Latest news with #negligentmismanagement
BreakingNews.ie
20-05-2025
- Business
- BreakingNews.ie
Loans issued by Irish Nationwide in face of financial crash 'hard to justify'
Failed lender Irish Nationwide Building Society was operating akin to a merchant bank when taking "very strong lending positions on speculative proposals", a state-appointed director has told the High Court case against former bank chief Michael Fingleton Sr. State appointed chartered accountant Rory O'Ferrall on Tuesday told the High Court that a series of multi-million euro loans were "very unusual" in the face of an economic crash and were "hard to justify" given Mr Fingleton pledged in 2007 to the society's board that the lender should be "risk averse" in the face of the financial climate. Advertisement The civil case against the former INBS chief executive and managing director 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. 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. Advertisement 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. Today at the High Court, Mr O'Ferrall likened the lending of the society to that of a "merchant" bank which, he said, takes higher risks in lending but takes a share of the proposed profit from loans made on projects. He said this criteria of operating requires a different set of skills and expertise in specific industries and areas of the globe in fields such as shipping, railways, property and development. Mr O'Ferrall said Irish Nationwide under Mr Fingleton had taken up "very strong lending positions" in property development on speculative proposals in the UK and France. Advertisement Mr O'Ferrall said that at around the time of loans issued between 2006 and 2009, there was a "generally held view by investors and banking" by 2007 that there was going to be a property market downturn and that by 2008, "all banks" were experiencing the predicted difficulties. Mr O'Ferrall told Lyndon MacCann SC, for IBRC's liquidators, that INBS no longer held a banking licence, was therefore not trading anymore and that its only activity was in resolving various claims, including some from abroad. Gerry McGinn, a former chief executive who arrived after the departure of Mr Fingleton, referenced a loan for a luxury hotel project in a skiing area in the south of France, referred to as 'Ice Mountain', which the borrower had valued at €32.85M with planning permission. However, the project had no planning permission and was then hit with a bill of €565K by French tax authorities. INBS paid the borrower, Cyril Dennis', tax bill when requested to "stay in the game" regarding the asset which was never developed. Advertisement When Nama bought the loan for Ice Mountain in 2010, it stood at around €31 million. Nama paid just under €11 million for the loan, resulting in a loss of €20 million for the tax-payer. Mr McGinn said that when INBS received a valuation "about a hotel in a foreign country, and just getting a number on a page... it is pretty meaningless". Mr McGinn said the interest of the society seemed to have been "secondary" to some of the relationships between Mr Fingleton and the borrower. Mr McGinn said there were a number of different risks in lending into a foreign jurisdiction. He said that the society may have felt that it was a "gun to your head situation" in paying the French tax bill upon Mr Dennis' request in order to avoid being "badly exposed". Advertisement It may, he said, have been a question of the society being stuck "between the devil and the deep blue sea". The case continues at the High Court. In opening the case earlier this month, Mr MacCann said Mr Fingelton "gambled" with the society's money when he allegedly approved "speculative, risky" commercial loans, which sometimes had already been greenlit by him before they were taken before the board of directors or the credit committee. The five loans allegedly approved by Mr Fingleton relate to property land development projects between 2006 and 2009 in the UK and France, despite them having no zoning or planning permission, counsel said. It is further alleged that there were no securities in place on the loans and no personal guarantee sought for or provided by the borrowers. Mr Fingleton was a prominent presence in Irish business during the Celtic Tiger and was reported to have been worth around €75 million in 2006. However, his son has told the courts that his father is reduced to €25,000 in two personal bank accounts and has outstanding judgment debts of more than €10.7 million.
Irish Times
20-05-2025
- Business
- Irish Times
Loans issued by Irish Nationwide in face of financial crash were ‘hard to justify', High Court hears
Failed lender Irish Nationwide Building Society (INBS) was operating akin to a merchant bank when taking 'very strong lending positions on speculative proposals', a state-appointed director has told the High Court case against former bank chief Michael Fingleton Sr. State appointed chartered accountant Rory O'Ferrall on Tuesday told the court that a series of multimillion euro loans were 'very unusual' in the face of an economic crash and were 'hard to justify' given Mr Fingleton pledged in 2007 to the society's board that the lender should be 'risk averse' in the face of the financial climate. The civil case against the former INBS chief executive and managing director 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. READ MORE 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. On Tuesday, Mr O'Ferrall likened the lending of the society to that of a 'merchant' bank which, he said, takes higher risks in lending but takes a share of the proposed profit from loans made on projects. He said this criteria of operating requires a different set of skills and expertise in specific industries and areas of the globe in fields such as shipping, railways, property and development. Mr O'Ferrall said Irish Nationwide under Mr Fingleton had taken up 'very strong lending positions' in property development on speculative proposals in the UK and France. Mr O'Ferrall said that at around the time of loans issued between 2006 and 2009, there was a 'generally held view by investors and banking' by 2007 that there was going to be a property market downturn and that by 2008 'all banks' were experiencing the predicted difficulties. Mr O'Ferrall told Lyndon MacCann SC, for IBRC's liquidators, that INBS no longer held a banking licence, was therefore not trading any more and that its only activity was in resolving various claims, including some from abroad. Gerry McGinn, a former chief executive who arrived after the departure of Mr Fingleton, referenced a loan for a luxury hotel project in a skiing area in the south of France, referred to as 'Ice Mountain', which the borrower had valued at €32.85 million with planning permission. However, the project had no planning permission and was then hit with a bill of €565,000 by French tax authorities. INBS paid the borrower, Cyril Dennis', tax bill when requested to 'stay in the game' regarding the asset, Mr McGinn said. The hotel was never developed. When Nama bought the loan for Ice Mountain in 2010, it stood at around €31 million. Nama paid just under €11 million for the loan, resulting in a loss of €20 million for the taxpayer. Mr McGinn said that when INBS received a valuation 'about a hotel in a foreign country, and just getting a number on a page ... it is pretty meaningless'. Mr McGinn said the interest of the society seemed to have been 'secondary' to some of the relationships between Mr Fingleton and the borrower. Mr McGinn said there were a number of different risks in lending into a foreign jurisdiction. He said that the society may have felt that it was a 'gun to your head situation' in paying the French tax bill upon Mr Dennis' request in order to avoid being 'badly exposed'. It may, he said, have been a question of the society being stuck 'between the devil and the deep blue sea'. The case continues at the High Court.
