In Co. Cavan, Fingleton teamed up with an old Fianna Fáil pal, Senator Francie O’Brien. A dairy farmer by trade, O’Brien knew the area intimately as a regular land speculator who had often been backed by Irish Nationwide in the past. He had a reputation for popping up unexpectedly in land deals with a higher bid. He was part of the loose inner circle that revolved around Fingleton who didn’t need to bother with such things as paperwork or too many questions about their ability to repay borrowings.
Olivia Greene, a former home loan supervisor with Irish Nationwide, knew O’Brien as a regular visitor to head office after he finished his day toiling in the political backwater of the Seanad. ‘Francie would always be sitting in reception waiting when he was in,’ she recalled. ‘He’d meet Michael Fingleton upstairs out of hours. “I have a bit of business to discuss with himself”,’ she recalled O’Brien saying.
The ‘bit of business’ had built up over the years as O’Brien dabbled in loans from the society of €7 million to fund various land deals, mainly in Cos. Cavan and Monaghan. It’s not surprising that the two men got on, united as they were by a love of being close to the powerful and influential while building up pots of money and plotting how to make more.
O’Brien was a lifelong Fianna Fáil activist. Fingleton was also a fan of what was then Ireland’s dominant party, though in a less obvious way, and he had pals too in Fine Gael.
In 1989 O’Brien was made a Fianna Fáil senator, a position he held for the next twenty years. It was a good gig, providing a decent allowance, access to the Dáil bar, and a bit of prestige in his community. It was his reward for his years toiling for the party as a member of Monaghan County Council from 1979 to 2003 and chairman of the council from 1986 to 1987.
Two Monaghan businessmen, Charles McGuinness and Noel Mulligan, were also added in to the consortium. It is not clear why they were needed. Fingleton was then considered a rich man, and he certainly didn’t need any additional investors in order to borrow big money. Mulligan ran a small business in Monaghan called Star Lighting Interiors as well as Jono’s, a furniture shop. He’d dabbled in property development but was a small enough player. McGuinness was a farmer who also had a background in small and medium enterprise. He ran a mobile phone shop in Monaghan and had an alarm installation business. In 2004 he became briefly famous when his wife, Helen, filmed a large unidentified creature that became known as the ‘Border Beast’ when it was broadcast on RTE.
In late 2005 Fingleton and his crack team of investors began negotiations with the Wall family for a fifty-acre site at Swellan Upper and Lower outside Cavan. The family had tentatively agreed a deal to sell to a Northern developer, but Fingleton and his pals slid under the wire with a higher bid. At the time it was quite a coup. A price of €11 million was fixed on, and Ulster Bank agreed to fund the purchase. Ulster Bank was then headed by Cormac McCarthy, who is now chief financial officer of Paddy Power, a massive gambling company. His time in Ulster Bank was not dissimilar.
Under McCarthy, Ulster Bank was far bigger and far better managed than Irish Nationwide. But when it came to the basic mistake of failing to spot the property bubble, it made many of the same blunders. It was the principal banker to Fingleton’s friend Seán Dunne in his grandiose purchase of a seven-acre site in Ballsbridge, Dublin, for €380 million which Dunne had vainly hoped to turn into an ultra-expensive residential and shopping area.
Ulster Bank had lent billions to other developers to snap up plots of land around the country, and lending another few million to Fingleton and his pals looked like a safe bet. The bank didn’t see a large hilly field outside a border town: like Fingleton’s grand consortium, it saw a goldmine that could be turned into houses that would be flogged to Ireland’s young people.
These were exciting times for Fingleton as he worked on this side deal while busying himself with the serious business of preparing to sell his beloved society. In retrospect, both this and Montenegro were dangerous distractions for Fingleton at a time when he should have been hell-bent on cleaning up Irish Nationwide and getting it sold.
