Former INBS director refused orders relating to Central Bank settlement

John Stanley Purcell wanted to see correspondence between Central Bank and INBS board

INBS’s eventual merger with IBRC left the State liable for some €5bn in losses at the society.  Photograph: Eric Luke / The Irish Times

INBS’s eventual merger with IBRC left the State liable for some €5bn in losses at the society. Photograph: Eric Luke / The Irish Times

 

A former director of Irish Nationwide Building Society has been refused court orders requiring the Central Bank give him correspondence concerning a settlement reached with INBS of an inquiry by the Central Bank over past conduct of its affairs.

The Central Bank last year began an administrative inquiry against INBS and some persons involved with its affairs between August 1st 2004 and September 2008, when the society crashed.

INBS’s later merger with State-owned IBRC left the State liable for some €5 billion in losses at the society.

John Stanley Purcell, a former director of INBS, is among those being inquired into and he has brought proceedings aimed at quashing the bank’s decision to hold the inquiry.

Full hearing

Prior to the full hearing, he sought orders requiring the Central Bank discover correspondence between it and the current board of INBS leading to the 2015 settlement of the bank’s inquiry against the society.

In a statement issued after that settlement, the Central Bank said INBS had admitted “mutiple failings” at several levels of its commercial lending process, including “all the way to its board of directors”.

It also said a €5 million fine was being imposed on INBS but, given the society had no assets, that fine would not be collected.

Mr Purcell alleges the Central Bank acted in bad faith by agreeing what he alleges was a “completely artificial” settlement with INBS.

The Central Bank described those allegations as “scandalous and vexatious”. The High Court last month refused Mr Purcell orders requiring the bank discover certain documents relating to the settlement.

Mr Purcell had raised concerns about how the case settled when the current INBS directors previously said in correspondence they did not have the information to decide whether or not claims over the conduct of INBS affairs under its “legacy” directors were true.

Mr Purcell claims the settlement and the Central Bank’s publication of the statement about that have damaged his reputation and his entitlement to earn a livelihood. The bank denies those claims.

Rejected

The three-judge appeal court on Friday rejected Mr Purcell’s appeal against the High Court refusal to order disclosure.

Ms Justice Mary Irvine, giving the court’s judgment, said litigation privilege over the documents was properly claimed by the Central Bank.

There was no question that litigation privilege attached to such settlement documents, she said.

Because of the finding the litigation privilege was properly claimed and had not been waived, the court did not think it necessary to take up the bank’s offer to inspect the documents at issue.

Mr Purcell remains entirely free to maintain his proceedings against the bank, the judge said. So far as the merits of that case were concerned, she was expressing no view at all, the judge said. It was sufficient to say Mr Purcell had available to him the basic legal materials to support his case, including the settlement itself and the admissions by the present INBS management regarding their lack of first-hand knowledge of pre-2010 events.