Under-fire credit union 'had fake loans and two sets of deposit books'
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 mounts on smaller credit unions from the Central Bank to merge with stronger ones.
Up to 40 credit unions across the country are resisting attempts to join forces with others to create greater scale in the movement.
The renewed focus on mergers came as it emerged that the north County Dublin credit union at the centre of a fraud allegation 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.
It is also believed there are no records of some deposits taken from members.
The disappearance of the deposit money, and the existence of irregular loans, have prompted the credit union to write to its 10,000 members asking them to confirm their loan and savings balances.
This is because the credit union is unsure of the exact value of deposits held by a number of members, and how much members owe.
Some €700,000 is unaccounted for at the credit union, which also covers the town of Lusk. The suspected fraud has been reported to the gardaí.
One source familiar with the situation said: "There seems to have been two books recording the deposits, one official, and one under the counter. The level of deposits are not reconciled.
"Deposit money has disappeared, and that is what is concerning the Central Bank."
A large number of false loans in member names, unknown to the members, are understood to have been created.
The controversy at the credit union prompted the Central Bank to insist that members' money is safe.
Deposits are insured by the State deposit scheme, which covers up to €100,000 per person.
But the problems at Rush Credit Union have focused renewed attention on the Central Bank's attempts to encourage smaller credit unions to merge with larger ones.
- Read more: Credit unions should evolve to secure future
- Read more: Gardaí are called in over €700k missing from credit union
Central Bank-based regulator for the sector Anne Marie McKiernan told credit unions recently that mergers were needed to deal with legacy problems of the movement.
"Greater financial and operational strength of merged entities is needed to deal with legacy financial burdens, grow lending and take on business model development in a proportionate way."
She said the sector was suffering from having few younger members, falling loan books, governance issues and what she called "operational weakness".
A string of tie-ups among credit unions has resulted in their number falling from 383 last year to 335 at present. The number is set to fall to 280 by the end of this year. But up to 40 smaller credit unions are seeking to remain independent.
Rush Credit Union is understood to have resisted attempts to encourage it to merge with larger neighbour Progressive.
Credit union members in Rush and Lusk said they were shocked to hear the fraud allegations.
"I am very concerned about this. If it was €700, you would imagine that it was some sort of accounting mistake and they would get to the bottom of it, but €700,000 is an awful lot of money to mislay," said Marian Nugent in Rush.
"I've been a member 40 years and it seems to be business as usual today, but it would have been nice to have been told about it by them," she added.