BACKGROUND:NIB helped some customers evade tax and overcharged others on Jim Lacey's watch
SEVENTEEN YEARS have passed since Jim Lacey last closed the door on his chief executive’s office at National Irish Bank (NIB), his employment abruptly terminated by his then Australian overlords.
At that stage, he was among the highest-profile bankers in the State, in part for unfortunate reasons. In 1993, his family had fallen victim to what would now be known as a “tiger kidnapping”, where Mr Lacey was forced to withdraw £243,000 from a National Irish Bank vault while his wife and children were held hostage by Martin Cahill’s criminal gang.
He had been appointed as chief executive in 1988 and, until the kidnap, was known for spearheading a campaign to raise the bank’s profile. This included innovations such as lower interest rates, with changes accompanied by an advertising campaign featuring fictitious NIB manager Martin, who would repeatedly call his cousin Niall about the great deals the bank was offering.
As it happened, the bank was indeed offering deals, just not of the type that met standards that should be expected of a bank.
In 1998, four years after Mr Lacey’s tenure at NIB had ended, RTÉ aired two reports about the bank that would fundamentally change its course and, ultimately, lead to yesterday’s disqualification. The broadcaster had unearthed evidence that NIB, then owned by National Australia Bank, was operating a scheme which allowed customers to evade tax by investing in an Isle of Man- based investment company.
The scheme, involving Clerical Medical International, saw money flowing out to the Isle of Man, but subsequently coming back to the Republic, allowing for easy access by customers via an anonymous number rather than a name. The investments were heavily promoted by the bank, which drew hefty fees from their operation, and proved popular with customers with “hot” money.
Separately, but in parallel, it emerged that NIB had been (apparently randomly) loading customer accounts with interest and adding fees that were not owed. In turn, the bank’s profits were boosted and its executives’ earnings swelled.
Mr Lacey had moved on to other positions before the scandal broke, including a stint in the top job in publishing company Lafferty. He joined the directors’ circuit, becoming chairman at the Irish Aviation Authority and the Dublin Docklands Development Authority.
He stepped down after RTÉ’s reports were aired, just as the High Court was appointing inspectors to investigate the goings-on at the bank.
The inspectors reported in 2004, and Paul Appleby, the director of corporate enforcement, launched disqualification proceedings against Mr Lacey and eight others in NIB the next year. Mr Lacey opposed the move at every stage.
It later emerged that the former chief executive knew directly of at least some of the overcharging, having had sight of internal audit reports that highlighted the issue at two branches. He said in an internal memo that the practice should stop but did not mention the need to pay back customers’ funds.
He denied knowledge of internal bank memos about “hot” money and said he was unaware of the actions of the team leading the Clerical Medical International investments. He also said he was never presented with evidence of widespread tax evasion.
In 1999, Mr Lacey appeared before the Dáil Committee of Public Accounts and rejected suggestions of “slack enforcement” at NIB.
