Ex-director at INBS claims agencies trying to ‘ruin’ him

A former director of Irish Nationwide Building Society has alleged the Central Bank and other State entities have joined together in exposing him to a "vindictive and wholly unmeritorious" claim for damages of perhaps over €1bn to "ruin" him.

Letters including one from former INBS chief executive Michael Fingleton showed it was apparent to the Central Bank in 2006 and 2007 that the Irish Nationwide board was not monitoring delegation of the board’s powers to Mr Fingleton, yet the Central Bank “did nothing”, John Rogers, counsel for John Stanley Purcell, told the Commercial Court yesterday.

The action brought against Mr Purcell and other INBS directors by the State-owned IBRC arising from the alleged unlawful delegation to Mr Fingleton seemed to have been devised in consultation with the Central Bank, Mr Rogers said.

It seemed a “deliberate decision” was made to “exonerate” the Central Bank and instead “go after citizens”, although the Central Bank, for over a decade and a half, approved the delegation to Mr Fingleton, leading to him making deals and lending monies to developers allegedly without proper control by the INBS board, he said.

The Central Bank may have inquired about the delegation and added a rider to it but did “nothing” to ensure there was no abdication of the powers of the board, counsel said. Mr Purcell would fully defend the claims against him but, if he was found liable, the Central Bank was “a concurrent wrongdoer”.

IBRC, in bringing its proceedings against the directors, had not joined accountancy firm KPMG, the former auditors of Irish Nationwide, to the case, counsel said.

IBRC had been liquidated in 2011 and its special liquidators, Kieran Wallace and Des Richardson, were partners in KPMG. But Terence Cooney, one of the defendant directors, had applied to have KPMG joined, counsel added.

Mr Rogers said IBRC, the Department of Finance, the special liquidators, and the Central Bank are “working hand in glove” and a choice was made to pursue individuals for damages which could amount to billions of euro instead of going after the Central Bank.

At the core of IBRC’s case was its claim that an unusual management structure operated at INBS and, until the board quit in 2009, it delegated all its powers for effective management and control of the society to Mr Fingleton.

IBRC alleged breaches of contract and duty, negligence, and other claims against Mr Purcell but there was no claim of dishonesty, Mr Rogers said.

He was beginning his arguments opposing a pre-trial application by the Central Bank to strike out claims by Mr Purcell alleging it acted in breach of duty, including statutory duty, and was guilty of misfeasance in public office arising from the alleged unlawful delegation of the board’s powers to Mr Fingleton.

The defendants deny the claims but, without prejudice to that denial, Mr Purcell is claiming indemnity and contribution from the Central Bank should IBRC win its case. He alleges the bank knew of and approved the alleged delegation.

The hearing continues.