THE former chief executive of England’s biggest credit union altered the details of thousands of members’ accounts and used a corporate credit card to spend thousands of pounds at luxury shops and hotels, a report has found.
Sue Davenport, who formerly ran Leeds City Credit Union, also obtained loans totalling more than £100,000, most of which were obtained without evidence of approval or agreement.
Details of Mrs Davenport’s activities at the credit union, which has around 25,000 members, are contained in the findings of an audit investigation obtained by the Yorkshire Post which formed the basis of a lengthy police inquiry.
But after a three-year investigation by West Yorkshire Police, the Crown Prosecution Service (CPS) has advised Mrs Davenport should not face criminal charges. The force will not give its opinion on the CPS decision however it is known the inquiry was almost ended more than a year ago on the initial advice of the CPS. West Yorkshire Police appealed and the investigation then re-commenced.
The audit investigation into Mrs Davenport - who was required to resign from her post in 2008 by the Financial Services Authority - found she had changed loan repayment dates on members’ accounts. Auditors found this “manipulated” the credit union’s accounts which subsequently looked much better than was actually the case.
The credit union almost collapsed completely in 2009 when it emerged that around £2 million of so-called toxic debt had gone unreported. Without an emergency bailout of £4m from public funds, the credit union would not have survived.
The scale of the debt discovered in the accounts prompted the credit union to call in council auditors to investigate Mrs Davenport’s actions. Shortly after they completed their work in the summer of 2009 and uncovered a raft of serious concerns, Mrs Davenport applied to be declared bankrupt. Her debts of more than £90,000 included around £40,000 owed to the credit union in unpaid loans. She was arrested on suspicion of fraud in March 2010.
Commenting on alteration of members’ accounts, auditors said: “It is suspected that the action of changing repayment dates on a mass level would manipulate the arrears figures to make the results in a more favourable position.”
They also found Mrs Davenport had spent £24,000 on a corporate credit card during a 20-month period specified for investigation, including £5,000 in a single month on hotels and travel.
Expenditure at “high end” hotels was highlighted including £1,627 at the Hilton in Washington and £934 for a stay at Ragdale Hall, a luxury health spa in Leicestershire.
Auditors found no record of Mrs Davenport reimbursing any costs. They also found the card had been used to spend £552 at Harvey Nichols, £263 at John Lewis and £102 at Marks and Spencer.
Out of 280 transactions, only eight were backed by receipts.
It was also found Mrs Davenport had obtained 21 loans from the credit union totalling £101,386 but 15 of them had no evidence of approval or agreement. Preferential interest rates were also obtained.
Credit union chief executive Chris Smythe said it remained “satisfied… that it was correct to ask West Yorkshire Police to investigate a suspected fraud. Although disappointed with the decision the credit union acknowledges the thoroughness and professionalism of the police in investigating a very complex matter.”
Michael McGowan, former president of the credit union, expressed anger that no charges had been brought.
“Leeds City Council, the Financial Services Authority, the police and the credit union are all aware that serious malpractice has taken place. The report of the forensic inquiry carried out by Leeds City Council should now be published in order that our members know exactly what we had to deal with.”
A West Yorkshire Police spokeswoman said: “A thorough investigation was conducted by West Yorkshire Police’s economic crime unit and all evidence was made available to the CPS. Having taken advice from both the CPS and independent counsel a decision has been made not to continue with the investigation and all parties have been informed.”
Mrs Davenport declined to comment.