Credit Union denies regulator is checking its loan book

By TONY GALVIN FORMER chairman of St Jarlath's Credit Union, Tuam, Cllr Tom McHugh, has moved to counter rumours and media reports suggesting that the Credit Union has written off very substantial loans of his. In a statement to the Tuam Herald Cllr McHugh, who just this week has been officially added to the Fine Gael ticket to contest the general election in the Galway East constituency, said emphatically that he has not had any loans written off by the management of St Jarlath's and that he at all times adhered to the rules governing loans while associated with the credit union. St Jarlath's Credit Union Manager Mick Culkeen in an interview with the Tuam Herald stated that reports in the national media that the Financial Regulator is investigating St Jarlath's over large commercial loans given to businesses, including loans to its former chairman, Tom McHugh , were 'absolutely untrue'. He added that the Regulator was entitled to arrive at any institution at any time and he would welcome a visit as it would serve to clear the air of innuendo, rumour and unfounded gossip. The manager confirmed that the majority of problem loans at St Jarlath's were of a commercial nature, but he emphasised that they did not simply write off loans, they took them off the current balance sheet. However, these loans were followed up rigorously and they had no policy of debt forgiveness. In 2010 approximately €1 million was recovered in this manner. In his statement Tom McHugh points out that he has been a member of St Jarlath's Credit Union for 30 years and he has a long history of transactions with the institution. He acknowledges that he has loans but emphasised that any loans he has are being serviced. 'Since the beginning of 2002 to the end of 2010, we have paid a very large sum of money to St Jarlath's Credit Union both in interest paid and capital repaid. We do not have any loan or loans with St Jarlath's Credit Union that have been written off,' he said in his statement. Cllr McHugh also stated that he believes the controversy is being stirred up to damage him politically and regrets that an institution that has served the public so well over many years is being dragged into the political arena in this manner. St Jarlath's manager, Mick Culkeen, emphasised that St Jarlath's were no longer involved with commercial loans and there were new caps in place to prevent very large individual loans being issued. He said the stories being circulated in relation to Tom McHugh were causing some concern to a few members and acknowledged that they could hurt the image of the institution, but he insisted that all the rules and regulations in relation to the granting of loans had been adhered to, including in the case of Tom McHugh. 'We have no control over what is written in the national media but readily acknowledge we are answerable to our members and the community we serve. What is happening in this case is historical facts are being jumbled together for the sake of a story,' he said. He insisted that borrowers in difficulties with repaying loans, especially commercial loans, posed no threat to the viability of St Jarlath's. He refused to comment on suggestions that Tom McHugh or companies he controlled owed up to €1.4 million to St Jarlath's on the grounds of confidentiality. An industry source who preferred not to be identified explained to The Herald that at the time when commercial loans were being issued to Tom McHugh and other businesses, all financial institutions were 'awash with cheap money' and it was a matter of finding a home for it.  St Jarlath's had  €100 million or more saved in other institutions and at the time was happy to find takers for commercial loans. 'This was the financial industry at the time. No one thought anything of it. The banks were flooding the market with cash, the bigger the loan the better. With hindsight we see where this led but there was no question of the credit union being known as a place to get easy loans,' she said. The controversy is likely to continue for some time. Tom McHugh's political rivals are expected to continue  prompting media speculation while members of the 27,000 strong credit union are likely to seek more clarification on the matter. This is not the first time St Jarlath's Credit Union has been sucked into politically-associated controversy. A number of years ago accusations of political influence being used to obtain preferential treatment for some loan applicants resulted in a High Court case being taken. There is speculation that rumours regarding Tom McHugh's situation could be prompted by a revenge motive arising from this period which proved very divisive and controversial for St Jarlath's. â€Â¢ Statements from Credit Union and Tom McHugh on page 2