 to do an in-depth study of the supervision methods of credit unions in those two countries, because they had been doing it a lot longer than we had. So I did a very in-depth study in 1983. I visited ten supervisory organisations and spent a lot of time in there studying their supervision techniques, their statistical collection techniques, their insurance procedures. Actually there were ten different questions that I researched in each of those organisations and it proved to be a very beneficial report back to the Board. A number of policies were initiated, one of them being the introduction of actuarial studies of the movement. Then again, I followed that up in 1987 with another in-depth study. Revisited them to see what developments had come out of their operations from the 1983 thing. I really confirmed our relationships with those organisations and communications. So we kept very much in touch on the Reserve Board with developments overseas supervision techniques and adapted them where they were appropriate to improve our operations.
Were those reports published?
KM: No, I don’t think they were published. They weren’t kept in secret either, there are certainly copies of them around.
Well is there any chance of us getting copies?
KM: Yes, I would love to give you a copy.
The other thing is, that I think we might cover, the change in operations of the Reserve Board, the practical operation of the Reserve Board. The frequency of meetings and what have you. Did it change during the period you were on the Reserve Board?
KM: No. The Board always met on a monthly basis. I attended Board meetings from 1979 onwards even though I wasn’t employed until 1981. I attended those Board meetings from 1979, as I say I acted as a consultant for them, and I attended most of those meetings from then on to report on the problem credit unions I was working with on their behalf. Then of course when I went to work with them in 1981 I attended every Board meeting from then on. No the Board meetings, especially in the early days, were very long affairs because they had a lot on their plate, but they became streamlined in the later days. We held one a month. There was always room for emergency or special Board meetings of course. You know in the latter years we had planning sessions as well to plan out our operations and do our budgets and that. They were very professionally run the Board meetings and very objective.
Do you remember any of the Chairmen, or were you always it?
KM: No, I knew every Chairman and I attended all the meetings with every Chairman. Bert Gould was the first Chairman, from QANTAS Credit Union. Bede Alexander was the second Chairman, from the CBLA Credit Union. Kevin Perere was the third Chairman of the Reserve Board, from Hunter United Credit Union and John McIntyre was the fourth and final Chairman. I think his term went from 1986 to 1992, he was the longest serving Chairman of the lot.
Well those sort of details we don’t have either. Was there any historical report done? You know a summary of the Board’s operations?
KM: Yes, there was a brief summary done in the very last Annual Report that was produced by the Reserve Board, and the Tenth one. We also did a ten year summary of the operations of the Reserve Board for the Tenth Annual Report.
They were in Parliamentary Papers were they?
KM: No, we produced our own Annual Reports. We were a Statutory Authority but a completely independent organisation. We reported to the Minister but in other respects were completely autonomous and independent. So we produced our own Annual Report, which of course had to be tabled in Parliament, but it was outside of normal Government procedures.
So they weren’t printed in Parliamentary Papers, or you don’t know whether they were?
KM: Oh they were because they were eventually tabled, all of them were tabled in Parliament.
But they don’t necessarily print everything that is tabled.
KM: Well, I am not too sure of that, but they would have been tabled. They were a public document, every Annual Report. I have a copy of all the Annual Reports from the Reserve Board.
Have you got any spares?
KM: Yes. I have a couple of complete sets.
Particularly those two that have the historical summaries because we don’t have anything. That was why I was sent down here in the first instance to contact you.
KM: No, well I have got all them, I will give them to you.
So there was no change in that sense. What about changes in the prudential sense? There were changes during your time weren’t there?
KM: Oh yes, very much so. Well the lessons that we learned in the old Savings Protection Fund days were naturally taken over to the Savings Reserve Board, you know vis a vis firstly with our consulting role that we placed from Management Services to the Reserve Board. Then of course after my employment we maintained exactly the same prudential standards and procedures. But in 1985 the Board realised very rightly that most of these prudential standards were all in my head and it was about time that we documented them all. So that was what we did, we produced the Standards of Operations Manual in 1986 which set out all of the prudential standards that we used in stabilising problem credit unions and that we used in our inspection procedures for finding out the problems within credit unions. We produced that in booklet form and it proved to be an invaluable booklet for all credit union managers and administrators. Recently the World Council have adopted that for use in credit unions in developing countries. They now distribute that booklet world-wide in the Eastern European countries and South Pacific countries and Asian countries. We have all of the prudential standards in there. We explain very comprehensively the reasons why we have those standards there, the pitfalls that could be found. Really when you look at the new AFIC Standards you will find that they are very, very similar to the standards that are espoused in that blue book. That had a very, very good effect on the operation and management of credit unions. We used to attend many Board meetings in our time there and they would all be there with their blue books and they are all colour coded and things like that. They used them very comprehensively and to the benefit of their organisation. So we did a lot of that.
There is also the matter of the Addressment Guidelines for the Fund.
KM: Yes, again that was another good thing that we did. The way that we managed the Fund and operated the Fund. We always got very high returns for the operation of the Fund and therefore we kept the contributions by credit unions to as low as we could. In the latter years.
End Tape 2A: 4242 Words: 1 hour 40 minutes.