Fingleton's successor says events at INBS an outrage-Montenegro investigation into offshore accounts

[C. Flower]

Banks were lending funds so fast it was not possible to perfect the security held against the borrowings beyond the title deeds of the property/lands, the speculative part of a deal, usually covered by an l/g was not completed as assets were not specified in support, in many cases no extra assets actually existed as in this case of Fingleton/Scully.

For Fingers to declare the loans non-recourse is quite unreal and the Board of INBS have declared it was in his remit, talk about covering your ass.

I would have thought any self-respecting Judge would fall about laughing at that. So far, it's the borrowers who have been brought to court.

[disability student]

Fingers isn't the only one as Anglo toxic bank did the same thing re non recourse loans. It's from Fitzpatrick's tapes book and Carswell's book as well.

It should be banned unless authorised by the financial regulator. I recall one property developer using same property for collateral re loans with different banks. It creates a ponzi scheme but the legal profession have played their part with their consent re loans.

[PaddyJoe]

Another 'nothing to see here, folks' story in the Indo:

THE Central Bank is preparing a landmark case against former senior executives and board members of Irish Nationwide. The investigation has identified about 40 different cases where the building society appears to have broken the rules of banking.

The investigation, which has been under way for two years, could lead to fines of up to €500,000 each for Michael Fingleton, former chief executive of Irish Nationwide, and Michael Walsh, its chairman from 2001 to 2009, as well as other individuals.

Wow, two year investigation, fines, whoopy...
hang on a sec..

The Central Bank's investigation team, which is led by its director of enforcement Peter Oakes, has a full-time case officer and legal adviser gathering information in the Enforcement 1 Division of the Central Bank.

The extent of any sanction will depend on various factors being examined by the Central Bank, including whether the society or individuals acted in what its procedures term a "deliberate, dishonest, or reckless way".

It will also examine the "general compliance history" of the society and whether it had "previously been requested to take remedial action". A full formal inquiry will begin in 2013, when the Central Bank has completed gathering its evidence.

The Central Bank is also understood to have referred a number of reports relating to loans granted by the society for examination by gardai.

http://www.independent.ie/business/i...n-3168493.html

[Captain Con O'Sullivan]

I think I mentioned on one of the banking threads that I doubted very much whether the personal loans extended to senior executives at Irish banks were secured on any assets at all.

I strongly suspect that what was happening in a number of cases was that Executive A would apply for a milllion euro loan via the backstairs handshake method in operation at at least two major Irish banks claiming he was investing in a milkshake mine in Montevideo. The banks would then say 'good man yourself Executive A' and 'when do you need the money?'.

Executive A would then receive the money in his account and merely shift it off to some jurisdiction for example such as Austria or Liechtenstein through a nominee company in Vienna which he and his accountants controlled, send it back to the IFSC in Ireland and then back out again to Holland and possibly surfacing again after travelling through a corporate structure entirely offshore and collect a tax claim on the money from the Irish exchequer.

Effectively I think senior executives in Ireland were using the notorious corporate 'Irish sandwich' tax arrangements to collect back for example 1.2million euros where they had borrowed 1million euros from the Irish bank.

They could then manipulate the Irish tax system and various offshore jurisdictions to effectively buy money which they were borrowing cheaply. Because the money they borrowed was being marked 'non-recourse' in many cases they were not personally liable for any debts lent to a company in their private corporate structure.

I suspect what has happened now is that someone somewhere has copped what they were up to- possibly something has come to light on the international scene perhaps through German investigations where the IFSC keeps popping up- and of course the Central Bank which now houses the Irish Financial Regulator's office is being asked awkward questions behind the scenes about what system was used to check the collateral on these executive's loans.

If I'm right and I suspect for a number of reasons I may be close to the nut here- that would explain the sudden plethora of 'non-recourse' loans to insiders in Ireland. Effectively there was a money-transfer scam going on backed by nothing and hidden behind corporate shells and offshore tax regimes including those who operate nominee bank account systems.

This in the United States would be called a form of wire-fraud- on a large scale. Ordinary shareholders left with 'non-recourse' paperwork in the deteriorating banks were being defrauded by company executives in a number of ways- loss of collateral protection in the banking system, loans granted to insiders on a fraudulent application system and so on.

I think this is the real story behind at least two if not three Irish financial institutions and their executives.

[Stanley 2]

Given that Fingers has written to say that loans to Scully were non-recourse another issue that should be looked at are personal letters of guarantee.

