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Independent reports that former Irish Nationwide boss Michael Fingleton ran the
financial institution for 37 years with no computer access in his office.
It has emerged that new management at the financial institution inspected his
office after his resignation four years ago and found that he had no access to
the building society's computer network.
The revelation is among a number of new claims about Mr Fingleton's decades-long
tenure as chief executive of the bust building society.
A former director of Irish Nationwide said that Mr Fingleton admitted to him he
ran it as a "sole proprietor".
And the defunct building society was found to have "highly unusual" management
practices, according to a consultants' report. The report by accountancy firm
Ernst & Young and law firm McCann Fitzgerald was commissioned by Mr Fingleton's
successor Gerry McGinn after his resignation in 2009. Details of the report were
revealed last night on RTE documentary 'Inside Irish Nationwide'.
Forensic accountant Michael Flynn, who examined the report for the programme,
said: "The absence of documentation for this amount of money is absolutely
The report found that:
• Lending files were "brief" and loans were "poorly structured".
• There was no paperwork in relation to a €10m figure used to settle a legal
• A mysterious €6.6m consultancy fee payment to a Jersey-based trust company was
• €435,000 was paid to a company that did not exist at the address stated when
checked by Ernst & Young.
• Invoices to the value of €2m, which had been paid for twice, went
The report also found that Mr Fingleton had been granted special powers by the
building society's board in the 1980s and 90s, allowing him to set interest
rates and loan conditions without consulting other directors.
It found that the powers allowed for the circumvention of the institution's
credit committee and that this was "highly unusual and contrary to normal
The Irish Independent also
reports that senior government ministers have promised backbenchers they will
shoot down any plans to include farm and business assets in the means test for
The Fine Gael ministers have said the
controversial plan will not get past them when Education Minister Ruairi Quinn
brings it to the cabinet table, which is expected to happen in the coming weeks.
Mr Quinn's department sent out a memo on the policy to fellow ministers in
recent days, and has received some observations back, as per normal practice.
However, sources said the response has been "very much a mixture" of opinion,
and when asked if Mr Quinn was confident of getting the proposals approved, his
spokeswoman would only say: "It's a cabinet decision, Cabinet will decide on
It is understood those with serious reservations include Taoiseach Enda Kenny
himself, Finance Minister Michael Noonan, Agriculture Minister Simon Coveney,
Environment Minister Phil Hogan, Arts Minister Jimmy Deenihan and Chief Whip
Paul Kehoe – although Mr Kehoe does not have a vote.
The review of the means test has been a long-running source of tension in the
Coalition because many Fine Gael TDs rely on votes from farm families and small
Waterford TD John Deasy said he raised the controversial proposal with senior
Fine Gael ministers and was assured it would "not be entertained" and "will not
It comes as the latest opinion polls show support for Fine Gael has dropped
substantially among farmers, with Fianna Fail overtaking the senior coalition
Mr Quinn is planning to mount a five-year trawl of assets owned by farmers and
business people whose children are applying for the college grant in September.
He intends to include assets in excess of €750,000, on top of how much income is
The Irish Times reports that
private capital could be used to contribute to bank recapitalisation alongside
capital injections from the euro zone’s rescue fund under a proposal discussed
by euro zone finance ministers.
The design of the European Stability Mechanism
(ESM) direct recapitalisation instrument, including the possibility of
attracting private capital, was discussed at yesterday’s meeting of finance
Euro group chairman Jeroen Dijsselbloem said
discussion of legacy assets and retrospective recapitalisation would be
considered in subsequent months.
S&P upgrades Irish rating
He added that finance ministers would discuss how
best to support Ireland and Portugal in successfully exiting their programmes
and fully returning to market finance at next month’s meeting. His comments came
as ratings agency Standard & Poors upgraded Ireland’s outlook yesterday from
negative to stable on the back of last week’s promissory note deal.
Euro zone finance ministers are expected to
deliver their verdict next month on those countries’ request for an extension of
certain loan maturities.
Speaking after the meeting, Mr Dijsselbloem said
the euro group had been informed by Minister for Finance Michael Noonan of last
week’s developments regarding Irish Bank Resolution Corporation (IBRC).
“We welcome the solution found by the Irish
authorities for the replacement of the promissory notes and the winding down of
IBRC,” he said. “This will lower the cost of restructuring Ireland’s financial
sector, which will be positive to complete Ireland’s return to the markets.”
His comments were echoed by EU economic and
monetary affairs commissioner Olli Rehn, who described last week’s deal as “a
major step” for Ireland.
“This has further boosted market confidence and
will certainly help to facilitate any subsequent outcome.”
Both also noted the positive assessment of
Ireland contained in the ninth quarterly review of Ireland published last week
by the troika of the European Union, European Central Bank and International
Speaking ahead of yesterday’s meeting, Mr Noonan
said Ireland’s bid to secure ESM direct recapitalisation for AIB and Bank of
Ireland was a “medium-term strategy”.
