Auditor denies knowledge of alleged secret deal between Lynn and Fingleton

‘Our procedures could have been better’ former Irish Nationwide auditor tells court

An auditor for Irish Nationwide has told a million-euro theft trial that he had no knowledge of any alleged secret deal between the accused and former bank boss Michael Fingleton.

Former solicitor Michael Lynn (53) is on trial at Dublin Circuit Criminal Court accused of the theft of about €27 million from seven financial institutions.

Mr Lynn of Millbrook Court, Red Cross, Co Wicklow, has pleaded not guilty to 21 counts of theft in Dublin between October 23rd, 2006, and April 20th, 2007.

It is the prosecution case that Mr Lynn obtained multiple mortgages on the same properties in a situation where banks were unaware that other institutions were also providing finance.


The financial institutions involved are Bank of Ireland Mortgages Bank Ltd, Danske Bank, Irish Life and Permanent, Ulster Bank, ACC Bank plc, Bank of Scotland Ireland Ltd and Irish Nationwide Building Society.

On day 13 of the trial, defending counsel Feargal Kavanagh SC was cross-examining Killian McMahon, an internal auditor for Irish Nationwide Building Society between 2003 and 2006 about the bank's lending practices.

Mr Kavanagh told the jury that he was attempting to establish that the loan procedures were "more in the breach than in the observance".

He said this was a case where a bank was “giving money out willy nilly” and then came back to “whinge about it later”.

‘Cared about money’

Judge Martin Nolan told Mr Kavanagh that there was no evidence that this bank didn't care about its money. "They cared about their money," the judge said.

After Mr Kavanagh described Irish Nationwide as a "reckless institution", Judge Nolan told counsel, "I don't think you should propagandise" during his questioning and that "his function was not to make comments".

Mr Kavanagh put it to the former bank auditor that the building society was “guilty of reckless lending and management”.

“Our procedures could have been better,” Mr McMahon replied.

Mr Kavanagh asked “was it just negligence” that led to the bank’s operations costing the Irish State billions of euro.

Counsel went on to ask Mr McMahon if he was aware of files recording the dealings of Irish Nationwide’s then chief executive Michael Fingleton with high-net-worth individuals.

Mr McMahon said he had no reason to believe there were any such files.

When asked if he was aware of any secret profit deals, Mr McMahon replied there was no such thing as secret profit deals, as far as he was aware. “That’s the nature of a secret,” he said at one point.

Mortgage applications

Mr Kavanagh said he was instructed that his client and Mr Fingleton met over coffee and he asked the witness if there would be a note of that.

Mr McMahon said it was unlikely. Mr Kavanagh asked if they were “discussing a secret loan deal”.

Judge Nolan asked counsel was he putting it to the witness “that there was a secret deal between Mr Fingleton and Mr Lynn”. Counsel replied “yes, and does he know anything it?”

Mr McMahon replied “I don’t”.

Earlier, Patrick McGrath SC, prosecuting, brought Mr McMahon through every investment property Mr Lynn took mortgage applications out on with INBS.

The court heard the bank was at a total loss of just under €4.2 million after it emerged other banks had advanced loans to Mr Lynn on the same properties.

Internal documents within INBS concluded in February 2008 that “suspect documents, undertakings, representations and submissions were submitted in support of the mortgage application(s)”.

“It was clear the information provided was false and misleading and Mr Lynn misrepresented his position.

“The society believes it was the victim of a deception and it would not have advanced any monies to Mr Lynn in this case if it had been aware the information supplied was false and misleading.”

The trial continues before Judge Martin Nolan and a jury.