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Irish Times
7 days ago
- Business
- Irish Times
Like grief, banking inquiries have five stages and closure is never guaranteed
The Central Bank' s investigation into the collapse of the Irish Nationwide Building Society (INBS) – which concluded with publication of a report last week – followed a depressingly familiar pattern. First there was anger. Lots of anger. The collapse of the building society in 2010 led to a €5.4 billion bailout. It was a disproportionately large part of the €45.7 billion bill for bailing out the banking sector during the financial crisis. The debacle confirmed decades of suspicion that the building society was run as a personal fiefdom by chief executive Michael Fingleton . It led to more public outrage during a very angry time. Then came fear. Fear on the part of politicians – correctly as it turned out – that all of this anger would be vented on them come election time. After fear comes the third stage of Irish inquiries; activity masquerading as action. The Central Bank – then known as the Financial Regulator – began an investigation into the INBS's activities between 2004 and 2008. This confirmed what it already knew: that the building society's governance and risk management were a joke. READ MORE [ Fifteen years, €24.3m and 1,384 pages later, was the Irish Nationwide inquiry really worth it? Opens in new window ] This five-year investigation concluded that a wider investigation was needed to see if the INBS had broken the law and if its management was involved. This led to the setting up of the second inquiry in 2015, which delivered its findings last April and finally wrapped up last week. But before that, we had two more phases to go through. The next was apathy. A constitutional challenge by Fingleton and his lieutenant Stan Purcell effectively put the whole thing on hold for two years. It also took much of the heat out of the inquiry before it finally got going in 2017. It then sat for 105 days over the next four years amid waning public interest. The Central Bank reached settlements – involving sanctions and fines – with former chairman Michael Walsh and former executive Tom McMenamin in 2019. It settled with William Garfield McCollum in 2021. A permanent stay was put on inquiries into Fingleton on medical grounds, leaving only Purcell in the inquiry's sights. He was fined €130,000 and disqualified from being a director for four years. We finally arrived at stage five last week: resignation. The publication – 15 years after the event – of the final report on how a small and badly run building society played an outsized role in our national bankruptcy has been met with barely a shrug. It might seem overly cynical, but the five-stage Irish inquiry process would seem to serve the interests of everybody involved, except for those looking for a timely explanation of how something went seriously wrong and who is responsible. The delay suits politicians well enough – as long as the inquiry is set up promptly enough. A quick start, followed by years of hearings and legal challenges is just fine. They are pretty much in the clear once the inquiry is set up as commenting on the work of statutory inquiry – no matter how slow or badly run – breaks the convention that they can't interfere in the work of inquiries. And of course, they can take no remedial action until the inquiry is finished as that would prejudge the outcome. The attractions of the five-stage process for the subjects of an inquiry are equally obvious. The more time passes, the less the public care about the result when it comes. That makes it easier for all concerned to dismiss the findings as past tense and move on. The legal profession is happy to facilitate all of this, but the real enablers are us. We have bought into the notion that it is not possible to get answers to any serious institutional or regulatory failure in less than half a decade. The Central Bank, in fairness, appears alive to the unsatisfactory nature of the INBS inquiry. It published a market commentary along with the inquiry report that touched on this. There is a section devoted to the 'importance of the Central Bank's investigation and inquiry into INBS'. It leans heavily on the lessons the bank can take from the process, noting that: 'As the inquiry proceeded, the Central Bank continuously reflected on what it could do better; developing improvements to both its internal investigative and inquiry processes.' It concluded that 'this investigation and inquiry have had an enduring and positive effect on the Irish regulatory environment'. It sets out various measures put in place to ensure the smoother running of inquiries. The Central Bank was less effusive about how the 15-year €24.3 million process bolstered its authority as a regulator. 'The Central Bank's ability to bring inquiries to conclusion is critical to the effectiveness of its enforcement regime,' it commented, somewhat elliptically. It said it was important that 'individuals understand the Central Bank will use the full extent of its powers to pursue cases to their conclusion and to hold relevant individuals to account.' That is not exactly the message conveyed by yet another five-stage Irish inquiry.
