Central Bank rejects as 'nonsense' claims by Michael Fingleton on inquiry into regulatory breaches

Central Bank rejects as 'nonsense' claims by Michael Fingleton on inquiry into regulatory breaches

by Ann O'Loughlin

The Central Bank has rejected as “nonsense” claims by former Irish Nationwide Building Society chief executive Michael Fingleton he cannot lawfully be subject to an inquiry into alleged regulatory breaches at the Society.

Mr Fingleton also contends his entitlement to a fair hearing has been prejudiced by the Central Bank’s publication of details of a settlement agreed with the Society itself over the bank’s inquiry.

Mr Fingleton is now aged 78 and has also been prejudiced by delay in the inquiry, particularly because it involves some 110,000 documents and his eyesight has deteriorated after a recent operation, his counsel Bill Shipsey SC outlined.

Mr Fingleton’s core argument in his appeal over the High Court’s dismissal of his challenge to the inquiry is he had retired before the inquiry was formally initiated in 2015 and the relevant law does not allow for inquiry into his “past” conduct of the Society’s affairs.

Paul Gallagher SC, one of three senior counsel representing the Central Bank, rejected that argument as “absurd” and “nonsense” while Remy Farrell SC, also for the Bank, argued “age per se” cannot be advanced as a ground for prejudice.

The appeal was heard yesterday (tues)y by the Court of Appeal, comprising Ms Justice Mary Finlay Geoghegan, Mr Justice Michael Peart and Ms Justice Mary Irvine. Ms Justice Finlay Geoghegan said there were "no obvious answers" to the issues raised and the court was reserving judgment.

The Central Bank estimates the collapse of INBS, which was nationalised and merged with the former Anglo Irish Bank in 2011, has cost the Irish public some €5.4 billion. That figure is disputed by Mr Fingleton, who joined INBS in 1971 and retired as CEO in 2009.

The Central Bank inquiry was initiated into allegations that certain prescribed contraventions were committed by both INBS, and certain persons “concerned with” its management, between August 2004 and September 2008.

If the allegations are upheld, the relevant law allows for imposition of sanctions of up to €5m on a regulated firm and up to €500,000 on individuals.

The Central Bank previously announced it had reached a settlement with INBS’ then management concerning the allegations against the Society and said the settlement involved INBS admitting multiple breaches of financial services law and regulations. The maximum €5m fine was imposed but the Central Bank said that would not be collected as INBS had no assets.

Mr Fingleton and several other former officials of INBS remain subject of the inquiry after separate challenges by him and another former INBS director John Stanley Purcell were rejected by the High Court last year.

In dismissing Mr Fingleton’s case, Mr Justice Seamus Noonan ruled a person who by virtue of their status was in a position to influence the actions of a regulated entity may be subject to Central Bank investigation even if they no longer held that position. He also found Mr Fingleton had failed to show any inherent unfairness in the inquiry process.

Mr Fingleton’s appeal centres on whether the relevant provisions of the Central Bank Act 1942, as amended in 2013, permit inquiry into “past” conduct of affairs at the Society.

Mr Shipsey argued the relevant provision – Section 33 AO 2 - only permits inquiry into “present” conduct of affairs at the Society. While the legislature may not have so intended, the Section provides a finding against an individual can only be made against a person involved in management of the Society on the date of the finding, he argued.

The Central Bank’s publication of its settlement with INBS, which counsel said referred to conduct of INBS at the “very zenith” of the alleged breaches and stated the maximum €5m fine was imposed on INBS, also prejudiced Mr Fingleton’s entitlement to a fair inquiry, it was submitted.

Mr Gallagher said the courts have power to avoid an absurd construction of the law and what was being argued for was “nonsense”. Mr Fingleton had not shown the High Court erred in any way in its various findings, he submitted.

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