September 2004 - Enterprise Magazine

ENTERPRISE
The
VOICE
of
CANADIAN CREDIT UNIONS
September2004
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Life, health, retirement
Crime School: Money Laundering 101
Chris Mathers, Canada's super-sleuth
Big Bang Two - this Time it's Digital!
David Chalk, technology guru
Lessons for Survival in Life and Business
Yvonne Camus, eco-challenge champion
Small Talk
WINDSOR FAMILY IS TOPS
that provides safe and fun after-school care
Flames superstar Jarome lginla and WesUet
Ontario's $366 million W indsor Fam ily Credit
for children and teens. Mclennan also won
Airlines
Union has been named to the annual Top 10
a $3,000 term deposit from Coast Capital
year's list of the 50 Most Influential Albertans,
Best Small ·and Medium-sized Employers (SMEs)
Savings Credit Union .
an annual roll call of the most powerful people
list by Queen's School of Business, Queen 's
Centre for Enterprise Development and Hewitt
DER HEADS
Associates. The award is based upon employee
What does Herb Der,
opinions, organization practices and the per-
Community Savings Credit Union, have in
of Red Deer-based
spectives of the organization's leadership team .
common with Premier Ralph l<lein, Calgary
CEO
CEO
Clive Beddoe? They are all on this
in Wild Rose country compiled by Alberta
Venture . Der was cited for his performance as
head of the thriving, $1.6 billion credit union,
as well as for his appointment as chair of the
Red Deer College board of governors.
Windsor Family, which placed fifth, was the
only credit union in the Top 10 list. CNC Global
Ltd., a national
IT
recruitment and consulting
company, was first.
NEGATIVE BALANCE
Canadians are another day older and deeper in
debt. According to an lpsos-Re id study, household debt in Canada increased by 18 percent
to $66,900 in 2003, up from $56,700 in 1999.
Personal debt stands at $450 billion, or $15,000
for every man, woman and ch il d. The debt
includes mortgages, car loans and credit cards.
BOYS AND GIRLS CLUBS GET $10,000
Ginette Mclennan of Delta, BC is the winner
of the second-annual $10,000 prize for youth
sponsored by the Savings and Credit Unions of
British Columbia prize for youth. The money,
which goes to a youth group of the winner's
choosing, has plumped the coffers of The Boys
and Girls Clubs of BC, part of a national network
1
"THE~E- S NOTHING wgoNG WITH YOUR
PEgsoNAL FINANCE SOFTWARE.. YoU
JUST Do~'T HAVE ANY MONEY.''
SEPT. 2 004 • ENTE RPRI SE
9
When a high-tech glitch hamstrung Royal Bani< of Canada's
••
•
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Internet banldng system earlier this year, credit unions wondered
••
•••••
•••
•
if it could happen to them. Wonder no more. by David Leid!
••• •••••• •• • •
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10
ENTER PRISE • SEPT. 2004
CELINE DioN's lungs notwithstanding,
the RMS Titanic was sunk by a combination of
brittle hull plates and rivets, inattentive lookouts
plus a captain's hubris running smack into a
bloody big piece of ice. Crunch! Oh, damn. The
Hindenberg airship? Blame the unhappy confluence of static electricity, damp mooring lines and
the clever use of aluminum-based doping paint a chemical mixture akin to solid rocket fuel to weatherproof the huge and highly flammable
hydrogen gasbag. Whump! Kaput.
Then there's the recent Royal Bank of
Canada's system debacle. No one died, no
maudlin salt-water flicks will be made but, like
most disasters, it started out as a simple design
or procedural flaw that got out of hand. RBC has
kept mum on the details but has acknowledged
that "human error, " combined with "incorrect
pieces of code;' was the root cause. Without
being properly checked, it seems the data were
simultaneously entered into RBC's main and
SEPT. 2 004 • ENTERPRI SE
11
backup system. Although the glitch was identified and corrected within hours, the decision
was made to delay the day's recovery until the
accounts were verified to avoid compromising
end-of-day production with incomplete data.
Prudent, but the timing was awful. It was
May 31/June 1 - month's end with hundreds
of million of dollars of payrolls and online bill
payments streaming in. The accounts piled up,
awaiting verification. Despite RBC staff's heroic
efforts, it took days longer than expected to
check and clear the backlog.
The glitch erupted into front-page news,
millions of indignant customers were unable to
access their money, automatic payrolls and bill
payments were in limbo, threats of class-action
lawsuits circled overhead - yet another disquieting example that small flaws can cascade mightily.
RBC estimates that 2.5 million accounts were
affected, or about 25 percent of all of its accounts.
Aghast, other financial institutions, large and
small, could only watch with sympathy. "This
type of thing can happen to anyone;' notes Susan
McNulty, senior vice-president of payment and
banking services for Credit Union Central
of Ontario. "If anything, I'm very empathic
to the situation. I think the Royal should be
commended for how well it handled what was a
difficult situation:'
Oscar van der Meer, associate vice-president
of technology services for Credit Union Central
of British Columbia, agrees. "We've had people
'trip over a wire' in a data centre and knock down
a bunch of systems. We're all human, so these
things happen:'
To trip is one thing. How deftly you get
back up is another. Van der Meer believes that,
compared to chartered banks, credit unions are
technologically more limber, less cumbersome
and "substantially better" in keeping critical
core systems on their feet.
Physical and virtual separation is one
safeguard. BC Central classifies and rates its
systems by importance. Services used directly
by members, such as Internet banking and bill
payments, top the list. Other payment services
and treasury systems come next. BC Central's
own human resources data, for example, "are
not really critical;' says van der Meer.
The critical services are run simultaneously,
'hot and live' with the load balanced between
two secure data centres, one in Toronto and one
in Vancouver. Both systems are 'live' - if one did
go down, the other picks up the load instantly.
THE BEST OFFENCE IS A GOOD DEFENCE
In the proverbial good old days,
have something in place, chances
pate - and guard against -
a bank consisted of a reassur-
are the plan has gotten dusty and
IT
ingly conservative building, teller
outmoded . As Group Seven man -
they hit. The 'IT Fire Drill'
wickets, a reassuringly intimidat-
aging director of business devel -
consists of a lengthy list that
ing vault, efficient staff and that
opment, Anthony Brown stresses,
includes risk identifi cation,
"The only way that businesses can
testing restoration systems
prepare for growth, security and
and a commu nication plan
information retention is to test
for employees .
friendly bank manager. Oh yes,
and some adding mach ines .
Today, those adding machines
literally run the show. Computers
now oversee almost every aspect
and test again."
Companies without a disaster-
glitches and disasters before
Complacency can be costly.
Depending upon the business and
of most businesses. In essence,
recovery plan should anticipate
its size, Seven Group estimates
they are the bank or credit union .
the worst and ask themse lves,
that each hour of downtime
If they go down , that business
"how much data can I afford to
will bleed up to $6-4 milli on per
hour for an e-commerce/financial
effectively goes down. Going to
lose, how long can the business
manual in an ultra-high-speed,
sustain manual processes and
business , $2.6 million for point-
interconnected 21µ7 world is
how much money and goodwill
of-sale, $90,ooo for a mail-order
simply impossible.
can we afford to lose?"
entity and $28,ooo for a shipping/
Call it biased, but Vancouver-
Seven Group , whose clients
transport firm .
based Seven Group Data
include BC Central, Coast
Management Company believes
Capital Savings Credit Union
Gartner Group study noted that
that all too many Canadian
and provincial and municipal
40 percent of companies that
businesses are riding on compla-
governments, has devised what
experience a technology disaster
cency when it comes to data- and
it calls the proactive ' Information
will go out of business within
disaster-recovery plans. If they do
Techno logy Fire Drill ' to antici-
five years.
