€1.5m bill for credit union

One of the Republic's largest credit unions has been forced to cancel its loan interest rebate for members for 2003 after it was hit with a €1.5 million bill following a High Court action.

Gurranabraher Credit Union in Cork will tell its 15,000 members at its annual general meeting on Monday that they will have to pay €707,229 in legal fees, €614,456 for consultancy fees and €250,000 in termination payments following a wrongful dismissal action taken by former employees in the High Court.

The bills are linked to an investigation into allegations made against former senior staff who were sacked from their posts. It also involves a legal challenge by former manager of the credit union Mr Alec Good and deputy manager Ms Patricia O'Neill surrounding their removal from their positions.

The €707,229 legal bill relates to costs associated with the wrongful dismissal case taken last year by Mr Good and Ms O'Neill.

The €250,000 is the termination payment made by Gurranabraher Credit Union to the former staff in recognition of services to the branch.

The €614,456 in consultancy fees during 2003 were incurred when the board of management employed consultants to operate the branch while the investigation was ongoing.

The board proposes that this figure should also be taken out of the 2003 budget.

As a result, the dividend for 2003 will be down by almost €600,000 on 2002. Gurranabraher will also not be in a position to offer members a loan interest rebate for 2003. Members would have received a €400,000 rebate for 2002.

On Monday night, the board will ask members to support their call for this bill to be paid out of the 2003 budget as opposed to spreading the costs over a period of years.

The total dividend proposed is €910,000 compared with €1,504,428 that members received in 2002.

Gurranabraher Credit Union chairman Mr Michael O'Connell said it was important to inform members of the financial position. "At the a.g.m. we will deal with the usual elements but people will probably home in on the difficulties surrounding the court case. It was an 18-month process but we have reached closure on that now."