The Registrar of Friendly Societies has said civil and criminal proceedings were not ruled out by his office as the inspection continues into the Gurranabraher Credit Union in Cork, from which seven officers have resigned.
Speaking to The Irish Times at the weekend, Mr Noel Martin Sisk revealed that he attended the annual meeting of the credit union in January 2000 because he was "concerned about events there" after receiving information from unnamed sources. In March of last year he was approached by members of the supervisory committee and not, as has been suggested, the chairman of the credit union, Mr Con O'Leary. "Even though, ultimately, I was forced reluctantly to ask the supervisory committee to resign, as I felt aspects of their work were not conducted in a reasonable manner, they deserve credit for making contact with my office. They raised certain concerns with me," Mr Sisk said.
Newspaper reports indicated the law had not been broken at the credit union, but this was incorrect because "clearly the law has been broken", Mr Sisk added. "The Credit Union Act 1997 governs the regulation of credit unions. The Act was breached, so the law was broken. Some of the breaches could be a civil matter, either for the credit union itself or for me as registrar. "There could also be grounds for criminal proceedings which would depend on the seriousness of the breaches. In that event, it would be open to the Registrar's Office to refer the matter to the Director of Public Prosecutions. "As of now, it is too early to say. Matters are still under scrutiny and the investigation is by no means over. Proceedings of a civil nature could involve the credit union or my office seeking to recover monies believed to be due to the credit union; and where breaches of the Act were deemed to be so blatant that criminal proceedings might have to be considered, then that course would be followed. There may be criminal or civil proceedings or both. No decision has been made as of yet."
Mr Sisk said he wished to clarify what he meant by the term "excessive" when he referred to the fact that a financial consultant appointed by the credit union to invest £3 million on its behalf had earned £95,000 by way of commission. The consultant was Mr Damian Wallace, a former lord mayor of Cork and son of the Minister of State at the Department of the Environment, Mr Dan Wallace. "I used the term excessive in relation to the amount of work carried out by the financial consultant. My view was that when such a large sum of money was being invested, the Liquid Assets Committee should have shopped around and that, while brokers are entitled to be paid the industry norm in commission, a deal more favourable to the credit union could have been negotiated," Mr Sisk added.
Mr Wallace has declined to comment.
At the annual meeting, Mr Sisk announced the resignation of six board members of the credit union and said he had used his powers to remove a seventh member, Mr Daniel Collins, when he refused to resign voluntarily. The meeting was told that members' funds were intact and under no threat. Following the meeting, the way was clear for a 4 per cent dividend to be paid to the 15,000 members of the credit union, one of the largest in the State.