Ex-NIB executive barred for 10 years by court

The High Court yesterday disqualified former National Irish Bank (NIB) executive Nigel D'Arcy from being involved in managing…

The High Court yesterday disqualified former National Irish Bank (NIB) executive Nigel D'Arcy from being involved in managing a company for 10 years. Mr D'Arcy is the first NIB executive to be barred as a result of a tax evasion scandal at the bank in the 1990s.

Mr Justice Peter Kelly yesterday held that the conduct of Mr D'Arcy, as outlined in the conclusions of the July 2004 report of the inspectors who investigated the affairs of the bank, was such as to make him unfit to be concerned in the management of any company and granted the application by the Director of Corporate Enforcement for a disqualification order under Section 160 of the Companies Act 1990.

Mr D'Arcy had consented to the order being made.

The judge said the inspectors had found Mr D'Arcy, as head of NIB's Financial Advisory Services Division for several years, was fully aware that Clerical Medical Insurance (CMI) policies were being promoted within the bank as a means of enabling customers evade tax and that he could have stopped the practice but did not.


Mr D'Arcy, of Castledillon, Straffan, Co Kildare, was recruited by former NIB chief executive Jim Lacey to head the financial advisory services division and did so from 1989 until the inspectors were appointed to the bank in 1998. Mr D'Arcy reported directly to Mr Lacey for a time.

Mr Justice Kelly said he was in the upper levels of bank management and, while he was not at the very top level of management, he was at just one remove from it.

"An extremely serious level of the conduct was that all of it was taking place within a bank," the judge remarked. Banks occupied a special position in society and were licensed to carry out financial transactions which ordinary corporate entities were not.

"The edifice of banking is built on a foundation of trust," Mr Justice Kelly said. "On the inspectors' findings, there was a breach of trust by dishonesty on the part of the bank in the operation of the CMI policies. That operation was carried out over a period of years in a deliberate fashion.

"The inspectors held that Mr D'Arcy could have stopped the practice but did not do so. They held him primarily responsible for the continuation of the practice."

This was demonstrative of "a lack of commercial probity" on Mr D'Arcy's part, the judge said. "I am of opinion that the director [ of corporate enforcement] has proved that the conduct of Mr D'Arcy as found by the inspectors was such as to make him unfit to be concerned in the management of any company."

The judge held that the appropriate disqualification period in Mr D'Arcy's case was 12 years but said he would reduce that period to 10 years given Mr D'Arcy's attitude to the application by the director of corporate enforcement for the disqualification order. He said Mr D'Arcy should be given credit for that attitude.

The judge noted Mr D'Arcy had indicated from the outset that he would not contest the director's application and had in fact consented to the disqualification order being made. He had also gone somewhat further in that he had resigned immediately from two companies of which he was a director and had also offered to give an undertaking not to be involved in the formation or the management of any company.

The judge further noted that he had no idea of the impact the disqualification order would have on Mr D'Arcy as the former manager had chosen not to give evidence to the court on the director's application. Mr D'Arcy was represented at earlier hearings but his counsel, Paul Gardiner SC, said he was instructed to make no submissions. Mr Gardiner did state there was "no denial of wrongdoing".

After judgment was delivered, Brian Murray SC, for the director, said he was instructed not to seek costs against Mr D'Arcy of the application. Counsel said this was because of the attitude adopted by Mr D'Arcy. Counsel said the director's attitude in this case was not to be taken as a precedent for other cases.

The judge said he considered the director's attitude regarding costs as entirely appropriate in this case and said he would make no order for costs.

The director has applied for similar orders against eight other NIB former directors or managers, including Mr Lacey. Those applications are being opposed by the eight respondents and hearing dates have yet to be fixed.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times