Gardaí investigate wound-up credit union

A Garda investigation is ongoing into the running of the Berehaven Credit Union, which was wound up by the High Court this week.

On Wednesday, the Central Bank was given permission to appoint a liquidator to the credit union in Castletownbere, Co Cork, on the grounds that there was a serious risk of corporate failure.

The court was informed that BCU’s problems were so great that it would be too expensive and unfair to burden a healthy credit union with its loan book.

A resolution report prepared for the court said that two separate consultants’ reports, in 2010 and 2014, had shown up irregular practices concerning loans to officers of BCU.

There was also a failure to report loans to connected parties, including those given to officers of BCU.

And there were a large number of other governance issues.

“Independent, third-party reviews identified significant and pervasive weaknesses in the areas of lending practices, credit control, internal control environment (including in the financial reporting and control area), and loan provisioning practices,” the resolution report said.

Last year, the Irish League of Credit Unions (ILCU) confirmed it had referred the BCU to the gardaí under Section 19 of the Criminal Justice Act 2011.

This followed issues raised in a wider report by KPMG for the ILCU, which identified irregularities in the disclosure of loans to connected parties at BCU.

Former ILCU director Matt Heffernan and BCU treasurer Tina O’Sullivan had loans from the credit union and had investments abroad with its manager, Yvonne Power.

Mr Heffernan was the ILCU’s field officer with oversight responsibility for BCU since 1987.

Mr Heffernan and Ms O’Sullivan consented to High Court judgments on behalf of BCU earlier this year.

The initial referral by the ILCU to gardaí related to the KPMG report.

However, it is not known if the Garda investigation has been broadened or if there have been additional complaints from other sources.

The investigation is being conducted by gardaí in the West Cork division, and when, it is concluded, a file will be prepared for the DPP.

According to the resolution report prepared for the court, an assessment by MKO consultants was carried out this year and finalised on July 1. It said it appeared all of the deposits in BCU were under the threshold for the State’s €100,000 deposit guarantee scheme and so savers would not lose money.

However, any dividends that were due will not be paid.

Borrowers will have to repay their loans as normal and they will not be required to speed up their schedules.

Siptu has sought a meeting with the liquidators at BDO to discuss the implications for staff who will lose their jobs and ensure commitments are honoured.

“Staff were advised following a meeting with BDO that salaries, holiday pay, and other outstanding entitlements as well as statutory redundancy will be paid,” Siptu organiser Paula O’Loughlin said.