Credit union faces court battle for €1.75m

By Catherine Shanahan

Thursday, December 03, 2009

ONE of the country’s largest credit unions faces a legal battle with its insurers to recoup more than€1.75 million spent on a combination of legal fees and settling cases taken by former disgruntled employees.

Nine of the cases, which date back almost 10 years, were taken by staff who alleged they were bullied and harassed while working at Gurranabraher Credit Union (GCU) on the northside of Cork city.

A separate personal injuries case, taken by a former manager and deputy manager of the credit union, resulted in payouts in 2003 of €150,000 and €100,000 respectively.

Last night outgoing chairman of the board of directors, Mick O’Connell, said he expected the case to be heard in the Commercial Court early in the new year.

The case is against insurers Cuna Mutual, who have left the jurisdiction, and Royal Sun Alliance (RSA).

It is understood some monies have been paid by the insurance companies towards the cost of settlements and legal fees but the "percentage of responsibility" is in dispute.

Mr O’Connell said a lot of difficulties had to be ironed out before getting to court. This included a three-year process to put in place the structures that would allow GCU to sue insurers from another jurisdiction and considerable legal argument with RSA as to the classification of the type of cover it was providing to GCU.

Mr O’Connell said the payouts GCU had financed in settlement of cases and the money it had paid inlegal fees "would have affected the dividend paid to members because it would have resulted in a reduced surplus".

Speaking at the GCU AGM on Monday night, Mr O’Connell said the credit union’s legal advice was that it had paid its insurance premiums and was fully covered. "We would be confident we will be reimbursed," he said.

The final two cases taken against GCU were settled during 2009 on foot of which two former staff received redundancy payments totalling €118,000. Legal fees in relation to these two cases totalled €114,657. There are no further cases pending against GCU.

Members were told on Monday night that a 1.5% dividend would be paid on shares, down from 2.5% in 2008. Members were also awarded a 10% rebate on loan interest paid during the financial year ended September 30, 2009, down from 15% last year.

Mr O’Connell said the credit union "was not immune" to the changes in the economic environment, but despite this, they had turned in a "strong and steady financial performance" in 2009.

GCU has almost 15,000 members and is fully compliant with the new Regulatory Reserve Ratio, which requires a credit union to hold 10% of its total assets in reserve.

This story appeared in the printed version of the Irish Examiner Thursday, December 03, 2009