Irish Times
21-05-2025
- Business
- Irish Times
Irish Nationwide manager shocked at Michael Fingleton's ‘get out of jail card' for borrower
A former senior commercial manager at failed lender Irish Nationwide has told the High Court he was left 'absolutely shocked' that Michael Fingleton Sr, referred to as 'the boss' at the bank, confirmed an alleged 'get out of jail card' to a borrower who could not repay a multimillion euro property loan. Conal Regan, who joined the bank after Mr Fingleton left the society in April 2009, told the High Court on Wednesday that the defendant allegedly wrote a letter to a lender, Louis Scully, who borrowed almost €6 million to purchase land in Co Meath in October 2007, confirming that the sum loaned to him was a 'non-recourse' one. A non-recourse loan means that debt on a loan is secured by the collateral and cannot be pursued by the lender from the borrower. The High Court civil case, which is in its third week, against the former INBS chief executive and managing director alleges he negligently mismanaged the building society and engaged in property 'gambles' with high-net-worth individuals in an informal and speculative manner in the mid-2000s, leading to fatal losses. READ MORE Mr Fingleton (87), who cannot give evidence due to ill-health, joined the building lender in 1971 and retired in 2009. He held the roles of both managing director and chief executive in that time. At its height in 2007, INBS had reported assets of €16 billion but was a high-profile casualty of the financial crisis in 2008. Liquidators for Irish Banking Resolution Corporation (IBRC) have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement. The total losses at INBS had been estimated to be €6 billion. However, only €290 million in damages is being pursued by IBRC, relating to five specific loans, allegedly approved by Mr Fingleton. The court has been told that Mr Fingleton was allegedly 'nodding through' top-ups and extensions to certain clients without the knowledge of the society's board. At the High Court on Wednesday, former INBS manager Mr Regan, who joined the society in late October 2009, said he was dealing with 'significantly' distressed credits at the lender. When Mr Regan queried and tested loans issued to Mr Scully, he was told by letter from Mr Scully that the money advanced to him were all 'non-recourse' loans. Lyndon MacCann SC, for IBRC's liquidators, was told by Mr Regan that a February 2009 letter from Mr Scully to Tom McMenamin, then manager of commercial lending at Nationwide, referred to a list of borrowings by Mr Scully and other individuals that stated 'nobody was getting any younger'. Mr McMenamin wrote back saying that all loans to Mr Scully were made on a non-recourse basis. Mr Regan said he could not find any reference 'anywhere' in the paperwork about a non-recourse element in a loan to Mr Scully for Meath lands – measured at 21,700 acres – at €598,7850, arising from a value of €275,000 per acre, which Mr Regan said 'seems exceptional, very, very high'. Mr Regan said he reacted by thinking 'why in the name of god was a get-out-of-jail card given here, given the level of funding that had been provided?' 'I just could not understand that somebody could possibly believe that letter would trump agreements or legal documents signed and on a 'normal-recourse' basis. All of a sudden there is this and it just didn't make sense,' Mr Regan told the court. Mr Regan said he had looked at the files regarding Mr Scully's loans and that 'non-recourse was mentioned nowhere. Nowhere'. Mr Regan told the court he asked Mr McMenamin 'why in the name of god' was the letter of confirmation issued and claimed Mr McMenamin told him: 'I was only doing what the boss told me to do'. Mr MacCann asked who was being referred to as 'the boss' to which Mr Regan said he was told by Mr McMenamin that this was a reference to Mr Fingleton Sr. Later in December Mr Scully wrote to Mr Regan saying as far as he was concerned all of his business with the society was on an non-recourse basis and that this had been agreed by Mr Fingleton. Mr Regan told Mr Justice Michael Quinn that it was a 'shocking assertion' and that 'individuals were not even putting hands in their pockets' if they had a 'free bet' on getting planning or zoning for lands. 'It was a get out of jail card. It was incredible. I have never, never come across it before,' said Mr Regan. In response to a request for any documentary evidence as to the agreement between Mr Scully and Mr Fingleton, Mr Scully wrote back on March 25th, 2010, enclosing a letter of confirmation of the non-recourse loans from Mr Fingleton and writes 'I trust this brings matters to a conclusion'. Mr Regan said he was left 'absolutely shocked' by the letter from Mr Fingleton. The case continues at the High Court.
