THE Financial Regulator is investigating a credit union that gave out millions in commercial and property development loans -- including to its former chairman, the Irish Independent has learned.
Matthew Elderfield is concerned about loans given by St Jarlath's Credit Union in Tuam, Co Galway, since 2007. Many of these were approved while Fine Gael councillor Tom McHugh was its chairman.
Mr McHugh, a councillor in Tuam, failed to get elected to the Dail at the last general election.
The inquiry is focused on whether the credit union lent more money than regulations allowed and whether proper procedures were followed when loans were issued to directors.
St Jarlath's increased its lending to directors from €595,330 in 2007 to more than €1.8m in 2008, after Mr McHugh had been appointed to the board. It has been forced to set aside €1.38m to provide for defaults on loans to its own members.
The latest annual accounts for the union show that its profit has fallen dramatically, from €5,274,195 in September 2008 to just €1.3m in 2009.
Mr McHugh has already admitted that he received a "substantial amount" from the union while its chairman. It is believed he received upwards of €1.4m, while a development company owned by him also owes money to St Jarlath's.
Company records show that St Jarlath's also has at least two mortgages with Thomas McHugh (Kilcloghans) Ltd, the construction company run by Mr McHugh. The heavily indebted company is responsible for the half-finished Clorghran development in Kilcloghans, Tuam, and owes €300,000 in development loans to Galway Council.
Its accounts also show that loans by the directors to the company jumped by over €1m in 2008. Mr McHugh and his wife Sally are the sole directors.
Last night, Mr McHugh said: "There aren't any issues with St Jarlath's Credit Union that wouldn't be in keeping with problems that other credit unions would have. Nothing happened during my term on the board that was in any way out of kilter with the rules of the credit union."
Meanwhile, the current St Jarlath's chairman Mick Culkeen said: "We are satisfied that at all times we acted correctly and appropriately in the best interests of the members and the credit union."