MADISON, Wis. - Less than one month after news was made public concerning the millions of dollars swindled from The Puerto Vallarta Credit Union allegedly by the CU's founder and the eventual collapse of the credit union (CU Times, April 12), the World Council of Credit Unions (WOCCU) is urging the Mexican government to enact credit union-specific supervision to protect consumers and avoid a worstening of the current financial system crisis in the country. Currently, not all credit unions in Mexico are legally registered or financially regulated. According to a story in the Los Angeles Times, $160 million of deposits from about 58,000 members of the credit union may be lost. The credit union's founder, Jose Ocampo Verdugo has been jailed since February and the credit union's 49 branches have been closed. Verdugo is charged with using the credit union to launder money for two well-known methamphetamine ("speed") dealers, and for using member deposits for his own personal use. Commenting on the credit union's failure, World Council CEO Arthur Arnold said, "This incident, while extremely unfortunate, proves WOCCU's point that in any country around the world, not just Mexico, proper credit union legislation and supervision must be in place to protect consumers and members. "More importantly, legislation and supervision are critical to the building of sound financial systems." WOCCU's affiliate in Mexico is the regulated Caja Popular Mexicana (CPM). It falls under the classification of "sociedades de ahhoro y prestamo" or societies of savings and loans. They are registered and regulated by Mexico's Superintendence of Banks. There are also "cooperativas de ahorro y credito" or savings and credit cooperatives which are registered and regulated by the Ministry of Agriculture. The CPM system of 332 credit union branches provides services to an estimated 400,000 members with US$309 million in assets. According to WOCCU, there are other caja populares that are registered and supervised as "sociedades de ahorro y prestamo." The failed Puerto Vallarta People's Credit Union was called a "caja popular", but in fact it isn't affiliated to CPM, nor does it have legal status with the Mexican government or report to any regulatory or supervisory authority. Mark Lowe of the California Credit Union League which has worked side-by-side with Caja Popular Mexicana implementing the International Remittance Network, or IRNet, which allows for the low-cost transference of money by credit union members in the U.S. to family members in Mexico and El Salvador, said to the best of the league's knowledge, nobody in the U.S. had any money deposited in Puerto Vallata People's CU. -
ekingoff@cutimes.com