In July 2006 Fingleton et al. borrowed €13.2 million from Ulster Bank. The loan covered the purchase of the site plus a little bit extra to help guide it through the planning process. At the time, four-bedroom semidetached houses were selling in Co. Cavan for up to €200,000 a pop, creating a huge potential gain from the site once they could get the right planning permission. Fingleton and his cronies decided they could at least double their money even if all they did was get planning permission and then ‘flip’ the site on another builder. If they held onto it all the way and developed the site themselves they stood to make tens of millions. There was a proviso: the price of houses had to hold up.
Then there was the tricky problem of planning permission. Unfortunately for the consortium, Cavan County Council turned down the first application to build 433 houses on the site. It felt that the roads in the area could not sustain that level of traffic. It was a hitch that Fingleton hadn’t considered. And the delay would lead to a financial catastrophe as the ‘impossible’ began to happen: property tanked.
In June 2008 things were rough, and Ulster Bank agreed an interest roll-up facility with the four men. This bought them more time while they hoped things would pick up again. It also took their borrowings to €13½ million. Ulster Bank gave them the extra facility on the condition that they sell part of the site to Bennett’s Construction, a building firm, to reduce their level of debt. But, as the financial crisis unfolded, this deal fell through. The consortium realised they were stuck with their fields.
As their advisers drew up a fresh proposal for the site, it must have begun to dawn on Fingleton that he was on the wrong side of a property bubble that he had so ably and greedily helped create. He and his cronies had no choice but to plough on and try to get planning permission, even as property prices continued to fall off a cliff.
In July 2009 Fingleton paid €42,875 to Ulster Bank to cover interest on the project, three months after he resigned from the building society. This was the first interest payment in a year on their loan. In November 2009 Ulster Bank moved Fingleton’s loan into its internal ‘bad bank’, such was its poor quality. This unit took a much harder line, as Ulster’s parent, Royal Bank of Scotland, had by now been bailed out by the British taxpayer. It began to threaten the investors to try to get its money back.
Three further payments—for €26,811, €34,842 and €34,769—were forthcoming to the bank, covering interest up to the end of November 2009. Then Ulster Bank really began to get worried. The money simply stopped. In December 2009 it wrote to Fingleton and his partners, asking for arrears of interest to be paid and for the investors to show how they intended to repay the loan in its entirety.
On the last day of 2009, with the property market in free fall, Fingleton and his fellow-investors got planning permission for an 82-bedroom nursing home. It was better than nothing but hardly enough to repay a loan of more than €13 million. In any event, the investors hadn’t got the money to build a nursing home. Instead Ulster Bank was breathing down their necks looking for more repayments.
Suddenly, Fingleton’s field of dreams died. By 2010, local auctioneers valued the site at €15,000 an acre, or €750,000 in total. This was one-fifteenth of its purchase price of approximately €220,000 an acre.
The prospects for the site were bleak. The Department of the Environment, asleep during the boom, suddenly realised that the country had a huge oversupply of houses at various stages of construction. In Co. Cavan alone it counted 147 ghost estates. This was a big surplus, which would mean that Fingleton and his friends had little prospect of ever selling any houses on their site, even if they could afford to build them.
At the beginning of March 2010 Ulster Bank was owed €13.535 million, with arrears standing at €285,000. On 3 March the bank wrote to all four borrowers, asking for net worth statements and tax returns. It also demanded again a repayment proposal from the men. It wasn’t happy wit
h what it got back.
On 23 March, Fingleton sent Ulster Bank a handwritten statement of net worth. He said his most valuable asset was a stake in a development site in Kotor, Montenegro. He valued this at €4 million. Next was his family home and nearby land in Shankill, Co. Dublin, which was worth €3 million. Ulster Bank wasn’t happy about this asset when it discovered that Fingleton had put his interest in it into his wife’s name in October 2009. This made it less clear to the bank whether it could take control of this asset. Fingleton also said he owned four apartments in the Mespil complex in Ballsbridge that he had acquired so controversially decades earlier. These were worth €1.2 million, according to Fingleton. He also owned a house in Leopardstown, Co. Dublin, worth €950,000, and a retail property in Phibsborough worth €900,000. He also had a cool million in cash—the exact amount of his much-disputed bonus.
