The Teachers' Credit Society (TCS) was a credit union founded in 1971[1]: p. 6 best known for its part in the WA Inc scandal of 1987. Over the 16 years it operated, the TCS grew from a 300-member society into the largest credit union in Australia, with 40,000 members and A$550 million on deposit and millions out on loans.[2] The TCS was considered one of the major driving forces behind the 1980s "debt-funded boom" in Western Australia (WA)[1] and its collapse, along with the collapse of several other large corporations within WA such as Qintex, Bond Corporation and The Bell Group, triggered an economic recession in the state.
By the 1980s, TCS was already one of Australia's largest credit unions, however they grew rapidly during the economic liberalisation and deregulation of the Australian economy under the Hawke government. With the repeal of section 54-57 of the Credit Unions Act 1979 in 1984, the society was permitted to offer commercial loans.[1]: p. 7 Previously credit unions were restricted to lending "modest amounts" to members for their "personal requirements".[3] While the society offered very few loans in the first year of deregulation 1985, by the second year, 1986, a substantial amount of their loan portfolio was commercial, and they no longer met their reserve requirements.[1]: p. 14
During this period TCS were offering higher interest rates to their members than other societies to attract funds. This combined with the failure to meet reserve led to an inspection by the WA Registrar of Credit Unions.[1]: p. 14 This inspection resulted in no action, however concerns were raised about the lack of diversity in their loan portfolio. Specifically the inspectors cited high levels of exposure to four individuals, and Rothwells. At the time of collapse, the four individuals owed the company a total of over A$118 million,[4] more than 22% of the society's loan portfolio.[1]: p. 15 [5]
Roth Auditors in 1986 also raised concerns about the society's loan lending procedures, and the board members' minimal accounting experience. They also recommended the society appoint an internal auditor. Another concern marked in the later royal commission was the overbearing personality of general manager, Alex Clark; leading to an ignorance of risk and the company officers being unable to challenge Clark on his high risk leadership.[1]: p. 15
Following the release of the 1986 annual report in March, the society experienced a run on liquid cash, resulting in an application for an A$18 million loan from the R&I Bank. Despite receiving the loan the society was not able to recover after the 1987 stock market crash, and collapsed.
In August 1987 the society was absorbed by the R&I Bank,[6] purportedly to protect its members.[1]: p. 52 This drew much media attention and criticism,[7][8] and set in motion what would later become the WA Inc inquiries and Royal commission. In 1988 charges were filed against several members of the board and the four major loan holders.[5] In addition the government had placed nine companies into receivership and issued formal demands to over 170 account in an attempt to recover losses. In 1990 Alex Clark was found guilty of five counts of false accounting, and one count in attempted false pretenses. He was sentenced to 2.5 years in jail.[9]
^"'Big four' owed credit society $18m". Canberra Times (ACT : 1926 - 1995). 11 March 1992. p. 4. Retrieved 21 July 2019.
^ ab"Society collapse draws charges". Canberra Times (ACT : 1926 - 1995). 24 August 1988. p. 32. Retrieved 21 July 2019.
^"Rothmans improves profit by 14.5pc to $60.58m". Canberra Times (ACT : 1926 - 1995). 18 August 1987. p. 18. Retrieved 21 July 2019.
^"Nationals want more corruption inquiries". Canberra Times (ACT : 1926 - 1995). 18 October 1987. p. 1. Retrieved 21 July 2019.
^"features". Canberra Times (ACT : 1926 - 1995). 28 September 1987. p. 13. Retrieved 21 July 2019.
^"IN BRIEF Right upheld for patient". Canberra Times (ACT : 1926 - 1995). 26 May 1990. p. 12. Retrieved 22 July 2019.
January 01, 1970
teachers, credit, society, credit, union, founded, 1971, best, known, part, scandal, 1987, over, years, operated, grew, from, member, society, into, largest, credit, union, australia, with, members, million, deposit, millions, loans, considered, major, driving. The Teachers Credit Society TCS was a credit union founded in 1971 1 p 6 best known for its part in the WA Inc scandal of 1987 Over the 16 years it operated the TCS grew from a 300 member society into the largest credit union in Australia with 40 000 members and A 550 million on deposit and millions out on loans 2 The TCS was considered one of the major driving forces behind the 1980s debt funded boom in Western Australia WA 1 and its collapse along with the collapse of several other large corporations within WA such as Qintex Bond Corporation and The Bell Group triggered an economic recession in the state WA Teachers Credit Society LimitedCompany typeCredit unionIndustryBankingFounded1971 53 years ago 1971 in Perth Western Australia AustraliaDefunct1987 1987 FateAcquired by R amp I BankHeadquartersPerth Western AustraliaArea servedWestern AustraliaKey peopleAlex Clark General Manager Brian Flemming chairman ParentR amp I BankRole in WA Inc editBy the 1980s TCS was already one of Australia s largest credit unions however they grew rapidly during the economic liberalisation and deregulation of the Australian economy under the Hawke government With the repeal of section 54 57 of the Credit Unions Act 1979 in 1984 the society was permitted to offer commercial loans 1 p 7 Previously credit unions were restricted to lending modest amounts to members for their personal requirements 3 While the society offered very few loans in the first year of deregulation 1985 by the second year 1986 a substantial amount of their loan portfolio was commercial and they no longer met their reserve requirements 1 p 14 During this period TCS were offering higher interest rates to their members than other societies to attract funds This combined with the failure to meet reserve led to an inspection by the WA Registrar of Credit Unions 1 p 14 This inspection resulted in no action however concerns were raised about the lack of diversity in their loan portfolio Specifically the inspectors cited high levels of exposure to four individuals and Rothwells At the time of collapse the four individuals owed the company a total of over A 118 million 4 more than 22 of the society s loan portfolio 1 p 15 5 Roth Auditors in 1986 also raised concerns about the society s loan lending procedures and the board members minimal accounting experience They also recommended the society appoint an internal auditor Another concern marked in the later royal commission was the overbearing personality of general manager Alex Clark leading to an ignorance of risk and the company officers being unable to challenge Clark on his high risk leadership 1 p 15 Following the release of the 1986 annual report in March the society experienced a run on liquid cash resulting in an application for an A 18 million loan from the R amp I Bank Despite receiving the loan the society was not able to recover after the 1987 stock market crash and collapsed In August 1987 the society was absorbed by the R amp I Bank 6 purportedly to protect its members 1 p 52 This drew much media attention and criticism 7 8 and set in motion what would later become the WA Inc inquiries and Royal commission In 1988 charges were filed against several members of the board and the four major loan holders 5 In addition the government had placed nine companies into receivership and issued formal demands to over 170 account in an attempt to recover losses In 1990 Alex Clark was found guilty of five counts of false accounting and one count in attempted false pretenses He was sentenced to 2 5 years in jail 9 See also editWA IncReferences edit a b c d e f g h WA Inc Royal Commission Volume III PDF 19 October 1982 WA s 10 worst corporate collapses The West Australian 2 February 2018 Retrieved 16 July 2019 Credit Unions ACT of 1979 WA PDF 1979 Big four owed credit society 18m Canberra Times ACT 1926 1995 11 March 1992 p 4 Retrieved 21 July 2019 a b Society collapse draws charges Canberra Times ACT 1926 1995 24 August 1988 p 32 Retrieved 21 July 2019 Rothmans improves profit by 14 5pc to 60 58m Canberra Times ACT 1926 1995 18 August 1987 p 18 Retrieved 21 July 2019 Nationals want more corruption inquiries Canberra Times ACT 1926 1995 18 October 1987 p 1 Retrieved 21 July 2019 features Canberra Times ACT 1926 1995 28 September 1987 p 13 Retrieved 21 July 2019 IN BRIEF Right upheld for patient Canberra Times ACT 1926 1995 26 May 1990 p 12 Retrieved 22 July 2019 Retrieved from https en wikipedia org w index php title Teachers 27 Credit Society amp oldid 1151142587, wikipedia, wiki, book, books, library,
