Prosecutions may follow Rush investigations
Criminal prosecutions may be brought arising out of investigations into a north Dublin credit union which the High Court has appointed provisional liquidators to, a judge was told.
Investigations into Rush Credit Union (RCU) had also revealed significant misappropriation of funds and gardai have been notified of suspected money laundering, High Court president Mr Justice Peter Kelly was told.
Appointing Jim Luby and Tom Rogers as provisional liquidators of RCU, Mr Justice Kelly said their appointment as officers of the court was necessary in order to address concerns of worried depositors given its unhappy financial position.
Among their powers will be to repay deposits within 21 days which are guaranteed under the State's Deposit Guarantee Scheme which guarantees savings of up to €100,000.
The court heard RCU is in a distressed state with net liabilities over assets of some €2m and has minus 8.7 per cent reserves which will require to be funded to the tune of €4.73m.
Credit unions are required to have at least ten per cent reserves of total assets.
RCU was established in 1972 and has about 11,457 members with savings worth €24m.
The winding up application was made by Paul Gallagher SC, for the Central Bank, who asked that certain material in the petition and affidavits before the court should not be publicised.
Mr Gallagher said this was because there may be criminal prosecutions arising and the Bank was anxious that it would not do anything to prejudice those.
The judge granted the order on this basis and also because there was commercially sensitive information which it would not be in the interest of the credit union to be revealed should it required to be disposed of.
Mr Gallagher said despite significant engagement and assistance from a number of bodies since 2010 to assist RCU with its difficulties, there had continued to be significant issues including in relation to internal governance, lending practices and there had also been a significant level of misappropriation of funds.
Mr Gallagher also referred to an affidavit from Patrick Casey, the Central Bank's head of resolution for credit institutions, which outlined a number of engagements by the Registrar of Credit Unions, reviews by accountants Grant Thornton and by the Central Bank itself.
Mr Casey said serious deficiencies were found in relation to a number of matters including control of bank and cash, lending practices, and day to day running of the credit union.
The Registrar issued a number of directions in relation to its business activities, Mr Casey said.
Issues arose in relation to a number of matters, including in relation to how a car draw was conducted and over certain payments to Revenue.
The credit union notified Revenue and also the gardai under money laundering legislation because of suspected money laundering activities, Mr Casey said.
The court heard there had been no annual meeting called by RCU since 2013, and no dividend paid to members since 2008.
If a meeting was called it would mean members would have to be informed of its financial position which could have led to a run on deposits.
Mr Justice Kelly was satisfied a prima facie case had been made out for the appointment of provisional liquidators to take over the running of RCU.
Under the order, the powers of the current board are suspended and the liquidators have powers including to make payouts under the Deposit Guarantee Scheme.
The court heard the liquidators hope to pay out earlier than the 21 days required under the scheme.
The case comes back before the court on November 21.