IBRC liquidators secure witness orders in Fingleton case

Evidence of three former employees of Irish Nationwide Building Society will assist liquidators in their civil case pursuing Michael Fingleton, 85, for alleged mismanagement of Nationwide during his time as its chief executive, court heard

The involvement of Irish Nationwide’s Belfast office in the increased lending to the United Kingdom between 2004 and 2008 will form part of the action against Michael Fingleton.

The liquidators of the Irish Bank Resolution Corporation (IBRC) have secured orders providing for the issuing of a request to examine three witnesses under oath at the High Court in Northern Ireland.

The subpoena request will be sent by the Dublin High Court to its Belfast counterpart concerning three former employees of Irish Nationwide Building Society — David Peacock, Tony Haren and David Hewitt.

The evidence they can provide will assist the liquidators in their civil case pursuing Michael Fingleton, 85, for alleged mismanagement of Nationwide during his time as its chief executive, Dublin High Court heard.

Mr Justice Denis McDonald made the orders on Friday after hearing the liquidators have made repeated unsuccessful attempts to contact the men, who all reside in Northern Ireland, to organise them giving evidence voluntarily.

The involvement of Nationwide’s Belfast office in the increased lending to the United Kingdom between 2004 and 2008 will form part of the action against Mr Fingleton, who is acting through his wife and son under their powers of attorney due to his ill health.

The liquidators of the IBRC, which took over Nationwide after its collapse, initiated the case in 2012 against Mr Fingleton seeking damages arising out of an alleged breach of duty and gross negligence. Mr Fingleton has denied the claims.

The liquidators’ senior counsel, John D Fitzgerald, told the court earlier on Friday that, while some of Nationwide’s €6bn losses from 2008-2010 were due to the wider financial crash, his clients argue the losses were “massively exacerbated” by poor lending, corporate governance and risk processes.

'High-risk' strategy

Nationwide’s shift away from primarily residential lending and €8.2bn increase in commercial lending over the five years to 2007 was part of a “high-risk” strategy that overly exposed the lender to a small number of borrowers, Mr Fitzgerald added.

In an affidavit to the court, McCann Fitzgerald solicitor Rosaleen Byrne, for the liquidators, said British customers represented more than half of Nationwide’s loan book by 2008. The vast majority of these loans originated from the Belfast office which had a staff of four people and was “completely under-resourced to manage this type of lending”, she added.

Ms Byrne said Mr Peacock, who joined Nationwide in July 2010, can shed light on deficient risk management and corporate governance at the society. While he was not employed at Nationwide during the time under scrutiny, he can share what he uncovered when he joined.

Mr Haren can give evidence on the risk management and corporate governance shortcomings he discovered upon joining the building society as a case manager in November 2009, Ms Byrne said.

Evidence from the three former employees was required in the “interests of justice”, the Commercial Court heard.

Mr Fingleton’s barrister, Padraic Lyons SC, said he was “respectfully sceptical” about the relevance of the evidence sought from the three witnesses. However, he was reserving his right to cross-examine them and did not propose to stand in the way of the judge making the orders.

Mr Justice McDonald said it seemed, based on Ms Byrne’s affidavit, that  the plaintiffs made out a case that the witnesses have evidence to support the case.