INBS in­quiry hears con­flict­ing ev­i­dence on loans

In­quiry told that credit com­mit­tee ‘never con­sid­ered credit re­view’ at meet­ings

The Irish Times - Business - - BUSINESS NEWS - JOE BREN­NAN

The Ir­ish Na­tion­wide Build­ing So­ci­ety (INBS) in­quiry has heard con­flict­ing ac­counts of whether a key com­mit­tee con­sid­ered re­ports on top bor­row­ers in the run-up to the fi­nan­cial crash, as the lender had as­sured reg­u­la­tors and out­side au­di­tors was tak­ing place.

INBS’s then com­mer­cial lend­ing man­ager, Tom McMe­namin, one of four men un­der in­ves­ti­ga­tion for al­leged reg­u­la­tory breaches, wrote in an in­ter­nal email in late 2005 that the credit com­mit­tee, of which he was a mem­ber and whose meet­ings he of­ten chaired, had dis­cussed 89 large bor­rower cases sub­mit­ted to him that Oc­to­ber by credit ad­min­is­tra­tor, Frank Casey, the in­quiry heard on Tues­day.

How­ever, Kel­ley Smith, of the team of le­gal prac­ti­tion­ers as­sist­ing the in­quiry, said a num­ber of one-time mem­bers of the credit com­mit­tee have tes­ti­fied to the in­quiry it never con­sid­ered credit re­views at their reg­u­lar meet­ings.

Con Power, a non-ex­ec­u­tive di­rec­tor at INBS be­tween 2000 and 2006, told the in­quiry as he was be­ing ques­tioned by Ms Smith on Tues­day that he would have been “deeply shocked” if he had learned that the com­mit­tee was not re­view­ing these files.

Top loan cases

INBS had com­mit­ted to its out­side au­di­tors at KPMG and the then reg­u­la­tor, If­sra, that the com­mit­tee would re­view top loan cases on a quar­terly ba­sis from Septem­ber 2005, fol­low­ing con­cerns raised by both about credit con­trols at the lender. Min­utes from a board meet­ing on De­cem­ber 21st, 2005, also showed the di­rec­tors had been in­formed by an in­ter­nal re­port the quar­terly credit re­view sub­mis­sions to the credit com­mit­tee had com­menced two months ear­lier.

The in­quiry also heard that INBS of­fi­cials had in­formed If­sra in De­cem­ber 2005 that the credit com­mit­tee had not only started dis­cussing credit re­views sub­mit­ted by Mr Casey, but that the so­ci­ety had started to fol­low up on rec­om­men­da­tions made by the com­mit­tee af­ter con­sid­er­ing such re­ports.

The INBS in­quiry was set up on foot of a Cen­tral Bank de­ci­sion in 2015 it had rea­son­able

Non-ex­ec­u­tive di­rec­tor said he would have been ‘deeply shocked’ if he had learned the com­mit­tee was not re­view­ing these files

grounds to sus­pect INBS com­mit­ted “cer­tain pre­scribed con­tra­ven­tions” be­tween Au­gust 2004 and Septem­ber 2008 and that cer­tain in­di­vid­u­als par­tic­i­pated in the com­mis­sion­ing of these. Mr McMe­namin and fel­low sub­ject of the in­quiry, Gary McCol­lum, who once headed INBS’s UK lend­ing from a Belfast base, have not been en­gag­ing with the in­quiry for some time.

INBS’s for­mer man­ag­ing di­rec­tor, Michael Fin­gle­ton, and one-time fi­nance di­rec­tor John Stan­ley Pur­cell, are rep­re­sent­ing them­selves. The first phase of the in­quiry is con­cerned with the func­tion­ing of the credit com­mit­tee of the now-de­funct INBS, which col­lapsed dur­ing the fi­nan­cial cri­sis and re­quired a €5.4 bil­lion tax­payer bailout.

The in­quiry is ex­pected to last un­til late 2019.

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