12
ENTERPRISE • SEPT. 2004
It gets worse . In
2001,
a
Assuming that the credit union's system is
connected to both sites, the most an online
member would get is an 'error' message. The
member would simply have to log back in and
the transaction would smoothly resume, van der
Meer says.
The dual system is quite new. Before that,
BC Central was in the same boat as most of
the banks. If things went to hell and the prime
and backup sites both shut down, BC Central
would have had to fall back on its 'cold' disasterrecovery centre in New Westminster, BC. However, being 'cold' meant it would take from 24 to
48 hours to hit top stride.
Van der Meer says that, in comparison, banks
are riding on antique hulls. To wit, their core
systems are "at least 20 years old and probably a
lot older;' he says.
Bank systems are built upon "a conglomerate of systems that are kind of tied together in
an awkward fashion;' explains van der Meer.
These core systems, in turn, support a myriad of
other systems bolted on over the years. "It's like
a whole set of dominos. If one falls over, everything falls over:'
In the late 1980s and early 1990s, the major
chartered banks tried mightily - failing to a large
extent - to revamp their core systems, spending
huge amounts of human and financial resources.
But being really big can mean being at the helm
of something inherently awkward and fundamentally vulnerable - just ask Captain Smith
of the Titanic who, in the best nautical tradition,
dutifully went down with his ship.
Whereas being small can mean nimble.
Van der Meer believes that credit unions have
largely kept pace with technology, upgrading core systems and streamlining systems.
"Effectively through this, credit unions have
better architecture:'
Just ask die Prairie credit unions, which are
plugged into Celero Solutions. The creation of
Co-operative Trust Company of Canada, Credit
Union Electronics Transaction Services and the
centrals of Manitoba, Saskatchewan and Alberta,
Celero services 40 of Canada's 100 largest credit
unions and handles at least some processing for
more than 180 credit unions. Since its launch
in 2003, Celero has improved the quality and
delivery of products and services by maximizing
resources and cutting costs, says executive vicepresident of infrastructure and service delivery
Richard Nakoneczny.
Celero's integrated IT structure is spread
across a cluster of data centres physically separated yet connected via ultra-high speed secure
links. Created in integrated modules - "we do
not allow single points of failure" - Celero is
deliberately overbuilt and with over-capacity,
Nakoneczny says. If something fizzles somewhere, it's easy to isolate and reroute.
ct.
CO-OPERATIVE TRUST
COMPANY OF CANADA
A Credit Union Company
We've had people 'trip over a wire' in
a data centre and knock down a bunch
of systems. We 're all human, so these
things happen. • Oscar van der Meer,
associate vice-president of technology services,
Credit Union Central of British Co lumbia
As a bank alumnus himself, Nakoneczny
sympathizes with RBC's tech travails. From his
experience, bank systems are a "tightly woven
combination of manual processes and automation." When the initial error snagged RBC, a
chain reaction ensued, leaving no easy out,
Nakoneczny says. RBC technicians, he explains,
have to pull apart the automation and do things
job by job, which is onerous. "If we had to restart
a process, it's not as big a deal;' Nakoneczny says.
After the dust and data settled, IBM Global
Services was hired by RBC to do a tech post
mortem. Conclusion: RBC had adequate protocols to prevent this type of error; the bank's IT
department had failed to follow them. The bad
data weren't properly checked and caught before
being entered into the prime site. Because the
backup had to run in tandem with the prime site,
it too was incorrectly programmed and compromised. Simple human error equals huge mess.
RBC has since vowed to rivet on another layer
of backup.
Meanwhile, over at Celero Solutions,
Nakoneczny says the credit union fleet "is in
the process of selecting our next generation of
systems:' This will eliminate overnight batch
processing, replacing it with real-time, 24/7
systems. Expect the rollout to begin in late 2006.
"It's a monstrous effort; we're literally talking
about taking the systems we have today and
totally converting them to the newest generation
of software;' says Nakoneczny. "It's a lengthy,
complex process but we feel it is one we have
to follow to keep ourselves fully current and up
to date:'
Meanwhile, over in the really big shipyard
next door, the patching continues. ~
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SEPT. 2004 • ENTERPR IS E
13
ONTARIO PERSPECTIVE
SH A KEN and stirred. That would be the reaction of Ontario credit unions to news that two of
the province's biggest - Niagara and HEPCOE
credit unions - plan to merge.
Niagara, with almost $1.5 billion in assets,
and HEPCOE, at $1.4 billion, are two powerful players serving different parts of Ontario.
Together, they strengthen and entrench their
positions in the province's financial services
marketplace. The merger, however, spotlights
a trend among Ontario credit unions that has
been occurring in the past decade or more - the
disappearance of closed-bond credit unions.
HEPCOE held an industrial closed bond
until 1995, serving employees of Ontario
Hydro who were scattered around the province.
Since opening its bond to the community,
HEPCOE has grown to become the third largest
credit union in Ontario and the tenth largest
in Canada.
Closed-bond credit unions are declining at a
steady rate. The Deposit Insurance Corporation
of Ontario (or co) reports that from 1999 to
2003 - the only years for which statistics are
available - the number of closed-bond credit
unions in Ontario declined by almost one-third,
to 137 from 199. Thirty four closed-bonds merged
with community credit unions, 14 amalgamated
with another closed-bond credit union, while
another 14 were dissolved or liquidated.
Why have so many gone the way of the
dodo bird?
Ontario had far more closed-bond credit
unions than other parts of Canada, says Harry
Joosten, vice-president of owner relations
and corporate secretary at St. Willibrord
Community Credit Union, a former closed-
16
EN TERPRI SE • SE PT. 2 0 04
bond institution in London, Ont. "Ontario,
compared to most of the rest of the country, was
well-served by banks and other financial institutions, and credit unions tended to serve niche
markets;' says Joosten. "Out West, there were
fewer banks, so there was more room for credit
unions to serve mainstream markets and gain
mainstream dominance:'
People's bond loyalty is declining, however.
Many of the closed-bond credit unions started
in the 1950s and 1960s and while second generations may have felt a connection, through faith,
ethnicity or employment, this has not held for
third and fourth-generation members. As well,
closed-bond credit unions have usually served
a smaller membership, making it a struggle to
keep up with increasingly complex reporting
and regulatory requirements or afford the products and services demanded by consumers.
With some industries in decline, paring down
staff or moving operations to the Third World,
you have a recipe for merger, purchase or outright dissolution.
Still, Joosten, who saw his faith-based
credit union make the gradual transition to a
community bond starting in 1977, sees a future
for closed-bond credit unions, particularly those
that are progressive and focussed on servicing
their members. "It depends how they view their
role and their market;' he says. "If they focus on
their market and provide valuable service, they
stand a good chance of surviving:'
the sale of their apartments to use as a down
payment for a home here. Our role has been
helping educate them about financial services.
Ukrainian has 10 locations from Thunder
Bay to Windsor, serving about 20,000 members
who either are of Ukrainian descent, support the
culture, or attend a Ukrainian church. Under
terms of the bond, the credit union is only
allowed to have three percent of its membership
outside the bond.
The latest immigration wave means the
credit union has enjoyed steady growth of about
$20 million a year over the past few years. But
Pidzamecky is under no illusions that the credit
union can rest on its laurels. "The key to success
is being able to understand these people and
their needs;' he says. "We still have to compete
for their business. The bonus is that we speak
their language:'
The credit union has developed a number
of integrated strategies to maintain growth:
capture and hold the immigrant market with
competitive products and pricing, engage
youth and build that business with specialized
programs, and stay current with new technology.
In addition, it has worked hard at streamlining
operations to reduce costs and boost efficiency.
Ukrainian is also heavily involved in its
community. It recently won Credit Union
Central of Ontario's youth involvement award
for its support of the Junior Achievement
program and its sponsorship of Ukrainian youth
It depends how they view their role and their mar/cet.
If they focus on their marlcet and provide valuable
service, they stand a good chance of surviving.