Furthermore, he said he had ‘initiated legal proceedings to recover €10 million plus held in trust by a third party from actual earned and received profits in relation to a major Northside development.’ This was a reference to a case Fingleton had begun a few days before Christmas 2009 against his former friend Gerry Gannon. He claimed he had put £75,000 into a huge project Gannon planned in Clongriffin, Co. Dublin, some time in the 1990s, and this entitled him to a quarter share in it. Gannon disputed this and denied there was a deal. It was all a long way from when the two men were so close that Fingleton picked out an antique silver fruit bowl as a wedding present for his old pal’s daughter in 2005.
(It was also curious. Was this a one-off deal, or had there been other little-known agreements between Fingleton and his clients down the years that had never emerged? This was an area that would later be investigated.)
In answer to Ulster Bank’s final demand, Fingleton said he had not yet prepared or submitted a tax return for 2009, but ‘my income for 2009 was in excess of €400,000.’
The bank was not impressed. Fingleton had assets, but they were mainly in the form of property and therefore hard to value in a falling market. His assets, the bank said later that year, were ‘significantly less than was previously understood.’
But what really shocked Ulster Bank was that there was no mention in Fingleton’s note of his pension, which had only recently been valued at €27 million. Its absence was a ‘considerable surprise’ to the bank. In April 2010 it wrote to Fingleton explicitly demanding that he disclose ‘all pension fund assets and liabilities, equitable interests in properties or companies held directly, indirectly or in beneficial trust for you, and deposit accounts held within or outside the jurisdiction.’ Fingleton, however, was not prepared to tell the bank how much his pension was worth, or to include it in the list of assets he was prepared to hand over to repay his borrowings.
By the summer of 2010 Ulster Bank felt it had no choice but to began legal proceedings, and it applied to have its case fast-tracked in the Commercial Court that November for full hearing. In mid-October 2010 it began a High Court action to recover €13.65 million from Fingleton, O’Brien, McGuinness and Mulligan.
The case came before Mr Justice Peter Kelly, a famously straight-talking judge who had become de facto chief undertaker for the former stars of Ireland’s boom, who were appearing regularly in front of him as their house of cards collapsed.
In an affidavit a manager at Ulster Bank Group Centre, Ted Mahon, outlined the sorry sequence of events. Ulster Bank admitted it had never asked for such basic information as statements of the investors’ affairs at the time of granting a loan of more than €10 million. Instead, it admitted, it simply relied on Fingleton’s ‘perceived wealth’. It said it believed him to be a ‘man of substantial means,’ and even though he was not previously a client it felt it could trust him because of who he was. The bank was ‘at all times very conscious’ that Fingleton was a ‘particularly well-known person in business and financial circles.’
Ted Mahon, the court heard, had seen Irish Nationwide’s annual report in April 2009, which revealed that Fingleton had a pension fund of €27.6 million. Up to April and May 2010, when relations broke down, this gave his bank ‘great comfort.’ However, he said, Fingleton was refusing to give up his pension.
Mr Justice Kelly described it as ‘extraordinary’ that Fingleton had omitted his pension from his list of assets and liabilities. Fingleton’s pension ‘eclipsed’ all his other assets, and he could not understand why it wasn’t included
A statement of affairs for Francis O’Brien also emerged, which showed a gap of some €12.8 million between his assets and liabilities.
Mr Justice Kelly refused an application by all four investors for a stay on registration and execution of the judgement, which they sought in the light of continuing negotiations with the bank and in the hope that planning permission might enhance the value of the land. He said he was not required to address the bank’s stupidity in entering into such a large loan with someone about whom it knew nothing except that his name appeared regularly in newspapers.
Fingleton, however, continued to insist that the deal could be got back on track. He said he had recently spoken to the head of the Penney’s chain, Arthur Ryan, who had ‘expressed a strong interest’ in the Cavan field, and he insisted that Tesco also might be interested in the site.
On 1 November, Ulster Bank secured a judgement against Fingleton and his partners over their unpaid loans. The judgement placed the ageing Fingleton in desperate financial straits. He still had millions, but he was running out of wriggle room.