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.
Irish Times
13-05-2025
- Business
- Irish Times
Changes in claims against Fingleton put defence in ‘intolerable' position, 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 liquidators for Irish Banking Resolution Corporation, 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. 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. READ MORE 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 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'. 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 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 per cent 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'. 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. 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.
Irish Times
09-05-2025
- Business
- Irish Times
‘Black holes after black holes' in €250m case against Fingleton, court told
There are 'black holes after black holes' in the €250 million damages case against former head of Irish Nationwide Building Society (INBS) boss Michael Fingleton, his lawyer has told the High Court. The civil case against the former INBS chief is in its fourth day before the High Court, where it is alleged that he negligently mismanaged the building society and engaged in property 'gambles' in the mid-2000s with high net-worth individuals in an informal and speculative manner. Mr Fingleton (87), who is in ill health and incapacitated, preventing him from giving evidence, ran the building lender from 1971 to 2009, as managing director and chief executive. 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 losses, relating to five specific property loans between 2006 and 2008, had been estimated by the IBRC at €6 billion. READ MORE However, only €250 million in damages is now being pursued by IBRC, relating to the five loans, allegedly approved by Mr Fingleton, who the court has been told was also 'nodding through' top ups and extensions to certain clients without the knowledge of the society's board. At the High Court on Friday, solicitor Niall Clerkin, for Mr Fingleton, said there were 'black holes' in the case in terms of documents and witness evidence against his client. Mr Clerkin said there were 'large substantial tracts of documents missing' in the case, according to a former senior staff member at INBS. Mr Clerkin said that a former UK branch manager based in the Belfast office of INBS, Gary McCollum, had told a court in Northern Ireland that documents before the courts were incomplete. Mr Clerkin said that, in addition to the incomplete paperwork in the case, none of INBS' borrowers had been called by IBRC in the case currently before the High Court. 'It is an enormous black hole,' said the solicitor, who said there was no other witness in the case who could give evidence to the level of Mr McCollum regarding the integrity of the five loan files subject to proceedings. Mr Clerkin said that the court could search the Common Law world and 'barely find a case like this'. The solicitor said that it is the plaintiff's case that this type of action could only be heard on 'purely objective grounds'. However, said Mr Clerkin, Mr McCollum had previously evidenced he was unable to answer certain questions regarding diligence on loans because there is incomplete information available regarding the relevant time period at the society. Mr Clerkin said that it is IBRC's case that there was a 'critical triangle' at the top of INBS during the 2006 and 2009 period, namely: Mr Fingleton, Mr McCollum and Tom McMenamin, who the court heard was the head of commercial lending in INBS' Dublin office from 2002. Mr Clerkin said that Mr Fingleton was 'incapacitated' and could not give evidence, that Mr McCollum had given evidence that 'there were substantial tracts of paperwork missing from our files' and that no reason had been put forward by the plaintiff regarding Mr McMenamin not being a witness in the case. Mr Clerkin said there were 'black holes after black holes' in the case against Mr Fingleton. 'This leaves us with one person [Mr McCollum] left in the critical triangle, and he is too confused by the absence of documents to give certain evidence,' said Mr Clerkin. The solicitor said the court was being asked to make a determination in the civil case without a 'settled' set of 'binary, factual documents' available. He said the court could not now decide on what 'alarm bells' did or did not go off for Mr Fingleton regarding caution and due diligence during the period of the issuing of the five loans, which was now a question that simply cannot be answered and that it was 'too easy to portray him [Mr Fingleton] as a man out of control'. In opening the case on Tuesday, Lyndon MacCann SC, for IBRC, said Mr Fingelton 'gambled' with the society's money when he allegedly approved 'speculative, risky' commercial loans, which sometimes had already been greenlit by him before they were taken before the board of directors, on which he also sat. The five loans allegedly approved by Mr Fingleton relate to property land development projects between 2006 and 2008 in the UK and France despite them having no zoning or planning permission, counsel said. It is further alleged that there were no securities in place on the loans and no personal guarantee sought for or provided by the borrowers. Mr Fingleton was a prominent presence in Irish business during the Celtic Tiger and was reported to have been worth around €75 million in 2006. However, his son has told the courts that his father is reduced to €25,000 in two personal bank accounts and has outstanding judgment debts of more than €10.7 million. The case continues at the High Court.