• Harry Joosten, vice-president of ow ner relations and corporate secretary, St. Willibrord Community Credit Union
Ukrainian Credit Union stays the course
History repeats itself, and Ukrainian Credit
Union is taking full advantage of the opportunities this truism presents.
The closed bond credit union, founded
by post First World War-era immigrants, has
welcomed a new influx of educated and relatively affluent immigrants from Ukraine in the
10 years following the collapse of the former
Soviet Union. "Most of our growth in membership the past decade is from this wave;' says
Taras Pidzamecky, CEO of Ukrainian, with assets
of $280 million. "They are professionals and
computer programmers. They bring assets from
groups. "All things being equal - service, pricing,
convenience - our members stay because we're
at work in the community;' says Pidzamecky.
Talks about broadening the bond to community are always there, but there's no need for it for
now, says Pidzamecky. "Our market isn't going
away. But we still have to adapt to change:'
Unigasco Credit Union - the changeling
Flexibility equals survival for Unigasco
Community Credit Union. A modest financial
institution serving employees of Union Gas in
Chatham, Ont., the credit union was buffeted by
a shift in fortune in the 1990s. Ownership flips
and restructuring at Union Gas created uncertainty for Unigasco as membership shrank with
each downsizing.
In 1999, the credit union's board approved a
five-year strategic plan to accept members from
outside the gas company. A year later, a new
community bond was in place and Unigasco was
on its way to fulfilling its goal of becoming one
of the top financial institutions in Chatham-Kent
region, southwest of Toronto. "The dependency
on Union Gas was always a threat;' says Tim
Bossence, general manager ofUnigasco, who
has been with the credit union for 25 years. "The
future for potential growth was very limited:'
The change in Unigasco's fortunes has been
dramatic. Just prior to changing its bond, the
credit union's assets were $62.2 million and
members numbered 5,740. About 60 percent of
those members were Union Gas employees. Four
years later, there are 1,200 new members, assets
are $95·5 million, and about 70 percent of the
members hail from the broader community.
Broadening the bond wasn't the sole reason
for growth, however. Unigasco also sought
to enhance the credit union's presence in the
community. A creative company was hired
to create a new brand and new value statement, "Committed to Service, Owned by You:·
A second street location was opened early
in 2002 and a call centre installed. Unigasco
also received a commercial lending licence. A
commercial lender has been building a respectable portfolio of small business loans in the past
15 months.
The credit union has encouraged its employees to be involved in such community causes as
Children's Safety Village and Crime Stoppers.
This focus on community was rewarded last year
when Unigasco earned the Corporate Citizen
Award granted by the regional municipality of
Chatham-Kent.
Bossence says the challenge now for
Unigasco is to maintain its growth trajectory.
The latest strategic move includes possibly opening a third branch in nearby Ridgetown, a risk
because of operating costs and tight margins.
There's no doubt that Unigasco made the
right decision in 1999, especially since the gas
company is still downsizing. "I can't imagine
what it would have been like if we hadn't done
this;· Bossence says. "This was a very wise
and timely decision. You've got to diversify if
you want to survive. You can't depend on any
one industry:·
It's like instantly having your people
call their people and having their people
contact some other peoples' people.
By connecting your organization with Filogix Solutions you can
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©2003. All rights reserved. Filogix is a registered trademark of Filogix Inc.
SEPT. 2004 • ENTE RPRISE
17
ONTARIO
PERSPEC T I V E
Victory Community Credit Union
opens to the masses
"We're a little short-staffed right now." On the
telephone, Adrienne McKenzie, general manager
of Victory Community Credit Union, is a bit
apologetic. With a staff of three stick-handling
$7 million in assets and serving 1,200 members,
"every day is a struggle, to be perfectly honest;'
McKenzie says. Then she laughs. "It's fun. I'm
definitely a hands-on type of manager:'
increase business while maintaining "that village
feel;' says McKenzie. Local activities and business, from farmers' markets to grass-mower
repair shops, are embraced. "It's nice for the
credit union to support and help build upon
those community ties:'
Victory Community, which began life more
than 50 years ago as Our Lady of Victory Parish
Credit Union, is a product of numerous mergers
with oilier small parish credit unions iliroughout
All things being equal - service, pricing, convenience our members stay because we're at work in the
community ... Our marlcet isn't going away. But we still
have to adapt tO Change.
Good thing. McKenzie is getting busier; the
once closed-bond parish credit union converted
to an open-bond community credit union
in 1998 in ilie low-income neighborhood of
Toronto's Weston district. It was important to
the board of directors iliat Victory Community
• Taras Pidzamecky,
CEO,
Ukrainian Credit Union
Toronto. Aliliough there are oilier parish credit
unions in the city; when the time came in 1998
to kick-start anoilier round of growtli, the board
of directors eschewed a merger. Instead, Victory
Community opened its arms to ilie masses - but
the local masses only.
To raise its profile, Victory focuses on backing small community projects. Being small, ilie
credit union can't always offer financial assistance, instead relying more on personal gestures.
For example, staff might show up with a cake
to celebrate a local group's project. Meanwhile,
new services were added to its small, albeit
select, offering. Victory recently upgraded its
ATM-access service and its clearings are now
posted automatically.
To balance an aging membership, Victory
targets the youth market, by, for example,
encouraging grandparents to start trust accounts
for ilie grandkids and opening savings accounts
such as FatCaC and HeadStarC.
Time to ring off; Adrienne McKenzie has
lots to do. Before she does, she has some advice
for other small credit unions. "Don't be afraid
to ask for help:' McKenzie relies on "a wonderful network of people within the credit union
system" who are w.illing to assist. "There may
be simpler or more efficient ways of offering
services and products, or ways of doing things
in-house, all you have to do is ask:'
I will go anywhere
to help my clients.
"I'll travel halfway around the world to help my clients-literally.
I've flown for 13 hours to meet with a client to help them get
ready for their budgeting season. I really get a charge out of
seeing our clients utilize the softwa re ."
-Rick Jones, Education
At Profitstar, creating superior, integrated financial management
solutions is only the beg inning of what we do for our clients.
For almost 20 years, Profitstar has helped financial
institutions-just like yours-meet and exceed their goals.
Call us today at 800.356.9099 or visit us on the web at
www.profitstar.com to find out how we can help you succeed.
-Rick Jones, Education
18
ENTERP RISE • SEPT. 2 00 4
PROF/TSTNl.
Dedicated To Your Success.
Dofasco Credit Union's nifty niche
Back in 1954, 23 charter members pooled their
resources and, after deducting the $20 charter
fee, counted out $48-75 as seed money for
closed-bond Employees of Dofasco Credit
Union (Encu). For five decades, the credit union
contented itself with simply being a savings and
loans institution for employees of the steel giant.
In 1999, the board of directors looked around,
realized that EDCU had reached a plateau in
terms of membership and asset growth and
finally held its first-ever, formalized planning
session. A merger was debated. Ultimately,
the board called in top-gun Kathleen Zebruck.
A 25-year veteran of the Ontario credit union
system, Zebruck is lauded as a 'fixer upper: The
credit union was the third in Ontario she was
asked to 'get on the right track:
Zebruck focused upon adding new products
and introducing what she calls "the three 'e's:
expand capabilities, enhance its position with
Dofasco Inc. and the community, and provide
exceptional service. Three years ago, the credit
union hired her as its general manager. Since
then, assets have risen to $29 .6 million, up from
$23 million.
Key, says Zebruck, was focusing upon what
the credit union did best. "We decided to build
our strategy around being a niche player. It was
too late for us to be a primary financial institution:' The credit union is refining that focus.
The emphasis now is communicating to employees that the 'mom and pop' credit union of old
is now a truly professional organization. With
seven full-time and two part-time staff, the
credit union might be small, but it moves fast.
Before, EDCU had no registered products.
