DUBLIN, Ireland–One credit union here that was victimized by fraud is reporting it spent nearly five times the amount of the fraud itself on a follow-up investigation and compensation to victims.
The fraud involves what has emerged as a common issue at many credit unions, the annual prize draws, which are a tradition at Irish CUs.
Citybus Employees Credit Union, which had earlier reported fraud of €218,000, said the cost of investigating and compensating members was €1.2 million. The fraud itself took place in 2016.
“Members who attended a heated annual general meeting this week were left frustrated when credit union officials failed to provide them with the details of the financial irregularities,” the Independent reported.
According to the report, members were told CECU could not comment while the investigation is going on.
"There were ructions at the meeting. There were a lot of unanswered questions. Members are angry," one member who attended the AGM said, according to The Independent.
Half Went to Consultants
Citybus Employees Credit Union said that €600,000of the €1.2 million cost to clear up the fraud issue went to consultants Grant Thornton, which conducted the review once it was discovered money was missing, the Independent said. Another €300,000-plus was used to pay back every member who had entered the prize draw over the eight-year period.
“People got more than they had spent on tickets in a bid to compensate them,” the Independent reported. “There is no suggestion the draw was rigged, but instead money was being taken from the entry charges every month in incremental amounts. What the credit union described as ‘financial irregularities’ arose due to how it ran its member prize draw, which resulted in losses of €218,547 from the running of the competition.”
In most cases, the top prize in the draws was usually a car.
Citybus Employees said it has insurance to cover the costs related to the fraud and the investigation.