One of the State's largest credit unions has warned that it will take legal action against members who fail to repay loans. Gurranabraher Credit Union in Cork says it took almost 300 people to court last year, including two who ended up in jail for defaulting on payments.

The Cork credit union, which has more than 14,000 members with savings of €56 million and loans of more than €46 million, took 272 of its members to court between September 2003 and September 2004 for monies owed.

Gurranabraher Credit Union chairman Mr Mick O'Connell told around 540 members attending its annual meeting that it obtained committal orders in 59 cases with two people going to jail over failure to repay loans and 20 people clearing their debts before issue.

The credit union obtained instalment orders in 213 cases with the total loan value at issue in these cases amounting to €1,112,902. The group's annual report shows it was awarded legal costs of €38,809 arising from the legal actions.

Mr O'Connell said: "It takes two years for a case to come to court and we do everything in our power to try to resolve the matter before going to court. We send seven letters to the member and we also have meetings with our credit control manager and our manager.

"We don't want to take people to court and we do everything we can to facilitate people in repaying outstanding loans but, when money is outstanding, it must be repaid and we will take people to court.

"We're not a soft touch anymore and nobody walks away with our money."

According to Gurranabraher Credit Union's annual report for 2003/04, €127,297 was recovered through bad debt collection while €277,913 was recovered through the courts' process. A further €88,430 was received in door-to-door collections.

Mr O'Connell said the credit union had accumulated €1.5 million in bad debts over the past 40 years. Last year, €208,262 in bad debts were written off, down on the €333,478 written off as irretrievable a year earlier.

"We are very pleased to report that the bad debt write-off figure for the year has decreased by 38 per cent and bad debts recovered increased by 43 per cent," said Mr O'Connell.

However, he said that €600,000 had been set aside by the credit union's board for the provision of bad and doubtful debts in the current year.

Savings at the credit union rose by €2.5 million or 5 per cent while its loan portfolio rose by €1.7 million or 4 per cent, said Mr O'Connell, adding that the credit union had a surplus of €1.6 million for distribution to members.

Mr O'Connell said that €910,000 allocated for last year's dividend, which was never paid out, would be included in this year's distribution, making a dividend of 3.25 per cent and a rebate of 17.5 per cent on interest on loans to members - giving a total distribution of €2.46 million.

Details of the dividend come just days after it emerged that the Garda are to send a file to the Director of Public Prosecutions (DPP) following an investigation into the setting up of a fictitious account by a former employee of Gurranabraher Credit Union.

According to Garda sources, the amount of money, including loan and interest, outstanding in August when the matter was first brought to the attention of Garda Bureau of Fraud Investigation in Cork was €24,000 and this has now been repaid.

Gardaí later questioned the former member of staff about the loan after the person voluntarily agreed to be interviewed. A file on the matter is nearing completion and is expected to be sent to the DPP before Christmas.