Fingleton then explained his rather expensive stay in the Dorchester Hotel, paid for by the society even after he had left it. ‘Sometime before my retirement I had arranged to go to London to visit our principal borrowers to reassure them that the new management would be fully accessible to them in relation to their business relationships with the society etc.’ He said he decided the best time to do this was at the annual company dinner of Laing O’Rourke, the massive London-Irish construction group headed by Ray O’Rourke. Fingleton said he had spoken to O’Rourke and suggested that Gary McCollum might attend in his place. ‘He was insistent that he wanted me there and nobody else,’ Fingleton said. He had convinced O’Rourke to do a deal with the society, which earned it a fee of €2 million, so he felt compelled to go. ‘This visit while technically after my retirement date was clearly related to Society business and not a personal unrelated matter.’ He said he was ‘genuinely shocked’ at the cost of his stay, as he usually got a room for only £300 a night there. Again he made no offer to repay the cost of the trip.
Finally, in a brief riposte, he brushed aside McGloughlin’s other concerns about his expenses, from his green fees at the K Club to thousands spent on chauffeurs.
All expenditure itemised was incurred for the promotion of the business of the Society and for the development and enhancement of customer relationships.
In relation to the last item on the schedule [his going-away watch] this expenditure was not initiated or authorised by me and I had no involvement in it whatsoever.
I trust this sets out my position in relation to the claims made in your letter.
It was a bravura performance. Despite his protestation that he was keeping his €1 million bonus on a point of principle, and that he was entitled to all his expenses, it was not hard to conclude also that Fingleton needed every penny he had.
——
Fingleton was annoyed by these letters from his old society, but his real concern was with his own well-being as yet another horrible year drew to a close. Within a year, what he had described in his statement of affairs as his most valuable asset, a stake in the leisure resort in Montenegro, would look very shaky.
The first public sign of trouble emerged on 15 September 2011 when Fingleton was forced to ring the Employment Appeals Tribunal and say he was unable to turn up that day. He was due to appear in an unfair dismissal case being taken against him by Brendan Beggan, his former Monaghan branch manager. Fingleton told the chairperson of the tribunal he was ‘eager’ to attend that day to testify against his former friend but that he was unable to as it coincided with a court appearance in eastern Europe.
The case he was referring to related to Montenegro, where Fingleton had fallen out badly with another old friend, Louis Maguire. Their dream of creating a luxury resort there was rapidly falling apart. The Montenegrin property boom had turned to bust, and values had fallen sharply. The city council in Kotor had publicly expressed its frustration at the lack of progress on the Hotel Fjord, which it had hoped would help to build a tourist industry there. By the end of November 2011 the authorities had placed Fingleton and Maguire’s New Fjord Developments in receivership during a closed court hearing in the capital city, Podgorica.
The accounts of New Fjord Developments had been frozen after an unnamed creditor who was owed more than €70,000 petitioned the court for the company to be placed in receivership. The company also owed money to the city council in Kotor, which was claiming that it was owed unpaid property taxes. A creditors’ meeting had been called for 29 December, and a special court hearing was set for the following February. It was a royal mess.
Worse, Maguire’s company United European Partners Montenegro was suing Fingleton for €6½ million. Maguire blamed Fingleton for the project’s woes and accused him in court documents of ‘corporate negligence’. The company claimed that one of the reasons the development was in trouble was that Fingleton had failed to explain the origins of the €5½ million he had used for the purchase of the hotel. Fingleton has not publicly explained why the company saw the origins of his money as an issue.
In January 2012, Dearbháil McDonald reported in the Irish Independent that Fingleton had moved €500,000—half the cash savings he had disclosed to Ulster Bank—into an offshore account four days after he was hit with a €13.6 million debt order by the bank. It was moved into his account at the Atlas Mont Bank in Podgorica on 5 November 2010. Then, the Independent reported, on 21 January 2011 he had emptied this account by moving €480,000 out of Montenegro into the account of his son Michael Fingleton junior in Barclays Bank, London. The same day he transferred another €128,498 from a separate account in Montenegro to his son’s London account. This was transferred out of New Fjord Developments.
Inspectors from Montenegro’s Authority for the Prevention of Money Laundering and Terrorist Financing had picked up the cash movements during a routine inspection after New Fjord Developments was forced into bankruptcy by its creditors the previous year.
The purpose of the transfer of €500,000 was described as ‘foreign investment’, but the inspectors say in their report that it has not been confirmed that Fingleton in a personal—as opposed to a corporate—capacity has invested in property in Montenegro.
The inspectors have queried the transfer of €128,498 from New Fjord accounts to Michael Fingleton junior’s account, stating that it was ‘without a clear basis.’ They said that Fingleton’s son had no ‘commercial relationship’ with New Fjord Developments, and appeared concerned that Fingleton had nonetheless moved money there.
Late the night before the Independent went to press, Fingleton sent a text message to McDonald.
… I am unable to comment on matters before the Courts in Montenegro. You will simply compound the enormous Libel already perpetrated which my Lawyers advise me is the most blatant they have ever encountered. I would respectably [sic] advise you to await the outcome of the case. When the case is finalised I and my Lawyers will have a lot to say.
In objections submitted in Podgorica in response to the inspectors’ report, Fingleton said that he and his son were not the subject of any official investigation into their private accounts. They were innocent men being wrongfully persecuted—just like back home.
It was hard to know what to make of it all. Fingleton’s personal finances, like his society, appeared to have slipped into a bizarre twilight zone, where nothing was as it seemed.
Whatever was happening in Montenegro, Fingleton had clearly decided to get what money he had left there out. Self-preservation was now his primary concern. His dream of relaxing his bones in the new Hotel Fjord was now as distant as his hopes of a quiet retirement as a multi-millionaire.
Chapter 16
FINGERS
At 9 a.m. on 12 December 2011 Michael Fingleton arrived at Davitt House in Adelaide Road, Dublin. Wearing his trademark fedora, the septuagenarian was ninety minutes early so as to avoid photographers.
He was at the offices of the Employment Appeals Tribunal to testify against an old friend, Brendan Beggan. The former manager of the Monaghan branch was suing Irish Nationwide for wrongful dismissal. