A BUILDING society chief has been suspended following allegations of fraud involving company accounts.

Gerald Waterworth, finance director at Scarborough Building Society, is the subject of an investigation "into the use of" £103,000.

The cash was held in an external bank account used by the society for administrative expenses.

Scarborough Building Society, the second oldest in the country, said it suspended Mr Waterworth last Friday until further notice.

Police have launched a criminal investigation into the matter after being called in by the society.

The society has stressed that none of its 250,000 customer accounts are affected.

Chief executive John Carrier said it was a case of business as usual, despite the suspension of Mr Waterworth.

He said: "The important point to stress is that, while we do not want to trivialise this matter, the amount involved is very small in relation to our profits, capital and assets."

He said there was nothing more to say at the moment, as a police investigation was under way.

A statement to the London Stock Exchange was made yesterday revealing the action taken by the building society.

It has not said how the cash at the centre of the investigation was used.

Last night, Mr Waterworth, who lives in Scalby, North Yorkshire, said when approached by reporters that he did not want to comment.

North Yorkshire Police said they had received a complaint from the building society and were investigating the matter.

Spokesman Ron Johnson said: "We are working closely with the society regarding an allegation of fraud."

Scarborough Building Society, which is based at Prospect House, Scarborough, has branches across the region and the country.

Its assets exceed £1bn, having grown steadily throughout the 1990s.

Last year, its full year accounts showed it had pre-tax profits of £7m and capital of £74m.

Formed in May 1846, the society is one of the top 20 in the country.