resignation of its auditor -- were stamped on yesterday.

Manager Mr. Calvin Smith said the Credit Union was financially robust, and coping well with the recession.

The auditor's resignation was unconnected with any alleged cash problems, he claimed.

And Mr. Smith denounced as "mischievous'' some of the allegations by Independent MP Harry Viera. He said such claims were damaging to any financial institution.

Mr. Viera told the House of Assembly last week the union was in serious difficulties. He claimed the auditor, Scott Hunter & Co., had quit in frustration over the union's finances, mismanagement and Government's soft-pedalling on the issue.

Mr. Viera warned a collapse could hit many small investors. And he urged Finance Minister the Hon. David Saul to step in and sort "this dog's breakfast out.'' Outside the House of Assembly Mr. Viera said: "The Credit Union is a public deposit making company.

"There are some detonated bombshells there and I do not want to see any poor little depositors hurt.'' But yesterday Mr. Smith said Mr. Viera's comments about the union's liquidity position were "at best mischievous.'' "We wish to assure our members the union's liquidity position has never been better''.

Mr. Smith said as of October 31 this year the union's reserves -- as reflected by cash and short-term deposits -- stood at $934,000 or 26 percent of total assets of $3,624,000.

The legal requirement was 20 percent of total assets, explained Mr. Smith.

He added: "Not only is the Credit Union's cash position strong but it has been steadily improving throughout a period when Bermuda's real consumer expenditure has declined from $426.8 million to $388.5 million.

"This is certainly a strong statement that the Credit Union has been managing well in a period of great economic uncertainty and therefore deserves the continued support of the BIU membership.'' Mr. Smith also said Mr. Viera was wrong to describe the Credit Union as a public company.

"We are not. Only members can enjoy the benefits of the union and the bond is the membership of the BIU.'' Mr. Smith said the resignation of the auditor had nothing to do with any worsening of the union's finances or "any skullduggery.'' "If he sees fit to tell you why he left, that's up to him.'' Mr. Smith said the resignation letter was short, and spoke of the "pleasant relationship'' that had existed with the union.

He admitted the union had experienced some administrative problems switching to new technology. "We have been in the process of moving from a manual to automated system.'' Mr. Smith said Scott Hunter & Co. had resigned six weeks ago after nine years auditing the union's accounts. "We are in the process of appointing a new auditor,'' he added.

Accountant Mr. Scott Hunter declined to comment when contacted by The Royal Gazette .