There are, I think, a number of questions that need to be asked:
1. Why did Mr Fingleton get the €1m bonus, and then give it back?
2. Why did Mr Fingleton get a pension of close to €30m?
3. Why were the media obsessed with the former and not the latter sum?
4. Why did Mr Fingleton deserve a substantially larger pension than RBS chief Fred Goodwin (RBS was once the largest company in the world by asset value, unlike INBS)
5. Why has Mr Fingleton received none of the backlash as a result? Unlike AIG executives in the US, or Goodwin himself?
6. Why did the Sunday Independent run a page one story about what it said was essentially a non-story?
7. Why did the Irish Times run the story in apparent isolation from other interesting elements of the story?
Curious indeed. First things first though, that Irish Times story from last week. It raises more questions than it answers. Emphasis mine:
IRISH NATIONWIDE chief executive Michael Fingleton personally authorised a fast-tracked loan of €40,000 from the building society last year to Celia Larkin, former partner of ex-taoiseach Bertie Ahern. The payment was connected to transactions investigated by the Mahon tribunal as part of its inquiry into Mr Ahern’s personal finances.
Mr Fingleton approved a loan of €40,000 to Ms Larkin on March 4th, 2008 without the standard criteria being fulfilled initially on the loan application. Ms Larkin did not provide documents normally required by customers borrowing such loans when she applied for the money.
The loan was provided to Ms Larkin without showing proof of her income, identification, current account statements or details of other loans she had drawn down. Mr Fingleton personally signed off on the loan and no documentation was received by the lender when Ms Larkin’s loan was approved.
Last year the Mahon tribunal conducted inquiries into an account with the Irish Permanent Building Society in Drumcondra called the B/T account from which Ms Larkin received €30,000 in March 1993, and which was used for the purchase of a house in Phibsborough.
The tribunal was told the account held political contributions donated to Mr Ahern’s political operation in the Dublin Central constituency.
Mr Ahern’s disclosure in the witness box in February 2008, when he was still taoiseach, that money from the B/T account had gone to his former partner, caused a huge political controversy. The tribunal was subsequently told by Ms Larkin that she had repaid the money in early February, using a €40,000 loan she had received from Mr Ahern.
Ms Larkin left a signed blank cheque into Mr Ahern’s constituency office in St Luke’s. He later supplied her with a figure for the repayment of the money with interest, and a secretary in St Luke’s filled in the cheque, completing the transaction. A spokesman for Irish Nationwide said that it did not discuss the affairs of customers.
Interesting, isn’t it? But why did Ms Larkin turn to Mr Fingleton? Why did he personally see to it? Why did Ahern give her the money first? Why did Larkin leave a blank cheque at St Luke’s? The Tribunal too was curious about some of these questions. In June last year it put some of these questions to Ms Larkin.
Now, some history.
Up until 1989, building societies in Ireland were regulated by the Registrar of Friendly Building Societies. Regulation was then handed over to the Central Bank. This was amid allegations that building societies were highly secretive and kept information from their members.
Despite the Central Bank taking over regulation, building societies were not without their scandals, some of which will look familiar to us now.
In March 1993, Dr Edmund Farrell, executive chairman at Irish Permanent Building Society was suspended over an investigation into a property deal. The deal concerned Mr Farrell’s £600,000 home in Foxrock. Essentially it seemed that the house had been transferred to the ownership of the society, which then paid off the mortgage. He then leased the house back from the society from 1987 to 1991. The investigation centred on money spent on the house by the society, including the installation of security cameras.
I digress. Back to Mr Fingleton.
The Mespil loan
Under the Building Societies Act 1989, loans made to directors, the interests of directors, either directly or indirectly in any contracts or proposed contracts with the society, must be registered and made available to society members to inspect.
Also under Section 56 of the Act, a society director may receive a property loan of up to £50,000 at preferential rates, but only where it is for their main residence. Any other loan would have to be at commercial rates. In early 1993 this register was reported and no loans to Mr Fingleton were reported.
Here’s where it starts to get interesting, but we have some way to go yet, so stay with me.
The current editor of the Irish Times, Geraldine Kennedy, then a reporter, wrote a story in May 1993 that Michael Fingleton got a mortgage from Irish Nationwide, the society he was managing director of, towards the purchase of a 1-bedroom flat in the Mespil Estate. In all, Mr Fingleton bought four apartments. with one mortgaged from the society.
But Mr Fingleton was not the only one to buy apartments in the estate, and not the only one to get a mortgage from Irish Nationwide. Solicitor Andrew O’Rourke bought two apartments in trust for two daughters of then Fianna Fail taoiseach Albert Reynolds, Emer and Leonie.
