Fingleton accused of having ‘excessive’ power
KPMG claims former MD loaned about €350m without board approval
KPMG, the special liquidator of what remains of Irish Nationwide, is seeking damages from Michael Fingleton and his board for alleged failures in their duties to the society.
Michael Fingleton, the former managing director of Irish Nationwide, has been accused of having an “unusual and excessive concentration” of power that allowed him lend €350 million to developers in three years without first getting the approval of his board.
Mr Fingleton it is alleged “enjoyed complete (or near complete) authority and freedom from oversight by the board in his conduct of the business of the society.”
The accusation is made in a statement of claim prepared in a civil action being taken by KPMG, the special liquidator of what remains of the building society, seeking damages from Mr Fingleton and his board for alleged failures in their duties to the society.
Lending policiesUnder the society’s own lending policies it said any loan above €1 million could not be granted without first being approved by the board of Irish Nationwide, chaired by Michael Walsh, a former professor of banking.
The claim against former executive and non-executive directors identifies 18 occasions when Fingleton loaned about €350 million between 2004 and 2007 to developers based in Ireland, the UK, Monaco, Jersey and Switzerland, without first getting the approval of his board.
The special liquidator claims in its action that this type of lending on the one hand shows the board failed in its duty to sufficiently monitor Mr Fingleton and on the other hand allegedly shows Mr Fingleton was lending in a manner that breached the society’s own rules.
Major loansThe 18 occasions where the board retrospectively gave approval to major loans in some instances later led to the society being hit with huge losses either because of the property crash or their alleged unorthodox and high-risk structure.
There is no suggestion with any of the loans granted of wrongdoing by the borrower.
The executive and board of Irish Nationwide is understood to be preparing its responses. It is understood it will be defending the claims. The non-executive board of INBS is expected to claim, among other things, that its positions were part-time and it could not be expected to monitor every aspect of the society.
Both the executive and non-executive directors of the bust society will use the frequent involvement of KPMG and the Central Bank of Ireland in the affairs of the society as part of their defence.