“We’re at the early stage. This is not something
that is going to conclude quickly; this is a medium-term strategy but with the
ground we’ve gained on the promissory note arrangement we can afford to wait for
the next phase as long as the commitment that was made on 29th June last is
still the commitment,” he said.
Ireland is hoping the euro zone’s rescue fund,
the ESM, can be used to directly recapitalise both banks.
Yesterday’s meeting of finance ministers also
discussed the bailout of Cyprus, with Mr Dijsselbloem refusing to rule out the
possibility that depositors could be affected by the deal.
While negotiations on a €17.5 billion rescue
programme began late last year, disagreement has emerged about how the bailout
should be funded amid concerns about Russian involvement in money-laundering in
Speaking after the meeting, Cypriot finance
minister Vassos Shiarly said the so-called bail-in of depositors was a “grossly
exaggerated possibility” and “unlikely to happen”.
Mr Dijsselbloem confirmed yesterday that euro
zone finance ministers had decided to appoint an independent firm to assess
allegations of money-laundering in Cyprus. A final deal is expected to be agreed
in March, after Cypriot elections.
The Irish Times also reports
that Standard & Poor’s last night became the first ratings agency to improve
their outlook on Irish debt on the back of last week’s promissory note deal.
In an early sign that last week’s replacement of
the promissory notes used to bailout bank creditors with longer term government
bonds will improve the State’s solvency, the credit rating agency changed its
Ireland outlook from “negative” to “stable”.
It did not change the ratings band within which
it classifies the Irish State. That remains at “BBB+”, seven notches below the
top triple A rating, but above speculative or “junk” status.
The agency said it would consider raising its
rating “if the Government sustains its fiscal strategy [and/or] can sell its
sizable equity position in the domestic banking system to non-resident
S&P is one of the world’s three largest rating
agency’s, along with Moodys and Fitch. The ratings these agencies give to
financial assets has a strong influence on the rate of interest issuers must
offer. Last night the agency said: “In our opinion, the exchange of promissory
notes for long-dated Irish government bonds should reduce the Government’s
debt-servicing costs and lower refinancing risk.”
In a statement, the agency said that last week’s
deal “increases the likelihood of a full return by Ireland to private financing
and, therefore, of Ireland successfully exiting the EU/IMF bailout program, at
the end of 2013”.
S&P warned that it could yet downgrade Ireland
again. It cited any failure to comply with the terms of the EU-IMF bailout or if
the Government “were not able to access the capital markets sufficiently to meet
its 2013 funding needs”.
The Irish Examiner reports
that the proposed Oireachtas inquiry into the banking crisis could be undermined
by the timing of the trial of former Anglo Irish Bank chairman Sean FitzPatrick.
Mr FitzPatrick’s trial is listed for the Criminal
Court in Jan 2014. But this would also be the likely start date for an
The new Oireachtas (Inquiries, Privileges and Procedures) Bill to cover
Oireachtas inquiries is unlikely to be published until the Dáil summer recess.
This means that the preparations for the banking inquiry will not commence until
the Dáil resumes in September. The Public Accounts Committee and the Finance
Committee are both vying to hold the inquiry.
Informed sources say that the most likely outcome is that a new committee will
be formed comprising of members of the PAC and Finance.
A senior legal source says there are risks to holding the inquiry and the trial
at the same time. If the Oireachtas inquiry was to hear evidence in public that
would be very similar to testimony in the criminal trial, then Mr FitzPatrick’s
legal team could argue that it is prejudicial to its client.
There is an option for the Oireachtas of holding private sessions and
withholding chapters from its findings at the conclusion of its inquiry.
However, the legal source said the Director of Public Prosecution could take the
view that the risk of holding the inquiry is too great and request that it be
postponed until criminal proceedings against Mr FitzPatrick and other banking
executives have been completed.
The complexity of the case against Mr FitzPatrick means court proceedings could
be quite lengthy. And there are more charges pending against Mr FitzPatrick and
other former Anglo Irish Bank executives.
The Irish banking crisis was the worst ever recorded among any economy in the
developed world. Anglo Irish Bank accounted for nearly half of the €64bn it cost
to bail out the banks.
The Government backstopped the banking system in Sep 2008 on the basis the
sector faced a temporary liquidity problem. The liquidity problem turned into a
solvency problem, which forced the Government into an EU/IMF bailout programme
in Nov 2010.
There is still a lot of uncertainty over the sequence of events leading to the
state guarantee and what the Government knew on the night it was introduced.
The proposed legislation, which is being drawn up by the Minister for Public
Expenditure and Reform Brendan Howlin will have the ability to call ex-Taoisigh
and ministers before the inquiry, but it will not be able to make adverse
findings against any former member of the Oireachtas.
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