The Serious Fraud Office said yesterday it was working with Wellington police to investigate allegations of employee fraud at Hibernian Catholic Benefit Society, whose headquarters are in Dixon St, Wellington.
SFO chief executive Adam Feeley said that, after initial investigations, it appeared a single staff member had been committing fraud over an extended period.
"It's not a case of someone writing a single big cheque and walking off with it.
"It appears to be more covert and to have been carried out over a longer time, so there are a fair number of documents to look through."
Blenheim man Dan Murphy has been a member of the society since the 1940s. He said news of the embezzlement was a bit of a shock, but he was sure the society would endure.
He had some money in the credit union, but it was not much and he was not too worried about it, Mr Murphy said.
The union was a modest, working-class thing, and helped its members in small ways: "You get one rotten apple and things go a bit sour."People should use the society more, as it was a good organisation, he said.
Marlborough branch secretary Jane McKee said there are 244 society members in Marlborough, and 11 credit union members.
The Hibernian Society, founded in 1869, manages $9.6m of assets on behalf of 2700 members, providing services including insurance, mortgages and funeral benefits to members and their spouses.
Most – although not all – of the alleged fraud is believed to have taken place within the Hibernian Credit Union, which offers savings and loans, and is part of the larger society. According to its last financial accounts, the credit union had assets of less than $900,000 in March 2010, with several hundred depositors believed to be holding investments of up to $40,000.
Society president Mike McBride said financial discrepancies were discovered after the society contracted accountancy firm Munro Benge to carry out its administrative functions. As the firm began to prepare the accounts for audit, a staff member noticed irregularities, prompting further investigation.
It was possible that as much as $1m was missing.
He said some problems had been identified in the accounts of the benefit society "but they are nowhere near the precarious position that the credit union has found itself in".
Michael Gibson, a former manager of the society, said he had received a letter from the credit union last week explaining that withdrawals had been frozen after it was discovered more than $500,000 was missing.
Mr Gibson, who left the society more than a decade ago, said the news was distressing.
"Basically it is good, ordinary, honest Catholic lay people and I feel very, very sad about it."
COMMITTED TO HELPING
Friendly societies are member-owned organisations, offering financial products such as insurance or pensions. Before the welfare state was established they were common, often based on religious or political affiliations or at large workplaces such as mines. Credit unions are also co-operative financial institutions, typically offering savings accounts and loans. There are now believed to be only six traditional friendly societies operating in New Zealand, the largest of which is Manchester Unity
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