Today, it does. The loan and mortgage base
has been broadened significantly, the portfolio
has grown to $18 million from $8 million. As a
closed-bond entity, its fortunes mirror those of
Dofasco. Since the company expects to downsize in the next few years, EDCU plans "to attract
some of that retirement money" in its comprehensive financial wellness program, says Zebruck.
Meanwhile, Zebruck eyes the two-thirds
or so of Dofasco's 7,500 employees who are
not members. She believes the credit union
could potentially add another 3,000 to 4,000
new members plus their families, thus nearly
doubling the credit union's roster to 5,900.
Zeb ruck sees assets rising to $30 million, then ...
who knows? ~
SEPT. 2004 • ENTERPRISE
19
GLOBAL AFFAIRS
Two men, one in war-torn Iraq and another in warAfghanistan, have embarked upon dangerous qu
credit unions amidst the violence and ch
0 N A hot day last May in northern Iraq, Jesus
Chavez was snapping photos of the dusty countryside from the passenger seat of an equally
dusty Opal. Normal behaviour when sightseeing,
but cause for concern for twitchy checkpoint
20
ENTER PRISE • SEPT. 2 004
soldiers on the road ahead, suspicious that
the camera was being aimed at them.
Chavez and his driver, an Iraqi named
Sagvan Hassan Taib, were waved over.
Taib, Chavez's translator who learned English
watching American cartoons, hopped out of
the vehicle. It was up to him to try to convince
the soldiers that his shutter-happy passenger
was innocent of a security breach.
When it became obvious the argument wasn't
abating, Chavez, burly and dark-skinned, with
plaited ponytail trailing down his back, opened
the vehicle door and ambled over to the group.
By now, a moustached captain in desert fatigues
had joined the discussion. Looking keenly at
Chavez as he approached, the captain asked, in
flawless English, "Are you a Native American?"
Somewhat surprised, Chavez responded,
"Yes, I'm a Mescalero Apache from New Mexico:'
SEPT. 2004 • ENTERPRISE
21
GLOBAL AFFAIRS
The captain smiled and nodded his
head, "Ahh, you guys had the same problem
we're having:'
"I laughed so hard;' says Chavez, a project development and regulatory officer with
Madison Wis.-based World Council of Credit
Unions (woccu). "Then I asked him to have
his picture taken with me:' The captain, who
confessed to being an avid reader of Native
And, chuckles the 53-year-old, it helped "to
be crazy:'
It also helps not to be afraid. Chavez, who at
deadline had left Wisconsin for his third trip to
Iraq, stays low-key, tucking his ponytail under
his baseball cap. Still, he shops in the open
markets and goes to restaurants, enjoying such
traditional Middle Eastern fare as lamb and beef
kebabs. Chavez stays at a small hotel devoid of
tion would help finance a credit-union project.
USAID, however, "had other priorities in Iraq,
like putting in water and electricity;' says Chavez.
Still, he was convinced such an initiative
should be started right away, even without the
support of another non-governmental organization. "Iraq needs credit unions, regardless of the
lack of security. If we only worked in countries
that were safe, we wouldn't be anywhere. If we
American culture and history, turned and
mugged for the camera.
It was a rare moment of camaraderie between
two men whose countries have been at war. For
a quarter century, Iraqis were under the despotic
rule of former president Saddam Hussein. For
the past decade, the people have struggled to live
within an infrastructure destroyed by Americanled bombing in the 1990 Gulf War, launched in
response to Hussein's invasion of Kuwait. Harsh
economic sanctions followed, causing soaring
child mortality rates, hunger, malnutrition and
disease. The carnage resulting from the .2003
Iraq war and resistance to occupation includes
a death count estimated at 15,000 Iraqi soldiers
and about 12,000 Iraqi civilians. More than 950
coalition forces, most of them American servicemen and women, have also died. Despite the
transfer of sovereignty from the US-controlled
Coalition Provisional Authority (CPA) to an Iraqi
government last June, security is tenuous, with
almost daily terrorist bombings and political
kidnappings and assassinations.
It is appropriate, perhaps, that woccu sent
a former soldier into the violence and chaos.
Chavez is a former member of the US Special
Forces Green Berets who served during the
Vietnam War. Twenty-years-old at the time,
Chavez's mission as a Green Beret paratrooper
recruited into the crA's top-secret Operation
Phoenix was to infiltrate enemy lines and assassinate Viet Kong cadre. He was selected for the
covert action, Chavez says, because of his talent
for languages and excellent physical condition.
signage but sleeps with the hotel windows open.
He has been awoken by the early-morning poppop of an assassin's gun being fired down the
road, another time by a car bomb. As to his own
safety, 'Tm going to die someday;' the married
man says fatalistically.
After Vietnam, Chavez settled into a comparably prosaic career as a credit union regulator with the US federal government's credit
union regulator, the National Credit Union
Administration (NCUA). He started working with
woccu when the organization, which supports
the creation of credit unions in developing
countries to promote economic and social
progress, needed Spanish-speaking development officers. (Chavez is fluent in Spanish.)
He has also worked in Kenya, Uganda, Rwanda
and Ghana. At the end of 2003, when Chavez
wait until things calm down in Iraq, hell, that
might be another five years:' Iraqis would be
open to credit unions, Chavez says, because the
concept of cooperative banking is ingrained in
their culture. Iraqis have an ancient system of
money-lending called jamia, whereby neighbours
pool their money to lend to other neighbours.
Just before his first trip into Iraq, Chavez
established contact through the Internet with
the Kirkuk Business Center in the city of
Kirkuk, located in the semi-autonomous region
of Kurdistan in northern Iraq. He arrived last
February as the centre's guest. The region around
Kirkuk has substantial oil reserves and is the
one area in Iraq with rain-fed agriculture. The
Kurds are a minority in Iraq, and have long held
aspirations for independence. In the 1970s, they
were brutally repressed by Saddam Hussein, who
22
ENT ERPRIS E • SEPT. 2 00 4
Iraq needs credit unions, regardless of the lack of
security.
If we only worked in countries that were safe,
we wouldn't be anywhere. If we wait until things calm
down in Iraq, hell, that might be another five years.
• Jesus Chavez, woccu
returned to Madison from South Africa, discussions had begun about starting a credit union
system in Iraq. WOCCU leadership had already
contacted United States Aid for International
Development (usAm) to see if that organiza-
bombed and used chemical weapons against
them. The dictator then attempted to 'Arabize'
the region by relocating Arab Iraqis there. As
Chavez drove through the countryside, he was
startled by the decimated homes and asked his
driver if US bombs had fallen in the region. He
was told that, after the fall of Hussein, the Arab
Iraqis had fled, knowing they were in danger
from Kurds returning to reclaim their property.
"They knew they had to leave the houses, but
they didn't have to leave them in one piece;'
says Chavez.
Like the rest oflraq's institutions and infrastructure, the banking system is in disarray.
an overwhelming but inspiring initiative. "The
people are awesome and I've made a lot of
friends;' Chavez says. "They've got all these
problems and they're all just trying to get on
with life:'
In another part of the Middle East, east
oflraq, Edgar Comeros, another wo ccu
employee, motors along the rough, eight-hour,
320-km drive from Afghanistan's capital of
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Banks, which were not independent under
Hussein, are insolvent due to inflation, bad loans
and poor or corrupt record-keeping. Loans were
often awarded based upon Hussein's say-so. The
majority of people hide whatever savings they
have in their homes. Transactions are in cash.
There are no credit cards or ATMs.
The Coalition Provisional Authority has
drawn up a framework for a new banking system
that includes rules governing bank supervision
and management of foreign reserves, as well as a
new commercial bank \aw. It also established an
independent Central Bank oflraq (CBI) . Chavez
is currently lobbying the US Department of
the Treasury in Washington to include amendments to the new Iraq Banking Law that would
allow for and support credit unions in Iraq. The
amendments are many and cover such basic
rules as maintaining capital reserves and giving
all members equal voice in the credit union,
regardless of the amount of deposits held.
