‘Nothing to indicate’ regulator’s letters were kept from INBS board, says former director

A former board member of Irish Nationwide Building Society (INBS) has said he has "no reason to believe" that any correspondence from the financial regulator was not brought to the attention of the board by the society's management.

David Brophy, who was a non-executive member of the board of INBS from March 2006 until the spring of 2009, told the inquiry into alleged breaches of lending practice at the society that that there was "nothing to indicate" to him that "anything was missing".

Mr Brophy, a former chief executive of property group Ballymore, said there was some “frustration” on the board at the speed at which business practices were being improved, but that “to be fair” to INBS management, this was often due to the squeeze on its resources.

The expected trade sale of INBS meant the society found it difficult to recruit people in the years before the property crash.

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In his time on the INBS's audit committee, a greater priority was given to responding to any issue identified as "a gap" by the society's external auditors KPMG, Mr Brophy said.

Auditor role

Asked about the failure of management to implement KPMG’s lending practice recommendations, Mr Brophy said the auditors couldn’t “wash their hands” of this, as the following year’s audit should have included a review of whether the changes had been implemented.

“It would by pretty remiss if they hadn’t checked,” he said.

KPMG audit partner Vincent Reilly is due to appear as a witness on Thursday.

The inquiry is seeking to establish if former INBS managing director Michael Fingleton and three other former managers of the building society were involved in seven so-called contraventions at INBS between August 2004 and September 2008.

The others are former INBS finance director Stan Purcell, former commercial lending manager Tom McMenamin and Gary McCollum, who once led the society's UK lending activities from Belfast. Mr Fingleton and Mr Purcell are both representing themselves at the inquiry.

The inquiry resumes on Thursday with Mr Fingleton continuing his cross-examination of Mr Brophy, followed by questions to the next witness to the inquiry, KPMG audit partner Mr Reilly.