Former head of Britain's biggest credit union declared bankrupt
Investigation into misuse of company credit card
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The former head of one of Britain's biggest credit unions has been declared personally bankrupt after being unable to pay off loans. Sue Davenport, who was forced to resign last year as chief executive of the Leeds City Credit Union, was declared bankrupt at Leeds County Court.
She filed for bankruptcy after finding herself unable to pay off debts, including outstanding loans from her former employer.
Mrs Davenport resigned from the LCCU, the biggest credit union in England and Wales, last year after being issued with an ultimatum to go or face sanctions from the Financial Services Authority that would have disqualified her from her position as chief executive.
Earlier this year the LCCU applied for a £4m cash injection of public money to help it continue to offer loans to members while sorting out the problems left behind by Mrs Davenport's departure.
Mrs Davenport is now under investigation by the Economic Crime Unit at West Yorkshire Police following suggestions she may have misused a company credit card and could have breached regulations on how loans should be made.
In a statement issued yesterday, a police spokeswoman said: "West Yorkshire Police can confirm that information concerning the activities of a previous employee of Leeds City Credit Union has been passed to the Economic Crime Unit for investigation."
The police inquiry follows a detailed internal investigation at the LCCU amid concerns at the way the organisation has been managed.
Michael McGowan, the president of the LCCU, said: "We ordered a forensic inquiry because we were concerned about problems to do with management. The outcome of that was so serious we have handed the findings over to West Yorkshire Police."
Among the claims being investigated is that she used a company credit card to pay for purchases made at several retailers, including Harvey Nichols, and for a trip to a health farm.
Accountants who carried out the internal inquiry are thought to have complained that Ms Davenport had provided receipts for just a handful of close to 300 payments made using the credit card.
They also highlighted the circumstances in which she took out loans and were concerned to know whether or not the transactions had received the proper sanction of the directors of the credit union.
When she was chief executive of the credit union, the FSA expressed concerns that too much power was concentrated in the hands of one person.
FSA officials were worried in 2003 about the employment at LCCU of Mrs Davenport's daughter-in-law, and said the procedures for processing all loan applications were too lax. On one occasion they noted that, out of 24 loans they looked at, 18 failed to conform to usual policy.
Concerns were also raised by the FSA about a number of loans made to members of staff which were said to have been considerably more generous than other members of the credit union could have expected.
A review was launched by the credit union itself in 2007 after allegations were made in the Yorkshire Post that a loan of £16,000 had been approved for Mrs Davenport's son when he was only entitled to a maximum loan of £1,200.
The LCCU has 24,000 members and manages £30m of funds. Credit unions operate by offering loans to members, who are often low-paid people to whom high street banks would refuse to lend. Customers of credit unions might otherwise fall victim to loan sharks.
Mr McGowan said that the LCCU is now in much better shape to deal with the needs of members: "The credit union is under new management with a strengthened board. We will take whatever action is necessary to offer the best possible service to our members."
Mrs Davenport could not be reached yesterday but has previously consistently denied any wrongdoing.