Key, says Chavez, is obtaining exemption
from such laws that state the minimum amount
of capital for opening a financial institution is
10 billion dinar, or us $7 million. At deadline,
Chavez had scheduled a meeting in October to
meet with Iraq's new Finance Minister Kamel
al-Keylani to discuss the need to set up an
entirely new set of regulations for the governing
of a credit union system.
Once banking laws are changed, Chavez is
optimistic he can get a credit union in northern
Iraq up and running, followed, eventually, by
a credit union in Iraq's capital, Baghdad. It is
Kabul to the northern city of Mazar-e Sharif,
an important historical site and once a major
hub of commerce. It is a postcard trip, with
snow-capped mountains and fields of purple
and violet flowers swaying under plus-40 c heat.
Despite the beauty, Comeros doesn't stop to take
photographs. "It looks like tulip fields in the
Netherlands. But I'm afraid militiamen would be
protecting the fields;' says Comeros.
Afghanistan's famous pink, violet and white
poppy fields are the source of about 70 percent
of the world's opium and heroin, and constitute
up to 60 percent of the country's gross domestic product (GDP). One of the world's most
impoverished nations, Afghanistan endured an
invasion in 1979 by the former Soviet Union, two
decades of civil war and a devastating drought.
It is a beggar state, surviving off relief programs
and food provided by the United Nations. The
intellectuals and educated have long fled, and its
infrastructure, including highways, is destroyed.
The land is spiked with land mines. There are
thousands of orphans. Farmers make more
selling poppies then they can earn growing
anything else.
Poppy farmers have been encouraged
by Afghanistan's Western-backed Afghan
Transitional Administration under President
Hamid Karzai to grow other crops, but any
concrete initiatives to provide alternatives have
been poorly funded and organized. Comeros
says he sees little evidence that the Afghan farmers are benefiting, either, from growing poppies.
"The situation for the people is very difficult;'
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SEPT. 200 4 • ENTERPRI SE
23
GLOBAL AFFAIRS
says Comeros, a 50-year-old Filipino, whose
wife, three children and granddaughter remain
in the Philippines. "You look at the district, the
farms, it's barren;' says Comeros, who arrived
in Afghanistan early last May.
each change of hands in the city of 130,000
being characterized by bloody massacres.
One month after the 9/11 World Trade
Center towers tragedy, the US began bombing Afghanistan in an effort to rout out Saudi
Staying here is very risky but I have a mission. I want to
prove tO them that this Can WOrk.
It was not always so. Mazar-e Sharif is
one of Afghanistan's most fertile regions and
once yielded a cornucopia of fruit, grain and
cotton, boasting busy silk and cotton textile
manufacturing and flour milling. After the
fall of the Soviet-backed Democratic Republic
of Afghanistan in 1992, the country became a
battlefield of competing warlords. The Taliban,
a harsh Islamist movement with a record of
severe human rights abuses, including torture,
has ruled much of Afghanistan since then. It has
held power off and on in Mazar-e Sharif, with
,. Edgar Comeros, woccu
terrorist Osama bin Laden, who had forged an
alliance between the Taliban and his Al-Qaeda
organization, widely accepted as the mastermind
behind the Sept. 11 attacks. However, the Taliban
remain a force in Afghanistan. In the past year,
the group, along with other militant insurgents,
has been linked in the past year to the murder of
humanitarian workers in an attempt to stall aid
and reconstruction efforts.
Comeros' balances his unease, palpable over
a crackling cell phone line, with an idealistic
zeal. The former CEO ofVisayas Cooperative
Center (VIC TO) in the Philippines, who last year
lectured at a Canadian Cooperative Association
meeting in Ottawa, admits, "staying here is
very risky but I have a mission:' (He once drove
through the middle of an armed stand-off
between the local warlord and chief of police
and 200 of his men, who were divided only by
a roadway.) "What pushes me is that I believe
in the idea of credit unions. What keeps me
going is that they need credit unions here, credit
unions that will be sustainable and that the
people will patronize. I want to prove to them
that this can work:'
Comeros has a translator to whom he pays
us $400 a month to translate English into the
local dari dialect. He also has a full-time guard,
driver and cook at his five-bedroom house in
Mazar-e Sharif. He is on a one-year contract
with woccu. During the 12-month tour of
duty, he hopes to organize three credit unions.
WOCCU's long-term goal is to organize 15
credit unions in five years. However, Comeros
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is deeply frustrated by the lack of resources and
trained workers. In two months, he says, he
has been unable to find an accountant, and the
mainly illiterate population has a poor concept
of debit and credit. "One of the biggest problems
is recruiting people to run the credit unions:'
sighs Cameras, who convinced woccu to
send an accountant from the Philippines to be
his assistant. The assistant will b e the "roving
bookkeeper, setting up the books, helping in the
installation of a community credit union and
monitoring the progress:' Cameras, meanwhile,
will give crash courses to those who will run the
credit unions. "We will bring back the spirit of a
lively financial system;' he says optimistically.
Credit unions, Cameras believes, will help
motivate poppy farmers to grow legitimate crops.
"Sixty percent of our portfolio;' h e says, "will be
dedicated to agriculture. We can provide finan cial services to improve the irrigation system
and their methods of farming:'
Cameras has begun organizing community
meetings to promote credit unions. He has
explain ed to small audiences of Afghanis that
financial services will be made available not only
to farmers but market lenders. He has initiated
discussions with women and women's groups
to explain how credit unions can assist them to
achieve econom ic independence. Already, the
women are thinking about small enterprises
such as tailoring and dressmaking, beauty
parlours and market kiosks. Many of the men in
Afghanistan's deeply patriarchal society, which
historically has oppressed women, have been
opposed to such ideas, says Cameras.
Cameras also worries about the Afghan
people's general apathy. Decades of death, fear
and war have destroyed much of their hope
and initiative. The creation of a credit union
system, while an almost insurmountable challenge, will give the people a renewed optimism
and confidence in their ability to help themselves, Cameras hopes. A noble, some would say
Quixotic, quest. But noble nonetheless. ~
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ATLANTIC CANADA
.
~ Atlant I
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Economic realities are driving much of the youth of the East Coast
region to other parts of Canada. There are many things that credit unions,
in partnership with other community institutions, can do to keep the
young happy and at home.
by Laureen Griffin
TYLER DOUCETTE is graduating from the
University of New Brunswick at the end of
December. However, he doesn't plan to return
home to Summerside, Prince Edward Island.
Rather, he hopes to enroll in a MBA program at a
university in Vancouver, Halifax or Fredericton.
Will he return to Summerside once he has a
graduate degree in his pocket?
Probably not. "If you are seeking money, you
go to Ontario or British Columbia;' says the
Summerside native. A marketing and human
resources major, Doucette would like to work for
a credit union. After all, he has loved working
for Consolidated Credit Union in Summerside
as a member service representative, a position he
has held for the last five summers. He acknowl-
edges that Consolidated would probably hire
him permanently, but the small credit union has
its one-person human resources and marketing departments already staffed. "I think there
would be a lot more job offers in my field out
West or in Ontario;' he says.
Doucette is typical of the young, educated
people from the Atlantic provinces who are "goin'
down the road;' seeking education, meaningful
work and adventure. Three out of four don't
come back.
A survey prepared by Statistics Canada in
2000, titled Rural Youth : Stayers, Leavers and
Return Migrants, discovered, contrary to popular
belief, that the exodus of the young from rural
communities in the Atlantic provinces was lower
than in other parts of Canada. The problem,
it seems, is not so much that the kids leave, but
that they don't come back, and young people
from other provinces don't show up to take
their place.
The rural kids migrate to the cities, the urban
kids move out of province, and the birth rate
keeps falling; that combination makes Atlantic
Canada the region with the oldest population.
