NIB tax evasion report flawed, says Lacey

Former National Irish Bank chief executive Jim Lacey claims that the report of the inspectors into tax evasion at the bank in the 1990s is "flawed" and that the inspectors are guilty of "basic errors", the High Court heard yesterday.

Mr Justice Peter Kelly was also told that another former senior NIB executive, Michael Keane, is considering bringing a constitutional challenge to a provision of the Companies Act 1990 which confers a certain evidential value on the July 2004 report of the NIB inspectors. In their report, the inspectors made a number of adverse findings relating to Mr Keane, Mr Lacey and several other former NIB executives.

If a challenge to the constitutionality of Section 22 of the 1990 Act is brought, it is likely to delay the hearing of proceedings by the Director of Corporate Enforcement against eight former NIB executives, including Mr Keane and Mr Lacey, in which the director wants orders disqualifying them from involvement in the management of any company.

Even if the challenge is not brought, at least some, if not all, of the applications will not be heard until next year. Documents have to be discovered in relation to a number of the cases and preliminary issues may also be raised.

Mr Justice Kelly yesterday dealt with a number of legal matters preparatory to the hearing of the applications brought by the director. The eight respondents in the proceedings are: Mr Lacey, Barry Seymour, Mr Keane, Frank Brennan, Patrick Byrne, Kevin Curran, Dermott Boner, and Tom McMenamin, College Grove, Castleknock, Co Dublin.

A similar application has been brought against another former NIB executive, Nigel D'Arcy of Castledillon, Straffan, Co Kildare. Counsel for Mr D'Arcy told the judge last week Mr D'Arcy was consenting to the disqualification order and there was "no denial of wrongdoing". Mr Justice Kelly has reserved judgment in Mr D'Arcy's case.

Yesterday, the judge noted the eight other respondents were disputing the inspectors' findings. He was told that some, including Mr Lacey, are seeking discovery of certain documents from NIB. The judge directed that discovery be completed within certain timeframes. He also set timeframes for the delivery of legal documents by the respondents and the director. The judge said he would deal with directions regarding Mr McMenamin's case today. He also adjourned the case of Mr Curran to today to allow counsel have discussions on reducing the number of documents being sought. He returned the applications relating to Mr Boner, Mr Keane, and Mr Lacey, who are all seeking substantial documentation from NIB, to February 7th, 2006, when he will make directions regarding proceeding to trial.

Lyndon MacCann SC, for Mr Keane, said he was considering whether to bring a constitutional challenge and was also considering whether to seek a trial on a preliminary issue relating to the standard of proof required to rebut presumptive findings of fact in the inspectors' report. Brian Murray SC, for the director, said there could be real difficulties in trying to address the meanings of matters such as evidence and "primary facts" out of context. The judge said it was his view that preliminary issues should not be tried in an abstract or "fact free zone" but he was making no decision on those matters. The judge returned the application relating to Mr Brennan, who is seeking only a small number of documents, to December 15th next when he will make further directions.

The applications in relation to Mr Byrne and Mr Seymour, who are not seeking discovery, were returned to November 10th. John Hennessy, for Mr Byrne and Mr Seymour, said he had concerns that it was not clear what the issues in the case were. Mr Justice Kelly remarked that the areas of dispute were "crystal clear".