Sunday 19 November 2017

Nobody comes away clean from rotten mess

Accountants are trying to piece together the financial records of the controversial credit union after a string of revelations about blank cheques, prize draws and poor record-keeping. Photo: Gerry Mooney
Accountants are trying to piece together the financial records of the controversial credit union after a string of revelations about blank cheques, prize draws and poor record-keeping. Photo: Gerry Mooney
Charlie Weston

Charlie Weston

It is hard to imagine a worse financial and governance mess than Rush Credit Union. The chaotic way it was run even extended to something as innocent as the car draw.

A draw among members for a car is a staple in credit unions. There is usually an entry cost of €100, and the winner from among the members who enter it gets to drive away in a brand new set of wheels.

Except in the case of the north County Dublin lender, which has now been shut down by the High Court, as we don't know who won.

Fifteen cars were bought from a car dealer between 2010 and 2014, but try as they might, forensic accountants could not work out who won them. What was also hard to find out was whether people agreed to enter the draw or had money taken from their accounts to enter it without being told.

The suspect draws are a useful metaphor for a credit union that was out of control, if the documents presented to the High Court by the Central Bank are anything to go by.

It is not as if the problems sprung up just recently.

A sworn affidavit from Central Bank official Patrick Casey makes clear that the registrar of credit unions, which is part of the Central Bank, has been heavily engaged with the errant credit union for the last six years.

The lender, which serves the horticulturally-rich Rush and Lusk areas, was continuously playing fast and loose with regulatory rules. It was under-reserved, at one stage was seeking to allow itself be taken over by a larger credit union, and had poor governance for a number years.

No one comes out of this debacle well.

The Central Bank seems to have been too indulgent of rule-breaking Rush Credit Union for too long. When news of the mess broke in the Irish Independent, it then feared a disorderly collapse.

The board and senior staff of Rush Credit Union come in for strong criticism from Mr Casey in his affidavit and his financial resolution report.

Even though the reports are heavily redacted, they make clear that blank cheques were much in use, there were questionable expenses, there was personal use of credit union credit cards, and money laundering and tax evasion are also suspected.

Oh, and around €2m has gone missing.

The High Court, on an application from the Central Bank, has ordered the wind-up of the credit union.

Arrests and charges are likely to follow. That is why the documents presented to the court have been redacted.

All in all, it seems that Rush Credit Union was a rotten, stinking mess that deserved its fate.

Irish Independent

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