Fingers

by Richard Curran

  Soon afterwards €11,500 was withdrawn from this account and used to pay for the going-away watch for Fingleton. Purcell, when questioned on this expense, said that Meryl Foster had been the person who withdrew the money to pay for Fingleton’s watch. Neither the payroll section nor the society’s human resources department was informed of the present, despite the society usually informing them of any gift above €32 in value.

  Alarmed by this finding, the internal audit team dug deeper. They found that on 8 April 2009 Fingleton had approved a cheque for €2,000 to be paid to the Castleknock Hotel and Country Club. He said this was a ‘sponsorship’ donation for Meryl Coade. Apart from the money leaving, there was no other record on file to explain this charitable donation by Fingleton to a member of his staff a few weeks before he quit the society—and after it had clamped down on expenses for lower-ranked employees. Coade herself drafted the cheque, which she also made payable to herself. Stan Purcell then signed the cheque, which Coade endorsed. No tax was paid on this benefit in kind at the time. (In July or August 2010 the society ensured that Meryl Foster paid tax on this benefit.)

  Questioned by internal audit on the mater, Foster said: ‘Unfortunately, I am none the wiser. All I know is that Mr Fingleton would not have authorised any expense without supporting documentation.’

  That same day Fingleton approved a cheque for €1,250, payable to Educogym, a fitness chain founded by the colourful ‘guru’ Tony Quinn. The payment was again described as ‘sponsorship’ of Coade. Again Coade drafted the cheque, which was also payable to herself, before two other senior officials in the society also signed it.

  Coade gave the same dismissive response to internal audit when questioned on this second hefty payment. ‘Unfortunately, I am none the wiser. All I know is that Mr Fingleton would not have authorised any expense without supporting documentation.’ (Again Coade was retrospectively forced to pay benefit-in-kind tax on this payment.) Pressed to provide proof of her payment to Educogym, she eventually produced an invoice for €1,500, which said it was for a one-year personal training programme.

  Digging deeper still, the internal audit section found a cheque for €2,000 made payable to O’D Steel Products Ltd. The managing director of O’D Steel turned out to be John O’Doherty, who happened to be the owner of an Educogym. Meryl Foster filled out the paperwork for the cheque. Originally it was to be drawn in favour of Meryl Coade, but somebody scribbled this name out; instead the cheque requisition was signed by Michael Fingleton, on 7 May 2009. Fingleton had left the society on 30 April 2009 and therefore could not have authorised this payment. Yet again the payment was described as a ‘sponsorship’ for Meryl Coade.

  There were more unusual payments associated with Fingleton’s right-hand woman. In December 2008 Irish Nationwide was due to have its Christmas party in the luxurious environs of the Radisson Hotel in Golden Lane, Dublin. After the bank guarantee, not surprisingly, this was no longer considered appropriate. Unfortunately the society had already paid the hotel a booking fee of €5,275, of which the Radisson agreed to refund €5,000 in the form of a credit note, valid for one year. On 28 December 2009 Irish Nationwide discovered that a big chunk of the credit note had been used.

  One of the rooms in the Radisson Hotel was booked in the name of Meryl B. Foster, while two rooms were booked in the name of Marion McGuire, the married name of Marion Kiernan, supervisor of Irish Nationwide’s legal department. It is not clear who stayed in the third room, except that it appears to have been a relative of Meryl Foster. A bill of €1,140 was run up, including dinner in the hotel’s Sure restaurant, noted for its cocktails. This was paid with the society’s credit note. Nobody in the society approved this bill.

  In total, undeclared additional benefits of €5,800 could be traced to Foster. It was also found that she had booked several stays in February 2009 in the Radisson SAS Hotel in Galway under the name Judith Mulligan. The society was not sure who this person was, or what link she had to the society’s business, but the documents vouching for the expense appeared to have been altered to include Meryl Coade’s name and address.

  Coade was also found to have run up large bills in various expensive restaurants, including Dobbins, Trentuno, Canal Bank Café, Da Vincenzo and Pasta Fresca (where the same claim was submitted twice). Many of these bills ran to over €2,000 each.