It would not be beyond any Bank/Society officials who have to leave those orgs to make some documents go missing for favoured borrrowers who would be very grateful.

[PaddyJoe]

Could be interesting if this one goes to court:

Cindy Caffola, a businesswoman and socialite, is considering a blockbuster lawsuit against Irish Nationwide, which wants her to repay a €2m loan given to her to buy a luxury home in the K Club.

The former model, who bought a property in the K Club just prior to the Ryder Cup, has been in talks with the society since 2007 about her outstanding debts. She is likely to call on Michael Fingleton, the former boss of INBS, to explain how the society loaned her millions to buy the K Club property as part of a claim against the society that it granted her the loan without taking proper precautions

It is understood that the loan was interest-only for part of its initial duration. The former Miss Ireland is understood to have dealt directly with Fingleton and these dealings are likely to feature in any legal proceedings.

At the time of the loan in 2006, Caffola believed she was due to earn a windfall from the sale of her 55 per cent stake in her home on Torquay Road in Foxrock, which would help her pay off a big chunk of her K Club loan.

However, the multi-million sale price for this property never materialised as expected because of the property crash. Gallagher Shatter, Caffola's solicitors, wrote in November 2007 to the society stating it would give the society the proceeds from this sale if and when Torquay Road was sold and after a bridging facility of €285,000 from Anglo Irish Bank was also repaid. Caffola has placed her K Club home in the exclusive Ladycastle Estate in the K Club on the market for €750,000. Estate agent Arthur French sold her the property.

Other residents of the estate include Charlie McCreevy, the former Minister of Finance. Caffola did not respond to requests for comment.

http://www.independent.ie/business/i...n-3312078.html

[PaddyJoe]

Yep, James Gogarty
Interesting story today about a former INBS manager taking a case for unfair dismissal against Fingleton and INBS. I see his partner Olivia Green appeared on Prime Time last year to shed some light on the very strange lending practices that went on in the Society:


http://www.rte.ie/news/2011/0630/iri...-business.html

From June 2011:

Brendan Beggan has alleged that he was unfairly dismissed by the society after he sold a property for €202,000 without telling the society, but kept the money instead of paying back his mortgage.
The tribunal will decide tomorrow whether to issue a subpoena compelling Michael Fingleton to attend to give evidence.
Irish Nationwide contends that the dismissal was fair in light of the failure to repay the mortgage for the property known as Killylean in Monaghan and other matters.
Chief executive Gerry McGinn gave evidence that at a meeting to appeal the decision to dismiss Mr Beggan, Mr Beggan had acknowledged that his conduct in failing to notify the society of the sale of Killylean or to repay the mortgage constituted gross misconduct.
However, he had said that he did not want to be viewed as a thief.
He had told Mr McGinn he had been in fear of the previous chief executive, Mr Fingleton.
INBS chief financial officer John McLoughlin confirmed Mr McGinn's version of events at the appeal meeting.
However, Mr Beggan's barrister, Mary Paula Guinness, disputed Mr McGinn's version of that meeting.
She said that when Mr Beggan realised that the proceeds from the sale of Killylean had run out, and that he could not pay the mortgage, he had alerted Mr Fingleton.
Ms Guinness alleged that Mr Fingleton had suggested that he sell a further property on which he had a mortgage - which would allow him to clear both mortgages.
Mr Fingleton said he should keep paying the mortgage in the meantime and it would get sorted.
She said there had been a loan culture of extreme laxity in how loans were sought, approved and handed out.
She said that on one occasion, Mr Beggan had been given a loan €25,000 bigger than what he had sought.
She also suggested that Mr Beggan had been targeted because of the activities of his partner Olivia Green - a former loan supervisor at Irish Nationwide.
She had given evidence of the role of Mr Fingleton in approving loans to Michael Lynn and former European Commission Charlie McCreevy.
The hearing will resume tomorrow when Mr Beggan is expected to give evidence.

http://www.rte.ie/news/business/2011...ishnationwide/

It seems Brendan Beggan has lost his case for unfair dismissal. Should be more details on RTE in a bit.

[C. Flower]

RTE programme on now, going over the Ernst and Young report - question of a "special deal" with the Government.

[PaddyJoe]

Two pages in the Indo today devoted to extracts from the new book on Fingleton and INBS by Tom Lyons and Richard Curran. Plenty of background on Montenegro, the disastrous Cavan speculation with Francie O'Brien, the meals with Prince Albert, as well as socialising with the international elite.
Not a word about loans to Phil Hogan though.