To survive, Atlantic credit unions are making
plans. They want not only to capture a significant
part of the youth market, they also want to make
sure there is a youth market to capture.
The Atlantic credit unions are exceptionally good at engaging children. For example,
Consolidated sponsors the elementary and
SEPT. 2004 • ENTERPRISE
29
ATLANTIC CANADA
high school sports teams that teach more than
running and kicking. The older kids not only
coach the younger kids, but find sponsors for
their teams, buy balls, distribute T-shirts and
collect money. Like many other credit unions,
Bergengren Credit Union in Antigonish, Nova
Scotia goes into all the local schools, elementary,
middle and senior, on a weekly basis to open
accounts and collect deposits.
Joe Ruggeri, Vaughan chair in regional
economics at the University of New Brunswick,
believes that the credit unions, with their presence in the schools, could play a significant role
in keeping youngsters in Atlantic Canada by
collaborating on the distribution of information
with local chambers of commerce and Human
Resources Development Canada. "Labour
projections;' says Ruggeri, "indicate that we will
have a shortage of workers, especially in the
trades, in the next five years. If young people
were given the information in Grade 5 that there
will be a demand for plumbers, for example, they
would make better career choices and have less
incentive to leave the region:'
In PEI, every post-secondary student must
deal with a credit union to obtain federal and
provincial student loans. The 10 credit unions
on the Island share the distribution ofloans
to students attending the University of Prince
Edward Island. Nova Scotia, New Brunswick
and PEI all share the same banking system, so
students don't have to open new accounts to
access their money if they leave the Island to
study. The credit unions throughout the Atlantic
region offer student accounts, low ATM fees, and
lines of credit and credit cards. Despite these
perks, there seems to be little the credit unions
have done to alleviate the debt that bows the
back of graduates and pushes them to seek
employment in other regions.
Ruggeri believes the solution is a summer
research program that matches students with
local companies. "The professors could supervise the projects for free, the companies would
get good research at a relatively low cost and the
students would discover that there are interesting jobs in the region;' he says. If the companies
hired some of these students full-time after
graduation, young people would be more likely
to stay, he adds.
This past spring, Credit Union Central of
Prince Edward Island held focus groups with
students at Holland College in Charlottetown
to discover what services students are seeking
in addition to student loans. "They expressed
concern about the lack of honesty at other financial institutions;' says Darlene Turner, marketing officer at PEI Central. "If a special deal on
Labour projections indicate that we will
have a shortage of workers, especially in the
trades, in the next five years.
~ Joe
Ruggeri, Vaughan chair in regional economics,
University of New Brunswick
accounts is advertised to students, it is not necessarily offered when the young person goes into
the branch. Often the students are too shy to ask
for it, and they feel hoodwinked." Following the
focus groups, PEI credit unions started including
more information on their services with the loan
notices sent to students. The system intends to
expand this program.
In New Brunswick, the Mouvement des
caisses populaires acadiennes (MCPA) ran similar focus groups nearly two years ago. Out of this
arose a youth portfolio consisting of 11 projects,
in various stages of completion, on products,
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EN TE RPRI SE • SEPT. 200 4
branding, marketing and governance. In 2003,
formed a youth council with five Grade 10
and five Grade 11 students. "We realized that we
. were missing crucial information, so we invited
10 students to sit on the council and tell us about
themselves and their peers;' says Rene Legacy,
vice-president of communications and strategic
planning at MCPA . The students are visiting
individual caisse, sitting in on board meetings
and reporting to the MCPA on governance, products, marketing and overall impression.
In March, the MCPA helped fund a weekend
for people who had left the region ofTracadieSheila in an effort to encourage them to come
home. The Atlantic Canada Opportunities
Agency and the provincial government spearheaded the event. "Je reviens! J'y reste!'' gave
the 20 participants between the ages of 18 and
35 a chance to meet with local employers and
regional entrepreneurs.
As for young entrepreneurs, Legacy says, "42
percent of all small businesses in New Brunswick
have dealings with the M C PA . None of our small
business programs are specifically designed for
young business owners, but we are looking at
the possibilities." Legacy has some reservations.
"When the students graduate, they want to be
treated like adults, and often prefer not to have
special programs:' For now, the MC PA, in partnership with a community college, has developed a Young Entrepreneurs Internet Course.
Credit Union Central of Nova Scotia is just
beginning the process of finding more young
employees, directors and members. This project
is the result of an extensive consultation with
the credit unions in both Nova Scotia and in
Newfoundland and Labrador, and has just been
approved by the board of directors of Nova
Scotia Central.
There is no question that the youth population in Atlantic Canada is shrinking, especially
in rural areas where many credit unions are
located. Luring young people back home may
prove to be an uphill battle. Ruggeri notes
that Atlantic Canada can't compete with the
salaries offered in Ontario and the Western
provinces. Keeping the young at home with the
bait of interesting work, education and a sense
that their contributions can change things is
not the sole responsibility of credit unions. But
credit unions, with their access to the schools
and direct contact with students, are in the right
place to play a crucial road in keeping the young
from "gain' down the road:' ~
M CPA
SE PT. 2 0 0 4 • EN T ERP RISE
31
COVER S T ORY
11
32
ENTERPRISE • SEPT. 2004
SEPT. 2004 • ENTERPRISE
33
CO V ER STORY
h
Collier family,
29-year-old single mom Erin
and daughters Kay-Lynne,
eight, and five-year-old Emily,
recently added a hamster to
their domestic menagerie of
dog, cat and fish. The hamster
was Kay-Lynne's birthday
present. She was excited about
it, more excited than many
eight-year-olds might be.
34
ENTERPRISE • SEPT. 2 004
In the Collier household, a pet is still a novelty,
since beasts of any sort were banned in the lowincome rental housing where the family lived a
few years ago.
Today, the Colliers are more than pet owners,
they are homeowners, thanks to Saskatoon's
Quint Housing Co-op and Saskatoon and
St. Mary's credit unions in Saskatchewan, which
hold the mortgages for 108 families, many of
them on social assistance.
Credit unions have long been the "go-to"
financial institutions in Canada for low-income
individuals and families. But many credit unions
also play integral roles in housing, service or
worker co-ops designed to help poor communities battle poverty on a collective scale - co-ops
like the Quint Housing Co-op. Quint and
other co-ops were recently the focus of a study,
Building Assets in Low-Income Communities, that
was co-sponsored by the Canadian Co-operative
survey was conducted), the poorest 40 percent
of Canada's family units saw little or no increase
in wealth, while the richest 20 percent saw an
increase of 39 percent. The top 10 percent held 53
percent of the wealth in 1999, the top 50 percent
controlled 94.4 percent of the wealth and the
bottom 50 percent was left with 5.6 percent. The
poorest 10 percent of Canadian families also
have more debt than assets. Their average wealth,
adjusted for inflation, declined by 28 percent to
$10,656 in 1999 from $8,031in1970 .
Credit unions can and often do provide critical help to co-ops, partly because credit unions
base their own business models on cooperative
principles. "We rely on cooperation among
cooperatives;' says Carol Evoy, policy and
program officer with the federal Co-operatives
Secretariat, which advises the government on
policies affecting cooperatives. "When I joined
my housing co-op 26 years ago, one of the local
I can see, when they tell people that we own a house,
that they pick up on the pride that I have. When they
painted their rooms, they were able to pick out their
own colours and help paint. They were never able to do
that before.
Erin collier
Association and Co-operatives Secretariat. The
study concluded that credit unions and co-ops,
by helping people build assets in low-income
communities, help reverse the poverty in
which increasing numbers of Canadians now
find themselves.
