National Bank almost lost licence

THE financial services regulator (IFSRA) considered withdrawing National Irish Bank’s banking licence in the light of its tax evasion overcharging scandals.

Dr Liam O’Reilly, chief executive, admitted yesterday that IFSRA considered withdrawing NIB’s banking licence given the range of scandals and that three former chief executives knew all about what was going on at the time.

In a submission to the Joint committee on Finance and the Public Service yesterday, Dr O’Reilly said the view, however, was that to do so would have frustrated the wide ranging inquiry that lasted for several years.

The report published last summer named 19 senior executives, including three former chief executives, Jim Lacey, Philip Halpin and Barry Seymour, as guilty of wrongdoing.

Most of those involved quit banking sector at this stage.

The regulator confirmed that NIB has closed the Financial Advice and Services Division responsible for selling the CMI products, and that all branch and business centre procedures manuals have been reviewed, rewritten and reissued. The bank has also allocated additional resources to training, and settled all liabilities arising from the DIRT investigations, the regulator said.

In his presentation, Dr O’Reilly said NIB will pay out €12.5 million in total to those who were overcharged or wronged during the period of tax evasion and overcharging scandals .

The investigation cost the bank €50m to complete.

So far the bank has paid out €5.3m leaving a balance of €7.2m to be returned.

Of the sum paid over, €1m has been paid to the charity Community Foundation for Ireland.

Commenting on the overall issue of who to prosecute etc Dr O’Reilly said “making an assessment of guilt was long and protracted.”

And he added that the Director of Corporate Enforcement and the Revenue Commissioners were also involved in the investigations of the NIB scandals.

Mr Bruton said it was difficult to understand why those in NIB found guilty of aiding and abetting tax evasion “haven’t been prosecuted.”

And he wondered of there was a “lacuna” or flaw in the legislation that set up the new regulatory body. Dr O’Reilly said in the case of those found guilty, it was IFSRA’s task to ensure those with serious misdemeanours “no longer work in the industry.”

In many ways, IFSRA’s prime responsibility is to ensure the financial institutions operate in a way that gives consumers full value for money.

In the case of serious misdemeanours and tax evasion, it was for others to initiate prosecutions, not IFSRA, he said.

An investigation of the type carried out on NIB was broad ranging and involved more than IFSRA which can cause confusion about who is responsible for taking certain actions, he said.

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