Lunney and Central Bank reach settlement after ‘breach’ inquiry
THE Central Bank has reached a settlement with the former Quinn Insurance director Kevin Lunney, who was abducted and savagely beaten last year.
The bank, which regulates financial institutions, said its inquiry into suspected breaches of regulations by Mr Lunney had concluded.
The 51-year-old had his leg broken in two places with an iron bar, was stabbed with a knife across his face, neck and hands and had a number of fingernails cut off in a terrifying ordeal, after he was abducted in September last year.
Criminal proceedings in relation to that attack are ongoing.
The Central Bank would usually publish the details of settlements it reaches with individuals who have been under investigation.
But on this occasion it stated that, given the circumstances, ‘which were unrelated to the Central Bank’s inquiry’, it would not be making any further comment.
The circumstances are understood to relate to the abduction of Mr Lunney. It said the suspected breaches related to the soundness and adequacy of Quinn Insurance Limited’s (QIL) administrative and accounting procedures, and of its internal control mechanisms regarding the assets of QIL’s subsidiaries. The time of the alleged breach was prior to the insurer’s collapse in 2010.
The Central Bank stated that the settlement had been reached in July this year with Mr Lunney.
It said it had also reached a settlement, in December last year, with another former QIL director, Liam McCaffrey. That settlement, also not made public, related to the same Central Bank inquiry.
Seven years ago the Central Bank fined QIL €5million after it found that it had failed, between
October 2005 and March 2010, to maintain adequate solvency margins and had insufficient internal control mechanisms.
The regulator also carried out another investigation to establish whether there had been breaches of regulations by management of Quinn Insurance between 2005 and 2008. This led to the formal inquiry into the conduct of Mr McCaffrey and Mr Lunney. The pair took a High Court challenge against the inquiry but lost.
The inquiry concluded with seven days of evidence in June last year, chaired by retired High Court judge Iarfhlaith O’Neill.
The Central Bank has a range of potential sanctions at its disposal that can be imposed as part of a settlement agreement.
These range from a caution or reprimand to fines of a maximum of €10million, or 10% of turnover, for an institution and €1million for an individual.
The Central Bank’s director of enforcement Seana Cunningham said: ‘As one of our first enforcement cases to go to inquiry, the conclusion of this inquiry is significant in many respects. ‘It demonstrates the Central Bank’s willingness to pursue cases all the way to inquiry, if merited, under the Central Bank’s Administrative Sanctions Procedure.’
She said it had been critically important that the bank had won the High Court challenge brought by Mr Lunney and Mr McCaffrey.
She said this was because the Administrative Sanctions Procedure was the key enforcement process under which the Bank could act against firms that breach regulatory requirements, and senior individuals who participate in those breaches. ‘Since 2006, the Central Bank has imposed monetary penalties of more than €105million through our enforcement actions,’ she added.
‘Willingness to pursue cases’