100% mortgages were advances to 51 customers to buy 93 apartments. These included the then Attorney General Harry Whelehan, Marian Finucane, AIB’s Anthony Spollen, former publican Dessie Hynes and the then Comptroller and Auditor General Patrick McDonnell.
Of course Mr Fingleton had not declared the purchased of the apartment, as he was obliged to do under the Building Societies Act. He later corrected the record. The following year, further details emerged. Central Bank filings in 1994 showed that seven loans totalling £342,000 were made to people and a company connected with society chairman Peter O’Connor. Five loans totalling £163,000 were made to people connected to director John Murphy.
Four loans with a total value of £125,500 were made to people connected to Mr Fingleton, including the £110,000 loan to himself. Three loans were advanced to Peter O’Connor, son of the chairman. Mr Fingleton’s brother also took out loans.
As long ago as 1994, Mr Fingleton’s salary, then an enormous £249,000 a year, was questioned by shareholders.
In 1999, Mr Fingleton was threatened with imprisonment by a High Court judge over the employment and treatment of a branch manager in Cavan town.
All very interesting. But how does it relate back to our current questions?
Fast forward to 2000, and the Flood Tribunal is in full swing. On April 19, 2000, Frank Dunlop stopped stonewalling and after reflecting overnight, said he had participated in wholescale corruption. I myself was at the Flood Tribunal that day.
Someone else was giving evidence that day though, Michael Fingleton.
The “Starry” O’Brien case
The weekend after Dunlop admitted his involvement, The Sunday Independent and the Sunday Business Post ran with a front page story detailing an alleged £50,000 payment, made to two senior Fianna Fail figures, one of them a Cabinet member. As it turned out this was a story put forward by Denis “Starry” O’Brien, and it later turned out to be false.
Mr O’Brien told the Sunday Business Post he delivered two cheques for £50,000 each to Fianna Fail politicians in 1989. He said he was given a cheque for £100,000 by Owen O’Callaghan which he lodged to a Cork branch of the Irish Nationwide Building Society.
He then withdrew two cheques for £50,000, which he said were passed on to the politicians. One was allegedly handed over to Bertie Ahern in the carpark of the Burlington Hotel in Dublin and the other at the Silver Springs Hotel in Cork. This money was allegedly given in relation to planning at Quarryvale.
Mr Ahern initiated legal action for defamation against Mr O’Brien. On July 10, 2001, Mr Ahern was awarded the maximum £30,000 damages.
But at the end of June, before the case started, Mr O’Brien instructed his lawyers to withdraw his entire defence. Mr O’Brien told The Irish Times that he had decided to “walk away from the case”. He said: “There is nothing in it for me. I was sucked into this. And I am now unsucking myself. I never mentioned Mr Ahern by name.”
An affidavit by Mr Michael Fingleton given to the Flood Tribunal stated that INBS documents produced by Mr O’Brien had been forgeries.
Mr Connolly resigned from the newspaper as a results of its apology over the affair, and Tom Gilmartin, who was totally unrelated to the story, later said he believed the entire affair was a “setup”. Indeed, Mr O’Brien only made the payment of the award to Mr Ahern in 2006, just prior to the deadline, and prompted by media queries. Mr Connolly apparently believes the entire Starry saga to have been a ruse, fabricated by Starry to create allegations similar to the ones Gilmartin was making in relation to bribes given to Ahern.
Fingleton and Flood
In February 2000, the Flood Tribunal wrote to Michael Fingleton seeking all documents and records relating to deposits and withdrawals made at the Patrick Street branch of Irish Nationwide in Cork between June 1, 1989 and September 30, 1989. It also wanted similar records for March 15, 1987 to April 15, 1989. It appeared to be related to the “Starry” O’Brien allegation.
Mr Fingleton was summoned to appear before the tribunal, after undertaking to produce the specific documentation. He was called after the society failed to produce it. He said a search of the society had failed to produce the details of lodgments and withdrawals, as well as cheque journals and other journals for the period between March 15, 1987 and September 30, 1989.
On April 19, 2000, he again appeared before the tribunal, where SC for the tribunal Patrick Hanratty told Mr Fingleton he was in breach of the tribunal’s order. Justice Flood complained that it had taken the society too long to come to that point and did it was not appropriate.
Mr Fingleton said a flood at the Grafton Street branch, where he said some INBS documents were centrally stored had led to the loss of documents.
At one stage, Mr Fingleton said documents had been placed in central storage. Asked where that was, he replied: “Everywhere”. Justice Flood accused him of having a “cavalier” attitude.