How did three monitoring bodies miss financial trouble at Rush CU?
Three different bodies with responsibilities for monitoring credit unions failed to pick up on the suspected fraud and financial mismanagement at bust Rush Credit Union.
It has emerged that one of the largest credit unions in the country is planning to set up in Rush and Lusk, the north County Dublin towns that had their local lender liquidated this week.
Progressive Credit Union is also aiming to buy the €10m loan book of scandal-hit Rush Credit Union.
It emerged that the financial irregularities at Rush were discovered by accountants working for Progressive in March.
But the financial shenanigans were missed by Central Bank regulators, Rush Credit Union's auditors, and the Irish League of Credit Union's monitoring operation.
Progressive had been checking out the financial fitness of Rush Credit Union as it had intended to take it over, but walked away from the deal when it discovered suspected fraud, and other financial shortcomings.
Gardaí were then called in, while forensic accountants from Grant Thornton were engaged by the Central Bank to find out what had happened.
It emerged that some €1.5m has gone missing, the credit union's safe was being used to hide money from the taxman, and what is believed to have been a rigged car draw was won by a senior credit union staff member.
Eight months later, the High Court has given permission for provisional liquidators Jim Luby and Tom Rogers to take control of it, on foot of a Central Bank application.
The High Court heard this week the credit union is in such a distressed state, the only option is to liquidate it.
Despite the urgings of the Central Bank, the lender was unable to put its house in order since the financial issues emerged in March.
Fine Gael TD Alan Farrell said the liquidation raised a number of questions.
Auditors for Rush Credit Union, Dublin-based FMB, did not reply to a series of questions put to it about its role in examining the credit union's accounts.
Managing partner Kevin Morris cited client confidentiality when asked if it had spotted the suspected fraudulent activity and other financial mismanagement, if it had signed off on the accounts, and if it had qualified the accounts.
The Central Bank said it had ongoing concerns about Rush Credit Union and had been monitoring it closely for a number of years, and had investigated a number of aspects of its operation.
Asked why its supervisors had not picked up on the financial mess, it said: "The Central Bank is of the view that there are a number of reasons for the failure of Rush Credit Union which have manifested over an extended period of time, including issues relating to governance, internal controls, lending practices and valuation of its premises."
The Irish League of Credit Unions has a monitoring function as part of its Savings Protection Scheme rescue fund. "The monitoring service provided by the league uses desk-based analysis, combined with periodic on-site visits. It supports, but does not replace, each credit union's own internal checks and controls, including the risk, compliance and auditing functions," a spokesman said.
Shocked locals were angry at the closure of the lender this week, with the doors locked in both offices, and ATMs shut down. Now residents of Rush and Lusk could be about to get credit union services back.
Neighbouring Progressive Credit Union is bidding to set up in the two towns.
Progressive is a Dublin-based super-credit union which has 45,000 members and €142m. It has just reported a surplus of €1.7m for this year, and total reserves at €19.6m - well in excess of the minimum regulatory requirement.
It was formed following the mergers of credit unions in Skerries, Balbriggan, Donabate, Howth, Ballymun, Rivervalley in Swords, and Baldoyle and Portmarnock.
Progressive members are to be asked at their AGM next week for permission to extend its area of operation into Rush and Lusk. It may end up using the Rush Credit Union offices. But the closure of their own credit union will still leave a bitter taste for its 11,000 members in Rush and Lusk.