BreakingNews.ie
21-05-2025
- Business
- BreakingNews.ie
Former Irish Nationwide manager 'shocked' that Fingleton issued 'get-out-of-jail card' to borrower
A former senior commercial manager at failed lender Irish Nationwide has told the High Court he was left "absolutely shocked" that Michael Fingleton Sr, referred to as "the boss" at the bank, confirmed an alleged "get-out-of-jail card" to a borrower who could not repay a multi-million euro property loan. Conal Regan, who joined the bank after Mr Fingleton left the society in April 2009, on Wednesday told the High Court that the defendant allegedly wrote a letter to a lender, Louis Scully, who borrowed almost €6 million to purchase land in Co Meath in October 2007, confirming that the sum loaned to him was a "non-recourse" one. Advertisement A non-recourse loan means that debt on a loan is secured by the collateral and cannot be pursued by the lender from the borrower. The High Court civil case, which is in its third week, against the former Irish Nationwide Building Society (INBS) chief executive and managing director Mr Fingleton alleges that he negligently mismanaged the building society and engaged in property "gambles" with high-net-worth individuals in an informal and speculative manner in the mid-2000s, leading to fatal losses. Mr Fingleton (87), who cannot give evidence due to ill health, joined the building lender in 1971 and retired in 2009. He held the roles of both managing director and chief executive in that time. At its height in 2007, INBS had reported assets of €16 billion but was a high-profile casualty of the financial crisis of 2008. Liquidators for Irish Banking Resolution Corporation (IBRC) have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement. Advertisement The total losses at INBS had been estimated to be €6 billion. However, only €290 million in damages is being pursued by IBRC, relating to five specific loans, allegedly approved by Mr Fingleton. The court has been told that Mr Fingleton was allegedly 'nodding through' top-ups and extensions to certain clients without the knowledge of the society's board. At the High Court on Wednesday, former INBS manager Mr Regan, who joined the society in late October 2009, said he was dealing with "significantly" distressed credits at the lender. When Mr Regan queried and tested loans issued to Mr Scully, he was told by letter from Mr Scully that the monies advanced to him were all "non-recourse" loans. Advertisement Lyndon MacCann SC, for IBRC's liquidators, was told by Mr Regan that a February 2009 letter from Mr Scully to Tom McMenamin, then-manager of commercial lending at Nationwide, referred to a list of borrowings by Mr Scully and other individuals that stated "nobody was getting any younger". Mr McMenamin wrote back saying that all loans to Mr Scully were made on a non-recourse basis. Mr Regan said he could not find any reference "anywhere" in the paperwork about a non-recourse element in a loans to Mr Scully for Meath land – measured at 21,700 acres – at €598,7850, arising from a value of €275,000 per acre, which Mr Regan said seemed "exceptional, very, very high". Mr Regan said he reacted by thinking "why in the name of God was a get-out-of-jail card given here, given the level of funding that had been provided?" "I just could not understand that somebody could possibly believe that letter would trump agreements or legal documents signed and on a 'normal-recourse' basis. All of a sudden there is this and it just didn't make sense," Mr Regan told the court. Advertisement Mr Regan said he had looked at the files regarding Mr Scully's loans and that "non-recourse was mentioned nowhere. Nowhere". Mr Regan told the court he asked Mr McMenamin "why in the name of god" was the letter of confirmation issued and claimed that Mr McMenamin told him: "I was only doing what the boss told me to do". Mr MacCann asked who was being referred to as "the boss" to which Mr Regan said he was told by Mr McMenamin that this was a reference to Mr Fingleton Sr. Later in December Mr Scully wrote to Mr Regan saying as far as he was concerned all of his business with the society was on an non-recourse basis and that this had been agreed by Mr Fingleton. Advertisement Mr Regan told Mr Justice Michael Quinn that it was a "shocking assertion" and that "individuals were not even putting hands in their pockets" if they had a "free bet" on getting planning or zoning for lands. Ireland Michael Fingleton engaged in 'solo run' trading wh... Read More "It was a get out of jail card. It was incredible. I have never, never come across it before," said Mr Regan. In response to a request for any documentary evidence as to the agreement between Mr Scully and Mr Fingleton, Mr Scully writes back on March 25th, 2010, enclosing a letter of confirmation of the non-recourse loans from Mr Fingleton and writes "I trust this brings matters to a conclusion". Mr Regan said he was left "absolutely shocked" by the letter from Mr Fingleton. The case continues at the High Court.
Irish Times
21-05-2025
- Business
- Irish Times
EY, Arthur Cox and Mason Hayes main winners from €24.3m INBS inquiry
Big Four accountancy group EY and corporate law firms Arthur Cox and Mason Hayes & Curran have emerged as the biggest fee-earners from 15 years of regulatory investigations and an inquiry into Irish Nationwide Building Society (INBS) that cost the Central Bank €24.3 million. EY earned €4.29 million for acting as forensic accountants and assisting an investigation team from the Central Bank as it went about building up an investigation report between 2010 and 2015, when the regulator decided to send five former senior INBS figures forward for a public inquiry. The breakdown of costs was disclosed on Wednesday as the inquiry drew to a close with the publication of a decision that the last of five men subject to the inquiry, INBS's one-time finance director John Stanley Purcell, be disqualified for four years from managing an financial firm and fined €130,000. Arthur Cox, the third-largest law firm in the State by solicitor numbers, secured €3.35 million in fees between 2016 and this year assisting the three-member panel that presided over the long-running inquiry. READ MORE Mason Hayes & Curran, the fourth-largest law firm, drew in €2.44 million over the past decade as legal advisers to the Central Bank and its enforcement division during the course of the inquiry. This included work MHC carried out between 2015 and 2018 as Mr Purcell and INBS's former managing director, Michael Fingleton, pursued a legal challenge against the inquiry. That challenge ultimately failed. Accountancy firm Grant Thornton was also among the top-earning organisations, generating €2.15 million of fees for its role in providing data management and other services between initial inquiry hearings that started in private in 2016, public hearings that ran over 105 days between 2017 and 2021, and subsequent work by the inquiry team. The highest-earning individual lawyer was Brian O'Moore who received €1.51 million as a legal adviser to the inquiry panel between 2015 and 2019, when he was a barrister. He was subsequently appointed a High Court judge in 2019 and became a judge of the Court of Appeal in 2023. The chair of the inquiry panel, solicitor Marian Shanley, received €1.36 million in fees and expenses, while the other two panel members, Geoffrey McEnery and Ciara McGoldrick received €1.23 million and almost €557,000, respectively. 'The costs of the investigation and inquiry reflect its length (15 years) and complexity, including the extensive work to unearth the facts through a large volume of documentation and witness evidence, and the need to defend the statutory framework in the face of court challenges by persons under inquiry,' said Central Bank governor Gabriel Makhlouf. 'The lessons learnt have led to changes to the legislative framework, which have introduced efficiencies and further safeguards.'