Within a few months of the decision Francie O’Brien would announce that he had decided not to seek re-election to the Seanad. After so many decades wandering the corridors of power, he was bowing out. The decision, he insisted, had ‘absolutely nothing to do with the ongoing controversy over bank borrowings for investment during the boom years.’
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As 2010 ended, Irish Nationwide again picked up its pursuit of Fingleton’s bonus. On 8 December, Danny Kitchen sent Fingleton a copy of Irish Nationwide’s report on his pension and pay. The report, he said, was about to be made public by being handed over to the Committee of Public Accounts. ‘As you have clearly and publicly stated that the reason for not returning the 2008 bonus was that this report was not made available to you, I hope that providing it to you will remove the last obstacle to repayment and that the society may expect to receive the amount to which you committed.’ Fingleton did not reply.
A week later, on 15 December, the chief financial officer of Irish Nationwide, John McGloughlin, wrote to Fingleton. It was a no-nonsense letter, reflecting his management style. Unlike the more refined Kitchen, he pulled no punches in demanding that Fingleton repay what the society’s new regime believed were improper expenses. He told Fingleton that the society had discovered that on 2 December 2008 he had written to the IRFU asking for six ten-year tickets, to be sent to his home and not to the society. ‘These tickets are the sole property of the society,’ McGloughlin said. He gave Fingleton two options: pay for the tickets he had used and return the remainder, or buy them outright. The cost of the tickets from 2 December 2008 until their expiry in 2014 was €42,900.
McGloughlin also demanded that Fingleton reimburse the society for the £2,373.58 for his two-night stay in the Dorchester Hotel, London, in May 2009. This trip by Fingleton and his wife had taken place after he had resigned from the society.
It went on and on. McGloughlin demanded that Fingleton repay his dental fees of €12,180 run up in 2008 in the Blackrock Clinic. ‘The society should not have paid these amounts on your behalf due to the level of health care paid to you by the society,’ McGloughlin explained. He also sent him a long list of other expenses that the society wanted clarified or repaid. In total, he identified €73,524 in expenses that the society wanted repaid.
Fingleton did not get around to replying for several months. On 1 February 2011 he replied to McGloughlin and addressed each of his points in turn.
After Michael Walsh had ‘suddenly’ resigned on
13 February 2009, Fingleton said, Terry Cooney had been appointed acting chairman. Fingleton had been due to retire on 28 February, but Cooney asked him to stay on because of Walsh’s departure.
Mr Cooney was to say the least anxious that I stay on and I had a number of conversations with him on the matter. In the course of those conversations the question of the availability of tickets post retirement arose. He told me I could have as many tickets as I wanted provided I agreed to remain with the Society beyond my retirement date. I said that was a deal and agreed to stay on beyond my contract date.
It was a bizarre explanation. If it was true it provided a shocking insight into Fingleton’s priorities in his final weeks with Irish Nationwide. As the society crashed around their ears, Fingleton and his old pal Cooney had time to worry about rugby tickets.
Fingleton then said that, despite having had the tickets for more than a year, he had never actually used them. Either they arrived too late, he complained, or he wasn’t around to enjoy them because of ‘unforeseen circumstances.’
After making his excuses, Fingleton saw no reason to repay the society for any tickets over the previous year; but, he said magnanimously, ‘I am pleased to let the society have all the tickets for the current series.’
Having kicked the tickets issue to touch, he turned to his dental costs. He said that for the previous twenty-five years the society had covered all his medical and dental expenses. ‘Fortunately I never had a sick day since I joined the society in 1971. Indeed I believe the dental costs were the first claim of any substance I made.’ He said he only did so because he was advised that the treatment was not covered by the the VHI.
‘On a separate matter my wife was also covered for all medical health costs as well,’ he continued. In June 2008, Fingleton said, his wife had flown to America for ‘emergency surgery,’ which had cost €35,000. After prolonged negotiation, which continued after his retirement, the VHI agreed to pay only €14,000 of her bills. ‘I believe I would be entitled to claim for the difference from the Society but have not done so,’ Fingleton said. As a result, he seemed to suggest, the society was evens with him.
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