Former INBS director says claim ‘vindictive’

A former director of Irish Nationwide Building Society (INBS) has alleged the Central Bank and other State entities have joined together in exposing him to a "vindictive and wholly unmeritorious" claim for damages of perhaps more than €1 billion and "ruin" him.

Letters, including correspondence from former INBS chief executive Michael Fingleton, showed it was apparent to the Central Bank in 2006 and 2007 the INBS board was not monitoring the delegation of the board's powers to Mr Fingleton, but the Central Bank "did nothing", senior counsel John Rogers said.

The action brought against John Stanley Purcell and other INBS directors by State- owned Irish Bank Resolution Corporation (IBRC) arising from the alleged unlawful delegation to Mr Fingleton seemed to have been devised in consultation with the Central Bank, he said.

Exoneration

It seemed a “deliberate decision” was made to “exonerate” the Central Bank and instead “go after citizens”, although the Central Bank, for over a decade and a half, approved the delegation to Mr Fingleton, leading to Mr Fingleton making deals and lending monies to developers allegedly without proper control by the INBS board, he said.

The Central Bank may have inquired about the delegation and added a rider to it, but it did “nothing” to ensure there was no abdication of the powers of the board, counsel said.

Mr Purcell would defend claims against him but, if found liable, the Central Bank was “a concurrent wrongdoer”.

IBRC, in bringing its proceedings against the directors, had not joined accountancy firm KPMG, former auditors of INBS, to the case, counsel said. IBRC had been liquidated in 2013 and its special liquidators, Kieran Wallace and Eamonn Richardson, were partners in KPMG, but Terence Cooney, one of the defendant directors, had applied to have KPMG joined, he added.*

Unusual structure

At the core of IBRC’s case was its claim an unusual management structure operated at INBS and, until the board resigned in 2009, it delegated all its powers for effective management and control of the society to Mr Fingleton.

IBRC alleged breach of contract, breach of duty, negligence and other claims against Mr Purcell, but there was no claim of dishonesty, he stressed.

Mr Rogers was beginning his arguments opposing a pre- trial application by the Central Bank to strike out claims by Mr Purcell alleging it acted in breach of duty, including statutory duty, and was guilty of misfeasance in public office arising from the alleged unlawful delegation of the board’s powers to Mr Fingleton.

Mr Purcell previously applied to join the Central Bank as a third party to the proceedings brought against him, former INBS chairman Michael Walsh and directors, Terence Cooney and David Brophy.

IBRC alleges the board’s powers were unlawfully delegated to Mr Fingleton between 1997-2009. INBS was later taken into State ownership with losses of some €6 billion.

The defendants deny the claims but, without prejudice to that denial, Mr Purcell is claiming indemnity and contribution from the Central Bank should IBRC win its case.

*This article was amended on June 26th 2014 to correct an error