The media are reporting that a former employee has been arrested following investigations into fraud at the North Yorkshire Credit Union. The Union collapsed last week.

Separately, a decision by the Labour Cabinet has been “called in” for scrutiny. They were proposing to grant £50,000 (plus help in kind) to another Credit Union that wishes to open a branch in York.

The proposal has been called in to permit full consideration of the reasons behind the North Yorkshire Credit Union collapse.

The York Council stands to lose up to £100,000 of the loan it made to the York Credit Union in January 2009.

The minutes of meetings around that time reveal that Labour had proposed that £150,000 should be loaned on a unsecured “sub-ordinate” basis.

This proposal was rejected by the then LibDem controlled Executive and the York Council unanimously agreed on 22nd Jan 2009 to loan £52,000 (the maximum permitted) as a “preferential loan” with the remainder classified as a “sub-ordinate” loan (which has less protection in the event of a financial failure).

The Council also agreed that “That Council maintain a check on the financial position of the York Credit Union by such means as are acceptable to the Director of Resources”

It is the way that the latter condition has been exercised over the last 18 months – during which time the Credit union slipped into financial difficulties – that should form part of the scrutiny review.

Details of the historic decisions made can be found on the Councils web site

Executive meeting 23rd Dec 2008 http://tinyurl.com/Exec-23rd-Dec-08

Labour alternative proposals 23rd Dec 2008 http://tinyurl.com/Lab-23rd-Dec-08

Council minutes 22nd Jan 2009 http://tinyurl.com/Council-22nd-Jan-09