  Other expenses submitted by Coade were paid without any receipt or invoice being kept on file, including €1,000 described as covering the cost of a Christmas staff night out. One meal in Trentuno in April 2009 is described as being for ‘Jackson / O’Flynn.’ The bill came to €1,100, including a payment of €110 by Visa credit card signed by the mysterious Judith Mulligan. This expense was also submitted twice.

  The audit then focused on Fingleton. It found that expenses of €68,109 had not been declared and had benefit-in-kind tax owing on them.

  The receipts revealed yet more of the incredible life-style enjoyed by Fingleton in his pomp. He took large sums in cash from the society for walking-around money while on trips away. In February 2005 he took $2,000 for a trip to America and was reimbursed with €1,000 in relation to a trip with Michael Smurfit, Seán Mulryan and Arthur French. About €48,000 related to expenses run up in the K Club, together with everything from membership fees to dining. Green fees at the Real Club de Golf in Las Brisas, Marbella, a six-night trip to Dubai costing €3,500, €500 in cash for a trip to Moscow, €800 on a trip with Private Chauffeurs Ireland, and a medical fee of €495 in the Well health centre in Dublin ten days before he left were all included in these untaxed benefits in kind.

  In addition there were the expenses that were treated as benefits in kind by the society and on which tax was paid. These included a bill for €12,000 for dental work in the Blackrock Clinic in 2008, and membership in Woodbrook Golf Club and Luttrellstown Golf Club.

  Incredibly, it was found that Fingleton had been able to charge expenses to the society even after he had left it. A bill for £2,300 had been submitted for a stay in the Dorchester Hotel in London on 14 and 15 May 2009 and had been paid, despite Fingleton having resigned from the society two weeks earlier. Meryl Coade had authorised a payment of £3,799 to cover the cost of Fingleton’s stay, despite not having the authority to do so from the account the money was paid out of. After Fingleton and his wife stayed in the hotel there was a credit of £1,600 on Irish Nationwide’s account. In June 2009 Coade told the hotel to leave the credit there until her next stay.

  It was also discovered that there may have been a reason why Irish Nationwide favoured 4giftsdirect.com when lavishing gifts on developers. An e-mail message from the managing director of the company, Lulu O’Sullivan, to Meryl Foster on 8 December 2008 refers to her being given €600 worth of free gifts of wine and champagne. Foster told O’Sullivan after placing her mega-order with the society’s money that she was ‘just wondering is Santa calling to me, seeing the size of the order!!!!’ O’Sullivan replied: ‘We can discuss whether you would like champagne & chocolates for yourself on Monday or champagne bottles same as ’07.’ No record of these gifts being declared, as was the society’s policy, was available in either its payroll or human resources department.

  Not surprisingly, Irish Nationwide internal audit concluded that there were major gaps in the society’s procedures and significant control weaknesses in how it handled expenses by senior executives. The society was determined to get answers.

  ——

  Fingleton used gifts to charity to develop a reputation for philanthropy among the elite and chattering classes, even though it was usually the society’s members who were paying for his largesse.

  Fingleton’s spending of Irish Nationwide’s funds reveals how he saw his personal interests and the society’s money as the same thing. The society paid him a massive salary, giving him more than enough money to pay for pet projects or to reward favourites. But why would he do that when he could dip into the society’s funds virtually unchecked? Nobody on the society’s old
board ever seems to have reviewed his expenses, leaving him free to do what he wanted.

  ——

  Irish Nationwide’s new regime under Gerry McGinn and John McGloughlin was determined that Fingleton would be made to repay some of his expenses. Fingleton remained unrepentant, however, and instead retreated into a bizarre world where every action, every whim, every waste was justified. In his mind, Fingleton had become the victim.

