Irish Nationwide directors look to block Central Bank inquiry

Aodhán O’Faolain and Ray Managh

The inquiry into alleged regulatory breaches at Irish Nationwide Building Society is by the Central Bank violates the constitutional rights of a former director of the troubled lender to a trial by an independent judge, the High Court has heard.

The claim was made in the High Court on behalf of John Stanley Purcell who was a director and company secretary of INBS until his retirement in 2010.

Mr Purcell, along with several other former officers of INBS, including longtime chief executive Michael Fingleton, are the subject of a Central Bank inquiry into allegations that certain prescribed contraventions were committed by INBS and persons concerned with its management, between August 2004 and September 2008.

Separate High Court proceedings by Mr Fingleton – also aimed at stopping the Central Bank inquiry – were adjourned yesterday.

His challenge is based on several grounds including there had been a lengthy delay in bringing the inquiry, bias, and that the Central Bank cannot conduct an inquiry of this nature because Mr Fingleton, who retired in 2010, is no longer involved in the management of a regulated financial service provider.

In his proceedings against the Central Bank, Ireland and the Attorney General, Mr Purcell argues the inquiry, and the powers it purports to exercise, are unconstitutional.

His lawyers asked Mr Justice Robert Eager Thursday for an injunction until his constitutional challenge against the inquiry – brought under Part III C of the 1942 Central Bank Act – has been determined.

The Central Bank, represented by Paul Gallagher SC, Remy Farrell SC and Paul Anthony McDermott, opposes both the challenge and the application for an injunction.

Mr Purcell claims the Central Bank inquiry will act in a manner that is expressly reserved for the courts and which is therefore in contravention of Article 34 of the Constitution. The inquiry also breaches his constitutional right to a trial, under Article 38 of the Constitution, and his rights under the European Convention on Human Rights, it is further claimed.

Seeking the injunction, John Rogers SC who appeared with Reg Jackson, Mr Justice Eager that his client, along with Mr Fingleton and three others, was being subjected to an inquiry which was “in the nature of a criminal trial”.

He said Mr Purcell, if found to have done something wrong by the inquiry, could face a fine of up to €500,000 and be disqualified from holding a senior position in a bank.

The inquiry, counsel said, was an attempt by the Central Bank to potentially expose Mr Purcell to a disqualification and a monetary penalty that “would not be available in a trial before a jury.”

Those conducting the inquiry could not be described as being independent in the same manner that a judge is, Mr Rogers said. Under statute, the persons appointed to conduct the inquiry are “agents of the Central Bank”, counsel said.

He said the injunction was being sought because the Central Bank refused requests not to proceed with the inquiry until the constitutionality of the process had been determined. While the inquiry is due to commence in February, some preliminary matters, including a requirement that Mr Purcell complete and submit a detailed questionnaire to the inquiry, have to be concluded by the end of this month.

Mr Purcell, of Fortfield Park, Terenure, Dublin, resigned as a director of INBS in 2010. Irish Nationwide was nationalised in 2010 after receiving a €5.4 billion bailout. It was folded into Irish Bank Resolution Corporation in 2011, alongside Anglo Irish Bank, for wind down. IBRC was liquidated by the State in February 2013.

The hearing continues.