A week of division at the INBS inquiry
Former bank boss Michael Fingleton the star attraction, writes Gretchen Friemann
MICHAEL Fingleton, the former high-flying head of Irish Nationwide Building Society (INBS), this week lashed out at the Central Bank Inquiry set up to examine the collapse of the institution he led for 38 years.
As the Inquiry into alleged regulatory breaches by five directors into the run-up to the collapse of INBS finally swung into action last week, the almost 80-year-old banker stuck to a definite script.
The blame for the lender’s demise, and the €5.4bn cleanup bill foisted on the taxpayer, was the “collective” fault of the financial regulator, the Central Bank and the Department of Finance, he said. All three, Mr Fingleton asserted, had failed in their “statutory duty” to the State.
On Tuesday morning, a day later than anticipated, Michael Fingleton finally took to the floor and left no one in any doubt about his view of the Inquiry.
He railed against the “artificially” trumped-up accusations, branding the entire process an exercise in “scapegoating” designed to divert attention from the Central Bank’s own culpability.
But by mid-afternoon, towards the end of a two-and-ahalf hour speech, he seemed a spent force. His speech faltered, there were lengthy pauses and some moments of confusion as he struggled to locate relevant quotations, which he then promised to “clarify later”.
He reminded the three-member panel, led by solicitor Marian Stanley, that it had “taken seven years just to get to this stage”.
Michael Fingelton is the main draw at the Inquiry, which is taking place in the shabby DMG Building at Blackhall Place in Dublin’s north inner city.
If the Inquiry panel upholds seven separate allegations of special prescribed contraventions against five former INBS directors, each could face a penalty of up to €500,000. The stakes are high.
A key issue relates to the role of a Credit Committee that was charged with overseeing lending. But the Inquiry’s targeted conclusion date is anyone’s guess.
Michael Collins, senior counsel for INBS’s former chairman, Michael Walsh, predicted in his marathon opening speech on Wednesday that the process could run for over two years – at a “conservative” estimate.
In a suave delivery, peppered with droll asides, Mr Collins argued that the precise nature of this “morass that we are engaged in” (the Inquiry) remains unclear.
On Monday, Brian O’Moore, a member of the Central Bank’s legal team, stressed we are “not prosecutors”. He said this is not a “tribunal”.
So what is it, Mr Collins demanded? “Here we have an Inquiry where no one is making a case against any one else. We are all the best of friends.”
He pointed up what he called “inherent conflicts”, arguing that the Central Bank was involved in every level of this “case” from the assembling of evidence, via its enforcement unit, to its prosecution, and telling the independent Inquiry panel that “structurally” and under the law “you are all agents of the Central Bank”.
He stressed that his client, had, as chairman, been assured by management that all concerns raised by INBS external auditor KPMG and the regulator had been attended to.
He added that the allegation in relation to the role of the INBS Credit Committee ultimately derived from EU legislation that places the emphasis on the correct establishment of policies.
INBS was “swimming in policies”, he said.
Many of those disagreements with the Inquiry’s foundation and its central claims were echoed by Mr Fingleton, as well as the three remaining directors subject to the investigation: the ex-finance director, John Stanley Purcell; the former head of commercial lending, Tom McMenamin; and William Garfield McCollum, who led the Society’s UK lending operations.
But amid all the objections and outrage, the opening testimonies also laid bare stark differences between Mr Fingleton’s version of events and those of his former colleagues.
Seated beside Mr Purcell at the far end of a long table that faced the panel, the once powerful INBS head was barely visible from the tiny glass-framed room reserved for the public and media.
During his speech, he re- peatedly asserted he had joined the credit committee only in December 2007. But as soon as he’d resumed his seat, Mr Purcell gave the precise opposite recollection.
Mr Fingleton had indeed been member of the committee, a and vendor due diligence documents, signed off on by the executive management supported that fact, he said. He reminded the panel the veracity of these documents can be relied upon unlike the “veracity of individuals that can be subject to bias”.
Mr McMenamin’s view of his own role within the organization also highlighted sharp differences with Mr Fingleton’s account.
He portrayed himself as a near “administrative assistant” who lacked the skills or status to challnge Mr Fingleton, who he said was “fearfully” referred to as “The Boss”. Mr Fingleton said Mr McMenamin was an “experienced banker”.
The hearing resume on January 9. Twenty witnesses scheduled to appear, including the former regulator, Patrick Neary.