Grays Building Society Revisited

Robert_Sterling

http://www.bygonegraysthurrock.co.uk/grays_building_society.htm

Rollinghome

Robert_Sterling wrote: »

http://www.bygonegraysthurrock.co.uk/grays_building_society.htm

Any particular reason why?

Was a good time for fraud in diddy building societies. Similar happened to Glamorgan BS, Kingston BS, and New Cross BS which resulted in the The Building Societies Act 1986

premierfella

I had to look it up to double check.

The New Cross Building Society as I understand it was not closed because of fraud, and its closure was subject to some controversy at the time because of the fact that it was not linked to fraud or dishonesty.

As I understand it, the Society simply had an unsustainable growth rate which, in the (probably correct) view of the authorities, would have left it vulnerable to collapse at some point in the future. Mismanagement rather than fraud(?)

Reference: The Times Friday, Jan 13, 1984

Rollinghome

I can't really remember the full details but from a document from the Association for Accountancy & Business Affairs http://visar.csustan.edu/aaba/BCCICOVERUP.pdf :

However, a number of well-publicised frauds, usually by senior management, drew attention to the regulatory problems (Boleat, 1982). One of the most celebrated related to the Grays Building Society. Its chairman had been perpetrating frauds totalling some £7.1 million for some years. The society had inadequate accounting records and ineffective internal controls. Fraud was rife, but the auditors failed to spot any problems (Registry of Friendly Societies, 1979) and the regulators had no awareness of the problems. With 7,000 investors and 2,000 borrowers, the fraud attracted considerable press attention.

Further discoveries of frauds at the Glamorgan Building Society, Kingston Building Society and New Cross highlighted the ineffectiveness of regulation.

It was taken over by the Woolwich.

The Kingston BS affair I can remember quite well. They had just one small office in Kingston-upon-Thames run by one man who kept the books plus a couple of staff. I seem to remember he also died very soon after, whether of suicide or something else I can't recall, and I think it was taken over by the Portman BS.

Kingston Building Society, later to become the Royal Fish Bar.

premierfella

Many thanks for the reference.

I guess that suggests that there were further investigations into the health of the New Cross after the court case relating to the validity of the intervention and forced takeover by Woolwich (given The Times was 1984 and the report you reference is 2001).