  Chapter 14

  THINK OF A NUMBER: THE LOSSES RACK UP

  On Tuesday 17 August 2010 the governor of the Central Bank, Patrick Honohan, gave an address to Renmin University in Beijing. The speech contrasted starkly with a visit five years earlier by the Taoiseach, Bertie Ahern, to the same city, where he had been lauded in China’s Great Hall of the People by the Premier, Wen Jiabao. Ahern basked in Ireland’s economic success as he toured China’s greatest cities, lecturing them on the parallels between the great Celtic Tiger and the Chinese Dragon’s economic success. His visit peaked when he announced that the Irish developers Johnny Ronan and Richard Barrett planned to build a new €2 billion eco-city on an island off the north coast of Shanghai in the mouth of the Yangtze River. Ireland, Ahern and his developer associates believed, was now ready to teach the Chinese its secrets.

  Honohan, however, cut a more subdued figure in front of the students and academics of Renmin University. He was eloquent but forensic in his analysis, in a manner Ahern was incapable of.

  From 2003 to 2007 the Irish banking system imported funds equivalent to over 50 per cent of GDP to fund a runaway property and construction bubble. The tax revenue generated by the boom came in many forms … Immigrants from the rest of Europe, from Africa, from China, flooded in as the construction sector alone swelled up to account for about 13 per cent of the numbers at work.

  For over a decade the budget was in surplus almost every year. No need, it seemed, for restraint in spending, and so, after years of relatively disciplined government budgeting, there was a relaxation of spending controls—one, I will say, which was broadly welcomed across most of the political spectrum.

  Alas, that the apparent solidity of the public finances was all a mirage was brutally exposed when global financial confidence collapsed.

  The boom ended, house prices fell, and trade decreased as Ireland’s global partners slowed down or entered recession.

  The progressive tightening of short-term financial markets during the second half of 2007 and through 2008, peaking in those dramatic weeks after the bankruptcy of Lehman Brothers, eventually exposed the fact that not only had the banks fuelled an unsustainable property bubble but they had not safeguarded their own solvency through adequate collateral and guarantees.

  The Government had little alternative to announcing an extensive guarantee of bank liabilities.

  This has proved not to be costless and is imposing a net cost which will place a heavy burden on taxpayers and the users of public services in Ireland for several years—though it is manageable and much less than some alarmist commentary had suggested.

  Buried half way down Honohan’s speech was a bombshell: ‘Anglo may impose a net cost to the Government of about €22 to 25 billion, to which can be added about €4 billion mainly to cover one small building society.’

  Irish Nationwide, Honohan almost casually let slip, was going to cost the taxpayer €4 billion. This was a billion more than the last estimate and four times the estimate of only a year before. His description of the society was a telling one.

  Back home, politicians claimed that Irish Nationwide had been guaranteed by the taxpayer because it was of so-called ‘systemic’ importance. But in Beijing the governor of the Central Bank described it as what it actually was: a rather small institution that somehow was costing the public a huge sum of money.

  Joan Burton was quick to accuse the government of using Honohan to ‘drip-feed bad news’ and called on Lenihan to ‘come clean’ about the banks.

  At every stage of Ireland’s banking crisis, the Government has insisted that they have the costs under control, only for this to be blown out of the water by the next multi-billion euro announcement.

  Between Anglo Irish Bank and Irish Nationwide alone we are already looking at a bill for nearly €30 billion. This figure may have risen yet further by the time NAMA loan transfers are completed next year.

  Does he have any realistic idea of what the final bill will come to? It’s as if he has left the taxpayers’ credit card behind the bar for a bankers’ free-for-all.

  Three days after Honohan’s speech, Michael Fingleton landed at Dublin Airport after a relaxing holiday in Spain. He had been spotted getting on his flight, however, and someone had rung RTE to tip it off about his arrival. RTE’s business editor, David Murphy, waited with a camera crew in the arrival hall for Fingleton to emerge. Wearing a green flat cap, white striped shirt and yellow sports jacket, Fingleton was far from pleased when he saw Murphy, who insisted on pursuing him as he tried to escape.

  ‘Do you not have any sense of remorse about what has happened in Ireland as a result of what happened at banks like your own?’

