Judge gives deadline on joining KPMG as co-defendant in action

A judge said he wants to be told by the end of October whether it is proposed to join accountancy firm KPMG, former auditors of Irish Nationwide Building Society, as a co-defendant in a legal action brought over €6bn losses at the society.

Judge gives deadline on joining KPMG as co-defendant in action

Mr Justice Peter Kelly said a decision is awaited from either IBRC or others concerning the possible joinder of KPMG as a defendant. It seemed a law firm, Eugene F Collins, had been appointed to review legal advice on this issue and that was awaited.

The High Court judge said he had some sympathy in that regard with Terence J Cooney, a former director of INBS being sued for “enormous sums” who had himself joined KPMG as a third party and sought a stay on the proceedings pending a decision on the KPMG defendant joinder issue.

Until that decision was made, Mr Cooney does not know where he stands, the judge said. However, he did not believe Mr Cooney was prejudiced to the extent he should be granted a stay on the proceedings as very little would be happening in the case before October and any costs incurred by Mr Cooney could be met by a costs order in his favour.

The judge said the court is trying to manage this litigation, does not know what the position is on the joinder issue and could not be left indefinitely with a question mark over the matter. The court should be informed by the second motion day in October as to whether it was proposed to join KPMG as a defendant, he directed.

Earlier, he noted, while the law provides a former auditor of a company cannot also be appointed a liquidator to it, the act providing for the special liquidation of Irish Bank Resolution Corporation allowed for the position whereby IBRC special liquidator, a former partner in KPMG, is involved in the proceedings by IBRC/INBS against the former INBS directors as a plaintiff.

Mr Cooney, one of four former directors of INBS being sued separately from former INBS CEO Michael Fingleton arising from the losses, wrote earlier this year to the minister for finance claiming it was “preposterous” the two special liquidators of IBRC, Mr Wallace and Eamonn Richardson, both partners in KPMG, were not suing their own firm for alleged negligence. KPMG acted as auditors for the society for 20 years.

Mr Cooney previously secured orders joining KPMG as a third party to the proceedings brought against him and the other former directors, but he argues KPMG should be joined as a defendant.

Mr Justice Kelly previously made directions for the hearing next November of discovery applications in the proceedings involving the directors and in the separate proceedings against Mr Fingleton.

In his letter to the minister earlier this year, Mr Cooney asked the minister to direct the special liquidators to bring a claim against KPMG on behalf of the State-owned bank.

IBRC has brought the proceedings against Mr Cooney; John S Purcell, David Brophy and Michael P Walsh — over losses of some €6bn at the society between 2008 and 2010.

More in this section

Budget 2022 Logo

What impact will this  year's budget have on you and your business.

The Business Hub

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up