Building society manager fails in court bid to block probe into his borrowings

A BUILDING society manager has lost a High Court bid to prevent an inquiry into his conduct over his own borrowings from his employer and over his handling of the €36 million accounts of a property developer.

Noel Harrington, manager of the Irish Nationwide Building Society (INBS) branch at Cruise’s Street, Limerick, also failed to get an order restoring him to his position after he was asked to step aside on January 26 last, following the appointment of an independent investigator into his conduct.

Yesterday, Mr Justice Garret Sheehan rejected his application for an injunction seeking to restore him to his position and for an order halting the inquiry until it is constituted with his consent and subject to his entitlements.

The judge said it was important to point out that Mr Harrington faces no allegations, is on full pay and is not regarded by his employer as being under suspension.

The judge was satisfied this was not one of those rare cases where someone could be restored to their position while an investigation was under way.

On the question of stopping the inquiry, the judge noted Mr Harrington did not question the independent investigator’s integrity or professionalism, but did attack the terms of reference.

The judge said the manner in which the investigator proposes to proceed with the inquiry accords fair procedures to Mr Harrington.

While there may be a fair question to be tried and damages may be an inadequate remedy for Mr Harrington, the balance of convenience favoured the INBS in refusing the application to stop the investigation.

The judge refused INBS’s application for the costs of the injunction hearing and said they could be dealt with in the full damages proceedings being brought by Mr Harrington and to be heard at a later date.

The High Court was told, during the two-day hearing, that the investigation was dealing with Mr Harrington’s handling of the €36m accounts of a major property developer and with his own personal borrowings on properties at Catherine Street, Limerick.

It was alleged Mr Harrington provided an incorrect lower redemption fee of €1.1m to a solicitor concerning those borrowings, which was passed onto INBS, when the actual redemption figure was €2.3m.

Another matter related to certain transactions which resulted in three customers taking proceedings against INBS claiming the return of an arrangement fee of €75,000.

Mr Harrington claimed INBS was using the investigation to engage in “a scapegoating exercise”.

He said he was not himself responsible for the handling of accounts of a property developer who owed around €36m to the INBS.

Those accounts were mandated and controlled from INBS head office “at a much higher level than me” and were almost “virtual” accounts as they were controlled from Dublin, he said.

He also said he had an explanation for the other matters related to his own borrowings from the INBS.

He argued that an inquiry into his conduct should be carried out in a more open and transparent way, and not via a narrow attack on his conduct alone.

The INBS argued the investigation was fair because it was being carried out by a solicitor who was independent of the company.

The INBS also argued the injunction application was unnecessary, premature and ill-conceived.

It contended that the investigation was necessary and rejected Mr Harrington’s claims to have fully co-operated with it.