  ‘Of course I have, of course I have, like anybody else. I have indeed.’

  ‘What do you think should be done?’

  ‘Everything is being done that can possibly be done by everybody concerned.’

  ‘Do you feel guilty about what happened?’

  ‘Come on. Just … I have already made my comment and that’s it. I can’t say any more …’

  ‘Mr Fingleton, will you repay your €1 million bonus?’

  ‘I have already made a full statement on that.’

  ‘But you have received a lot of letters from Irish Nationwide.’

  ‘Sorry, I have already made a full public statement on that, which you are fully aware of. Okay?’

  Murphy followed Fingleton out of the airport, where cars were pulling up to collect passengers.

  ‘And what about the loans to directors at Anglo Irish Bank? Do you regret your involvement in that, in terms that those loans weren’t made public to the shareholders of Anglo Irish bank?’

  ‘That is a matter under investigation. It will be made very clear in due course that we had no responsibility whatsoever.’

  ‘Will you be co-operating with future investigations?’

  ‘I have already co-operated and I continue to co-operate in every way I can.’

  Then, having collected his golf clubs, Fingleton stepped into the back of a car and was gone.

  ——

  As August ended, Ireland’s economic situation just kept getting worse. At the beginning of the month the country had managed to raise €1 billion in six-month and eight-month treasury bills, but the price it had to pay for the market to trust it was creeping up fast. The yield on Irish ten-year bonds hit 5.4 per cent on 12 August, 2.94 points higher than the German bund and up almost half a point from the previous week.

  Philip Lane, a professor of international and macro-economics at Trinity College, Dublin, told the Wall Street Journal that the market was worried about the size of Ireland’s banking black hole. ‘Financial markets can go into panic mode, and it’s hard to say that the Irish fundamentals are sufficiently bad to warrant these spreads.’

  Irish Nationwide’s new management was still scrambling to hold on to deposits and get cash back in from developers. Everywhere, however, there were signs of Fingleton’s madness. A lot of corners had been cut in turning the building society from a relatively conservative lender to the little guy into a ‘player’ throwing money at the rich and powerful. The society, the new management learnt daily, had strayed a long way from its roots. Two examples from August that the new team had to deal with illustrate this.

  At the beginning of August, Michael Smurfit rescued his palatial Spanish villa at Marbella just as it was about to go into NAMA by paying off the remainder of a €20 million loan. The society, of course, was pleased to get its money back, but it was amazing that it had ever lent to anybody to b
uy such a house. It sprawled over 40,000 square feet on the Golden Mile and came complete with a gym, a cinema and a heated outdoor pool. It was so luxurious that Smurfit had once rented it out to an Arab princess for €20,000 a day. ‘How on earth did we ever end up lending for this type of thing?’ an Irish Nationwide source said.

  Not everything went so well. That summer Irish Nationwide appointed a receiver for the €60 million Moyvalley Hotel and golf resort in Co. Kildare and a related course in Co. Westmeath called the New Forest Golf Club, both of which had been developed by Alastair Jackson. Moyvalley, set on 550 acres with a stunning golf course designed by Darren Clarke, should never have been built. Even if the economy hadn’t collapsed there wasn’t much demand for another golf resort with holiday homes selling for up to €1 million each in the Kildare area, where there were already four or five resorts of similar quality. Fingleton never seemed to consider the bigger picture when he doled out the society’s money. Neither did Jackson, who went bankrupt in May 2012, dragged down by this and other follies.

  To manage its ever-expanding mess, Irish Nationwide had to hire a whole new team to try to prevent the society falling apart. ‘The quality of people was really poor in commercial; in residential it was okay,’ an insider said. ‘But what would you expect for the low salaries they were paying? Michael Fingleton had ruled the place with an iron fist.’

  The Ernst and Young trawl had uncovered many bizarre things, but it also found more systemic mistakes in the way the society lent commercially. Time and again the society found itself at the wrong side of the deal when it came to trying to recover cash from developers, as too often it had lent millions on bad terms.