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Wednesday 7 December 2016

Toxic loans tarnish the garda credit union books

Experienced officers 'worried' over colleagues' boom-time borrowing

Published 10/01/2010 | 05:00

The garda credit union, St Raphael's in Dublin, has been hit by a double whammy since the holiday period, with the near collapse of its new headquarters in the west of the city and a storm over toxic loans.

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Members attending credit union's annual general meeting last Tuesday night heard about toxic bridging loans on the union's books, including one of €850,000, another of €780,000, and two of €500,000. More than 700 members attended the five-hour AGM at the RDS.

The Sunday Independent was criticised from the stage for reporting last November that the credit union -- which is the biggest in the country -- had a series of other toxic loans and judgements in the High Court against 20 other defaulters for a total sum close to €1m.

It is understood that St Raphael's, which began offering bridging finance on mortgages five years ago, lent around €43m in short-term loans and that €36m has been repaid.

This is on top of High Court judgements against 20 other members, totalling €1m, which were published last year in the debt agency site, Businesspro. Last year Businesspro recorded the highest growth rate of bad debt judgements arising from credit union loans across the country.

St Raphael's, with assets of over €300m and 28,000 members, is not in danger, but had to reduce its dividend to members from a proposed 1.75 per cent to 1 per cent. The Financial Regulator has been in talks with the management.

It has also emerged that St Raphael's staff had a real-life scare on New Year's Eve when a mass concrete retaining wall in its basement car park collapsed. The huge slab of concrete fell into the underground car park and on to a space from which a member of staff had driven her car just a few minutes earlier.

It also damaged supporting pillars of the main building, which was evacuated. After an inspection by engineers the building was sealed off and cannot be entered. Staff were temporarily accommodated in a Portacabin. The modern building, which may be condemned, was completed only in 2005 when it was opened by then Taoiseach Bertie Ahern.

As well as being one of the biggest credit unions in the country, St Raphael's seems to have had some of the biggest individual credit union debt defaults in 2008. The largest single judgement was for €187,716 registered on March 10 last year against a member from Leixlip, Co Kildare. Another judgement, registered in August 2007, was for €158,274 from a member with an address in Roscommon. Two unpaid loans are registered to two people with the same family name and the same address in south Dublin totalling €143,096. There was another for €87,953 in Bray, Co Wicklow, one for €52,010 on a woman in Co Meath, and several others for sums higher than €30,000 and €20,000.

According to members, the credit union has been giving substantial loans in recent years, including some for the purchase of apartments, second homes and cars. The outstanding €780,000 loan is understood to have been paid out to buy a pub.

St Paul's, the other garda credit union, in Cork, has been more reserved in its lending and it has 11 judgements against debtors totalling only €170,000, which is on a par with other major credit unions across the country. St Paul's has also paid its members a dividend of 2.35 per cent for last year.

Experienced gardai are expressing concern about the level of indebtedness of many young gardai who took out mortgages, based on multiples of their salary and allowances at the height of the boom. All of these borrowed in the expectation that their salaries would increase, but many have been badly hit by cuts in public sector pay.

Sunday Independent

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