Firhouse Credit Union has told its members that it has an unexplained cash shortage of €678,096 and bad debts totalling €3.6 million. In its annual report, the credit union said the cash shortage was a result of a breakdown in "internal control systems".
The west Dublin credit union is being investigated by the Garda and the Revenue Commissioners about possible money laundering and fraud. A spokesman for the Irish Financial Services Regulatory Authority stressed that there was no risk to members' funds as a result of these issues.
The Irish League of Credit Unions (ILCU) has a savings protection scheme to safeguard its members' money. It has stepped in to guarantee €3.2 million of those debts to allow the credit union to continue to operate as normal. ILCU head of monitoring Mr Pat Fay said these monies will be pursued through whatever means are necessary.
A new acting manager and an acting treasurer are now working at Firhouse Credit Union. The former manager has left the organisation.
The €678,096 in members' lodgements was accounted for, but when this was reconciled with bank records, the amount lodged fell short of that figure. "The cash shortage is still unexplained and it is in the control of the gardaí to explain," Mr Fay said.
The annual report also told its 15,000 members that it had accumulated bad and doubtful debts totalling more than €3.6 million. Many of these debts have been on its books for more than a year.
The report also stated that a professional debt-collection agent and two credit controllers have been appointed to pursue debts.
Mr Fay said that the credit union members' accounts had all been properly credited and that it was functioning as normal.
Firhouse Credit Union spent €120,000 in accountancy and professional fees in examining its finances and this exercise established the amount of money that was in question.
In the annual report, the credit union's auditor, Mr Shane Browne, said it had failed to maintain proper books of account for the year to the end of September 2003. Firhouse Credit Union will hold its annual general meeting on June 29th. Mr Fay said the credit union is solvent and is trading profitably. "The value of the assets exceed the credit union's liability," he said.