Statistics Canada figures show that between
1984 and 1999 (the most recent year a 'wealth'
credit unions took a leadership role in getting
it going. They would come to meetings and
participate in getting it off the ground:'
But there are other reasons credit unions are
uniquely positioned to play integral roles in such
co-ops. "Credit unions and caisses populaires
are controlled locally;' points out Canadian Cooperative Association (ccA) government affairs
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SEPT. 2004 • ENTERPRISE
35
COVER STORY
and public policy adviser Lynne Markell. ''A local
loans officer in a bank branch might not have
the freedom to give out a loan that doesn't meet
their centralized credit guidelines. But a credit
union board can say, 'there's a social purpose for
in their community, so it's a way of keeping jobs
and also capital in a local area;' she says.
The results can be satisfying. The Cooperative
Travailleurs Forestiers Mckendrick Ltee is credited with saving an entire town. Formed in 1991
People start worker cooperatives to create jobs themselves, but these jobs are in their community, so it's a
way of keeping jobs and also capital in a local area.
Carol Evoy, policy and program officer, Co-operatives Secretariat
us to invest and give a loan to this new co-op,
in spite of the fact that the members don't have
enough collateral: "
This micro-economic, socially based
approach to low-income community development also has macro implications, says Evoy. "If
you're looking at a marketplace, organizations
and businesses will normally do what's profitable,
whereas cooperatives exist to provide services or
jobs to members. People start worker cooperatives to create jobs themselves, but these jobs are
in McKendrick, a rural New Brunswick francophone community of about 780 people, the
forestry worker co-op was intended to provide
employment alternatives for locals whose jobs
at the local paper mill had disappeared due to
shifting market demands.
By 2002, the co-op boasted gross revenues of
$2.8 million, $1.5 million of it returned as salaries
to more than 70 employees, most of them local
residents. Besides jobs, the cooperative has
supported a local newspaper, kindergarten and
the Acadian Festival, and created a woodwork-
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ing business for young people who otherwise
would have been forced to leave to find work.
"If it hadn't been for the co-op, the population
here would be much older;' says co-op general
manager, Donald LeBlanc.
And if it hadn't been for McKendrick's caisse
populaire, the co-op might not have prospered.
"No other financial institution would have
backed us up as well;' LeBlanc says. "I don't
think without the caisse populaire we could have
grown the way we did, because when you lack
money that's a big problem."
There is the flip side of the coin. Winnipeg's
Neechi Food Co-operative still struggles for
survival after almost 15 years in an area of
Winnipeg with a low-income First Nations
population. This is where prostitutes stroll 'The
Track; where rampant fires marked Winnipeg as
Canada's arson capital a few hot summers ago
and where gangs prowl the night streets.
The co-op, meanwhile, soldiers on selling
crafts and groceries, including bannock and wild
blueberries. Assiniboine Credit Union provided
Neechi's initial mortgage financing in 1991 and
has been its commercial lender ever since.
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ENTERPR I SE ·SEPT. 2004
The little food co-op has skirted perilously
close to insolvency on occasion. It employs
only a dozen people, including three unpaid
volunteers. Its building is in disrepair. "For
the first few years, it was doing well but the
social and economic climate deteriorated about
two years after Neechi came into being;' says
Russ Rothney, the volunteer treasurer and
Assiniboine credit union's community economic
development manager.
Neechi's fortunes plummeted until 2001,
when Assiniboine chose Neechi as one of five
small co-ops it enrolled in the credit union's
"co-op business pilot project" two-year mentoring program. "We worked with Neechi to help
identify gaps and plug them through training;•
says Rothney. Now the co-op is in a solid cash
position, although its dilapidated building still
needs to be dealt with.
"If you look at Neechi's balance sheet, you
might say that's not a successful co-op; it has
struggled and continues to struggle;· says Olivia
Enns, ccA's director of government relations
and policy. "But it has allowed people the pride
of having someplace to shop where it's culturally
sensitive. It's the pride of having Neechi Foods.
There are these other things you can't quantify
that are very important: the pride of a community, the skills that an individual will take away.
If you look at it in a holistic way, do they help
build social assets? Yes, they do:·
Heartwarming though it may be, anecdotal
evidence is almost all there is to support the
contention that co-ops spark what is called
"community-based poverty reduction:· There are
no statistics or research to support this thesis,
Evoy says. Perhaps, she says, the benefits are
not quantifiable. "A co-op is very much a selfhelp model, isn't it?" she argues. "People come
it frees up a little space where somebody can
think about what's next;• says Keeling.
But policy makers and people whose primary
business is processing financial transactions
need to objectively gauge results. Canada's largest credit union, Vancouver City Savings, which
owns Citizens Bank of Canada, is compiling
data to try to determine the effectiveness of
some of its socially motivated programs. Andrea
Harris, a Van City sustainability programs
manager, determines how effective a partnership
with a community group is at fulfilling VanCity's
social responsibility mandate. "A lot of it is anecdotal;' she admits, "because it's difficult to come
up with quantifiable figures verifying success:'
Joanne Woodward, VanCity's social audit
manager, says her department is facilitating the
development of key performance indicators by
inventing assessment tools. Woodward hopes
the new tools will enable data collection by 2006.
"It's a real gap right now. So it's really exciting to
be trying to develop those measures and be able
to report out on them:'
Meanwhile, a hard-nosed financial analyst
might conclude that Erin Collier's family
isn't much better off than when it lived in
low-income rental housing. They are, after all,
ensconced on one of Saskatoon's roughest streets
in the prostitute-infested area called 'The Stroll:
But the house has "given me the confidence
to become more involved in my community;'
says Collier. "That's one of Quint's mandates,
being in a housing co-op is to be involved in
your co-op:'
Collier is also more involved in the community in a broader sense. She has moved off of
social assistance and is now employed as a
social worker in Quint's community outreach
program. The move to their own home has made
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Anecdotal evidence is almost all there is to support
the contention that co-ops spar!< 'community-based
poverty reduction.'
together to do something for themselves, rather
than having it done to them or for them. So they
learn not only skills that can get them out of
poverty, but considerable self-confidence. They
can go out and get jobs because of that:'
The principle works, insists Mike Keeling,
one of Quint's housing coordinators. "Once
somebody's living situation is stabilized and
there are no surprises in terms of housing costs,
more than a hamster's-worth of difference to her
daughters' lives, she adds. "I can see, when they
tell people that we own a house, that they pick
up on the pride that I have. When they painted
their rooms, they were able to pick out their own
colours and help paint. They were never able to
do that before."
And how can anyone ever measure that
pride? !l
SEPT. 2004 • ENTERPRISE
37
OFF I C E AF F A I RS
Home Sweet Office
~
Telecommuting - turning the house into an ofnce is becoming part of the corporate culture. However, it
doesn't work for everyone all the time.
38
ENTERPRISE • SEPT. 2004
byLaureenGriffin
A MAG A z 1 NE advertisement shows a woman
sitting on a deck of the perfect beach house.
While she appears to be on holidays, the laptop
and cell phone indicates she's actually on the job.
Such are the pleasures of telecommuting working from the comfort of the beach, park
or home. Telecommuting, unfortunately, has
not made the world of work unrecognizable.
Company headquarters have not disappeared
and the gas fumes of commuter traffic jams
have not evaporated into clean air. However, it
has made work slightly less of a grind for many
people once a week or even once a month.
Executives always did this, but now people at the
lower end of the corporate ladder are doing it,
thanks to technology.
Fast-talking Laura Peacock rattles off the
benefits of telecommuting, "no commute, no
monkey suit and higher productivity." Three
years ago, Peacock, a senior business analyst with
Credit Union Central of British Columbia,
gave birth to her third child. The 55-lan com.mute to Central's offices from White Rock, BC,
seemed too onerous combined with herding
sleepy children and daycare drop-off. Peacock
tallied up the financial and emotional benefits
and resigned. Her boss countered, "let's find
a solution:'
Peacock was promptly rehired as a contract
worker. Technically, Peacock isn't part of
Canada's estimated 1.5 million telecommuters.
Instead, she is counted among about one million
self-employed, home-based business owners.