BreakingNews.ie
13-05-2025
- Business
- BreakingNews.ie
Changes in claims against Michael Fingleton put his defence in an 'intolerable' position, High Court told
The High Court case against former Irish Nationwide chief Michael Fingleton Sr has heard that his legal team were put in an "intolerable" position by alleged changes in the approach and claims by the plaintiffs - the liquidators for IBRC - who are pursuing the now-incapacitated defendant for €290 million in damages. The civil case against the former Irish Nationwide Building Society (INBS) chief alleges that he negligently mismanaged the building society and engaged in property "gambles" with high-net-worth individuals in an informal and speculative manner in the mid-2000s, leading to fatal losses. Advertisement Mr Fingleton (87), who cannot give evidence due to ill-health, joined the building lender in 1971 and retired in 2009 - he held the roles of both managing director and chief executive in that time. At its height in 2007, INBS had reported assets of €16 billion but was a high-profile casualty of the financial crisis of 2008. Liquidators for Irish Banking Resolution Corporation (IBRC) have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement. The total losses at INBS had been estimated to be €6 billion. However, only €290 million in damages is being pursued by IBRC, relating to five specific loans, allegedly approved by Mr Fingleton. The court has been told that Mr Fingleton was allegedly 'nodding through' top-ups and extensions to certain clients without the knowledge of the society's board. Advertisement At the High Court on Tuesday, solicitor Niall Clerkin, for Mr Fingleton, said his client and their legal team were put in an "intolerable" situation due to amendments in the statement of claim against his client, and complained of missing documents and "very relevant" witnesses not being called by the plaintiffs. Mr Clerkin said the case was now on its fifth version of a statement of claim against his client. The solicitor also said that "generic" or "systemic" allegations in the action had been precluded from the case at a previous hearing of the Court of Appeal. However, Mr Clerkin said the plaintiffs were still characterising the alleged negligence in general terms and describing the five loans at issue as "emblematic" or a "manifestation" of broader alleged wrongdoing. Mr Clerkin said that the plaintiffs have said they will call two Central Bank witnesses, "who could only be giving precluded systemic evidence", and that they could "not possibly have evidence regarding the specific five loans". Advertisement The solicitor said the impression being given in the case against Mr Fingleton was that his client was "like a toxic agent" and that "all the problems that happened were because of him [Mr Fingleton]". Mr Clerkin said the defence sought "clarity" in what was alleged against his client, saying the allegations were "very confusing" to defend and "heightened the amount of prejudice that we face" in defending the case. Mr Clerkin said that the original claim against his client was for €6 billion, but now only five per cent of the original claim was being pursued. He said the other 95% of the claim has "fallen away in concession" and "substantial tracts" of documents were missing from the case. The solicitor said the defence tried to engage with an expert who said he "simply would not be satisfied he had enough information to provide a proper expert opinion". Advertisement Regarding the use of expert finance witnesses in the case, Mr Clerkin said: "We don't have a reliable file set available, so the methodological foundation is broken. It's corrupted from our standpoint." He added that expert witnesses are reliant on what is sent to them by legal practitioners. Business Disgraced former solicitor Michael Lynn fails to h... Read More Lyndon MacCann SC, for the plaintiffs, said any suggestion that documents were being withheld would be "scurrilous". Mr Clerkin responded that "massive tracts" of information were missing, that there was no allegation of bad faith towards the plaintiffs but that it was "nearly impossible" for an objective analysis of events due to missing documents. "I can't change the way the world is for him [Mr MacCann]," said Mr Clerkin. Mr MacCann said that it was the plaintiff's case that, through discovery, amendments were made to the statement of claim against Mr Fingleton. However, he said it was "always" the plaintiff's case that claims against the defendant could be expanded, but the five specific loans were to remain the "focus" in the case. The case continues at the High Court.
