INBS inquiry hears credit committee agendas were ‘a sham’

Irish Nationwide Building Society’s former head of commercial lending, Tom McMenamin, has conceded that agendas for credit committee meetings at the lender were “a sham”.

Mr McMenamin, appearing on Wednesday at an ongoing inquiry into alleged regulatory breaches at the now-defunct society, acknowledged that a number of issues listed for discussion at the committee meetings during the property boom were never brought up.

Mr McMenamin was shown agendas for a number of meetings in May 2005 that said the committee would discuss matters in adherence with its terms of reference. These included large loans in arrears, reports on sectoral concentration, as well as issues raised by internal auditors, outside advisers or regulators.

He said under questioning by Brian O’Moore SC, of the legal team assisting the inquiry, that these items weren’t discussed.

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An agenda for a meeting in June 2005 also said that the committee would consider a credit review on top borrowers when no such report was available, the inquiry heard.

“The agenda appears to be a bit of a sham, Mr McMenamin,” Mr O’Moore said.

Mr McMenamin, who is one of four former INBS executives subject to the inquiry into matters that took place between August 2004 and September 2008, replied: “Based on that, yes.”

Substance

When Mr O’Moore asked if items were put on the agenda “to give substance to the notion” that they were being looked at, when they weren’t, Mr McMenamin, who acted as de facto chairman of the credit committee, said: “Possibly, yeah.”

The inquiry, which started public hearings in December, is in its first phase. It is looking at allegations that the credit committee failed to adhere to its terms of reference. This of one of seven alleged contraventions at the INBS in the run-up to the financial crisis that are subject to the investigation, which was initiated three years ago by the Central Bank.

Mr McMenamin also admitted at the hearing on Wednesday that he gave an untrue statement in December 2005 to the personal assistant to the society's then managing director, Michael Fingleton, that the credit committee had reviewed a credit report given to him two months earlier. At the time, the society was under pressure from regulators to provide minutes of credit committee meetings showing that such reports were being discussed, when in fact they were not.

“In hindsight, I shouldn’t have done it,” Mr McMenamin said.

€300m loans

It also emerged during the hearing on Wednesday that the credit committee reviewed and recommended the board approve more than €300 million in loans during a four-week period from late June 2005 when Mr McMenamin was in Australia visiting his son. Only one member of the credit committee was present at that stage, when it needed a quorum of three to discuss and recommend loans.

Mr McMenamin said he did not see any documentation on the loans during that period, even though they were signed off on his behalf.

Mr Fingleton and INBS’s former finance director, John Stanley Purcell, who are also subject to the inquiry in relation to the workings of the credit committee, are expected to give evidence within the coming week.