The sixth-largest credit union in Manitoba has suspended a senior manager and launched a special audit after discovering irregularities in possibly millions of dollars of commercial loans made in the past two years.
The client accounts involved in the irregularities at Astra Credit Union belong to Maple Leaf Distillers Inc. and at least two related companies, Salisbury House Restaurants Canada and Protos International Inc. All three companies are located in Winnipeg.
Astra’s board of directors became aware of the situation on Oct. 28, 2005, and called an emergency board meeting for the next day, says CEO Ian Dark. The board discovered that it had been provided with “incorrect” reports on transactions involving several commercial banking accounts.
“We’ve had unauthorized overdrafts and inaccurate reporting to the board,” Dark says.
He did not confirm the amounts of the irregularities involved. But Astra remains on strong financial footings, he says, and will probably post a net profit at yearend.
“No member of any credit union in Manitoba has ever lost a penny. We’re quite confident, from our members’ perspective, that business will be exactly the same the day after we publicly announced what has happened,” he says. “In 45 years, we’ve never had a significant commercial loss.”
The three companies are related primarily through David Wolinsky, chairman of Maple Leaf Distillers and Protos International, and Costas Ataliotis, president of those two companies.
In addition to being officers and shareholders in Maple Leaf Distillers through Protos International, their holding company, Wolinsky and Ataliotis are officers of and have an interest in Salisbury House Restaurants. Ataliotis and Wolinsky declined to answer questions about the audit.
Originally a Winnipeg-based military institution, Astra now operates under an open bond. It has six branches in Winnipeg, $398 million in assets and more than 20,000 members.
Extended audit
Dark says once Astra’s board concluded it had not been given correct information by the manager now under suspension, it directed its audit committee to investigate. The committee has retained PricewaterhouseCoopers LLP to assist with the extended audit. A report is expected to be complete before the end of January, at which time Astra will act on its recommendations.
Dark has confirmed an Astra employee was put on indefinite leave after the board meeting, pending the report.
Craig Lee, president of Astra’s board, says the credit union is committed to taking all appropriate action based on the results of the extended audit. He says the board was surprised when it found out the extent of the unauthorized loans because that differed significantly from what had been reported by a senior manager.
Maple Leaf Distillers was founded in 1999; in its first years of operation, it was considered one of Manitoba’s fastest-growing companies. The distillery had blended and bottled a line of spirits and crème-style liqueurs sold mostly in liquor commissions throughout Canada.
Salisbury House operates a chain of more than 20 family diners in and around Winnipeg. It has a long list of minority shareholders, including long-time Winnipegger and Guess Who lead singer Burton Cummings. Winnipeg mayor Sam Katz is a former shareholder, having sold his interest prior to assuming his mayoralty post in June 2004.
Angostura Ltd., an 180-year-old rum and bitters company from Trinidad, agreed in late December 2005 to buy most of Maple Leaf Distillers’ assets, including bottling equipment, real estate, warehousing space and trademarks to some Maple Leaf brands.
It is unknown how much Maple Leaf Distillers will receive from the sale. IE