Credit union ‘loaned €2m in breach of policy’

ONE of the country’s biggest credit unions granted almost €2 million in loans in breach of its internal lending policy, according to evidence produced before the High Court yesterday.

The former manager of Gurranabraher Credit Union, Alec Good, yesterday denied he had approved 639 loans totalling €1,187,684 for which there were no authorised signatures on the loan applications.

In addition to this money, a report exhibited in court as part of the affidavit of the credit union’s honorary secretary, Teresa O’Sullivan, showed further transactions totalling €777,493. They included:

17 loans, amounting to €109,329, which were not properly authorised by the Credit Committee;

Eight loans, totalling €349,807, paid to accounts or sub accounts where there were no savings, or where the savings were lodged after the payment of the loan;

35 loans, amounting to €165,962, recorded as being authorised by staff members who had no authority to do so;

One loan of €25,395 which did not have the required number of signatures;

One loan worth €127,000 granted to a member with €127 in savings and no savings history.

The Ernst & Young report said it was not satisfied that the €127,000 loan was made with the approval of the credit union’s board of directors, as required in its lending policy.

However, Dr John O’Mahony SC, for Mr Good, said his client stated in an affidavit that after a Garda Fraud Squad investigation into the loan, it had been concluded that it was approved by the Board of Directors, chaired by the second named defendant Mr Con O’Leary.

Dr O’Mahony also produced a letter from the Garda Fraud Squad stating that Detective Sergeant Edmond Fogarty was of the view the granting of the loan was correct and did not amount to a serious breach of the union’s rules and regulations.

Yesterday was the third day of the hearing in which Mr Good of Donnybrook, Douglas, Cork, and his former deputy Patricia O’Neill, Presentation Road, Cork, are seeking an injunction to stop the credit union filling their posts, following their dismissal in December amid allegations of misconduct.

In Mr Good’s affidavit he states there were no loans which he, and only he, could approve, because his jurisdiction to grant loans was no more and no less than that of any senior credit officer.

He said the average value of the loans in question was €2,360.01, which was within the jurisdiction of a credit officer. On the issue of 17 loans not being properly authorised, he said he had no input into the Credit Committee’s decisions.

He said his manager’s salary was €68,500 and that he had not been paid since he was dismissed.

Mr Mark Connaughton SC, for Ms O’Neill, said his client had been summarily dismissed without notice after 30 years’ service and had not been paid since. He asked Mr Justice Smyth for an order that she now be remunerated.