Tuesday 28 March 2017

Credit union's fake loans and two sets of books probed

Central Bank in renewed push for branch mergers to create 'super' credit unions

(Stock Picture)
(Stock Picture)
Charlie Weston

Charlie Weston

The credit union at the centre of a fraud allegation had fake loans and two sets of deposit books.

Rush Credit Union is now under investigation by the gardaí and forensic accountants appointed by the board of Rush Credit Union, on the advice of the Central Bank.

The revelations come as pressure from the Central Bank mounts on smaller credit unions to merge with bigger ones.

Up to 40 credit unions across the country are resisting attempts to make them join forces with others to create greater scale in the movement.

The official policy is for voluntary mergers, reflecting the more complicated financial world we live in since banks crashed the economy back in 2008. It is believed that size, professional management and strong governance are needed for a credit union to thrive.

From around 383 credit unions last year, there is expected to be 280 by the end of this year.

Rush Credit Union is understood to have resisted attempts to encourage it to merge with larger neighbour Progressive.

The renewed focus on mergers came as it emerged that the credit union is being probed over false loans and the disappearance of members' deposits.

It is understood that forensic accountants from Grant Thornton, appointed by the board of Rush Credit Union, have uncovered evidence that fake loans were created on the accounts of members.

And it is understood there are no records of some deposits taken from members.

The disappearance of the deposit money - and the existence of irregular loans - has now prompted Rush Credit Union to write to its 10,000 members asking them to confirm their loan and savings balances.

A figure of €700,000 is unaccounted for at the credit union, which also covers the town of Lusk. The suspected fraud has been reported to gardaí.

Credit union members in Rush and Lusk said they were shocked to hear the fraud allegations, with one saying: "€700,000 is an awful lot of money to mislay."

Irish Independent

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