Canada lags behind the United States in telecommuting popularity, where the International
Telework Association & Council (!TAC) counts
23-4 million self-employed teleworkers and
23.5 million employed teleworkers.
Teleworking estimates are gathered through
consumer surveys. "It's the only way to do
it;' says Bob Fortier, president ofinno Visions
Canada in Nepean, Ont., a consulting company
that designs and evaluates telework programs.
"Many places don't have a formal teleworking
policy or program. Often the human resources
department is not even told when employees
telecommute, so a survey of companies yields
an under count:'
Casual arrangements are the norm at credit
unions, although many are considering drafting
formal policies. At Desjardins Group, a pilot
project involving 12 employees was run between
December 2003 and April 2004. "It has interesting potential;' says Desjardins spokesman Andre
Chapleau, who works from home occasionally.
In Peacock's department of eight at BC Central,
telecommuting is still informal; one other
colleague is a full-time telecommuter, another
part-time.
In those rare cases where a telework policy
has been formalized, few staff members take
advantage of it. Credit Union Central of Nova
Scotia has such a policy, but only a few individuals participate. Celero Solutions, the company
formed nearly two years ago by CUETS, Co-op
Trust and the IT departments of the Prairie
centrals, also has a formal policy, but again,
only a few telecommute regularly. Pat Gifford,
Celero's human resources manager, says a formal
policy sets parameters and goals and helps determine what the real benefits are to telecommuting.
Not all jobs are created for the privacy of the
home. People working in credit union branches
serve members; being on site is part of their
job. Many jobs require collaborative work with
people from various departments - not particularly conducive to working from home. But
project work is suitable for telecommuters; they
can gather information over the Internet and
the telephone and it is easy for the manager to
measure. Peacock works on a project-by-project
basis, if she completes the assignment on time
and to the client's satisfaction, she has met
her goal.
At both Celero and Nova Scotia Central,
telecommuting is initiated by the employee,
who must prove on an application form that
the employer will benefit. "We don't want to
compare the needs of a young mother with
another employee who has an ailing father
or longer commute;' says Gifford. "Rather, we
decide who can work from home based on
initiative, past performance, the demands of
the job and the requirements of the individual
department:'
Once permission is granted, the financial,
legal and administrative details need to be
spelled out. Who pays for the computer, printer
and monitor? How about office furniture and
LAURA PEACOCI< RATTLES OFF THE BENEF ITS OF
TELECOMMUTING , 'NO COMM UTE , NO MON l<EY
SUIT AND HIGHER PRODUCTIVITY.'
supplies? At Celero, the company provides
laptops, software and an additional phone line.
Employees can pick up supplies at the office but
must find their own desk, chair, filing cabinet
and lighting. Nova Scotia Central, on the other
hand, doesn't provide any equipment.
Salary and benefits also become negotiable.
Peacock relinquished her benefits for the freedom of unorthodox hours. "Generally, I work
the same hours as the credit unions, but ifI have
a doctor's appointment I just go without telling a soul;' she says. Peacock is married and so
WE DECIDE WHO CAN WORI< FROM HOME
BASED ON INITIATIVE, PAST PERFORMANCE , THE
DEMANDS OF THE JOB AND THE REQUIREMENTS
OF THE INDIVIDUAL DEPARTMENT.
• Pat Gifford,
human resources manager, Celero Solutions
receives benefits through her husband's job at .
the Business Council of British Columbia, but
not all teleworkers are that fortunate.
Tapping into the credit union's network can
present problems for many teleworkers. "It's
difficult to link to our server from home;' says
Anne Bedard, senior vice-president of human
resources at Nova Scotia Central. "It may be one
of the big reasons why the program isn't used
by a lot of people:' A cable connection is almost
always necessary, but some places complain that
downloading can still be time-consuming.
Telecommuters must also be responsible for
protecting passwords and securing their premises. "If a computer with sensitive information
is stolen without the proper precautions being
taken, both the employee and the employer
could be accused of negligence;' says Fortier.
"Theoretically;' adds Fortier, "managing a
teleworker should be no different than managing the person across the hall; in reality it is not
always the same." There is greater onus on the
manager to communicate with the employee,
because the employee is not necessarily catching
the information that floats through the office
elevator, at the water cooler and over lunch. The
cessation of chitchat may account for much of
the productivity gains reported by teleworkers
and their managers, but it can also leave the
employee spiralling in an unconnected loop.
Kim Andres, Peacock's boss and vicepresident of credit union development at BC
Central, makes extra effort to communicate.
"We exchange between 10 and 12 emails a day,
and chat on the phone at least three times a
week;' says Andres. Peacock is supposed to go
into the office for a day or two every six weeks.
"Sometimes, I go three times a week, other
times, I don't see the place for a whole month;'
says Peacock.
Andres says that she wouldn't allow just
anyone to telecommute. "I wanted to keep Laura
SEPT. 2004 • ENTERPRISE
39
- - - - - - - -- --
- - - - - - - - - - - - --
-
IT Girl
A new software program for credit unions, developed in
Newfoundland and Labrador, eases the job of monitoring
suspected money- laundering transactions. by Diane Luckow
There are almost 100 possible indicators for unusual banking
transactions that could be related to money laundering or
terrorist financing. That's a lot to remember as staff at Canadian
credit unions attempt to find, track, research and report
"suspicious transactions" to Ottawa's financial intelligence
agency, the Financial Transactions and Reports Analysis Centre
of Canada (FINTRAC).
For the past three years, the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act has obligated financial
institutions and financial service businesses to report suspicious
or large cash transactions greater than $10,000 to FINTRAC. (Due
to vaguely worded legislation, it's up to financial institutions to
decide what a "suspicious transaction" is.) Besides the Suspicious
Transaction and Large Cash Transaction reports, International
Large Electronic Funds Transfer and Terrorist Property reports
must also be filed.
The legislation was created to try to stem the $12 billion to
$18 billion worth of proceeds-of-crime money laundering FINTRAC
estimates occurs each year in Canada. In the fiscal year ending
March 2003, FINTRAC reported $460 million in suspicious transactions to the RCMP. Between April and November 2003 , FINTRAC
had identified $35 million worth of transactions possibly linked
to terrorist groups.
To make the burden of reporting easier on credit unions,
there's affordable new software on the horizon. Verafin, a university spin-off company from Memorial University in Newfoundland,
is piloting anti-money laundering software designed specifically
for credit unions. It detects, tracks and flags potential money
42
ENTERPRISE· SEPT. 2004
laundering and terrorist financial transactions. It also fills in the
FINTRAC forms and sends them electronically to Ottawa.
"Our software looks for patterns," explains Jamie l<ing,
Verafin's president and the brains behind the project. "People
know that if they come into the credit union with $10,000, it
will be reported . So they may come in three days in a row with
$g,ooo. It's hard to detect that but our software looks for certain
patterns such as deposits just under the threshold or a large number of cash deposits, followed by a large transfer." Money coming
through ATMs is also hard for people to track, but Verafin can
correlate information from these machines, too. "A side benefit
is the ability to detect fraud," says l<ing, who is pursuing sales
of the software to data service providers to allow credit unions
easy access to the technology. (He hasn't yet set a price for
the software .)
Elizabeth Duff, CFO at Newfoundland and Labrador Credit
Union (assets $139 million), estimates staff spends up to 20 hours
a week collecting data and researching suspect transactions before
filing to FINTRAC. "We saw the potential for greater efficiency
from the outset," says Duff. Using Verafin, staff now spends about
five hours a week on FINTRAc-related business . "It's a fantastic
piece of software that has a lot of possibilities," says Duff, adding
the system was easily incorporated into the credit union's existing
computer system. "We're hoping this software will allow us to
comply more easily with FINTRAC requirements ."
League Data in Atlantic Canada has plans to pilot the program
with other credit unions in the region, and Credit Union Central
of British Columbia is also set to test the product with two of its
member credit unions. 1l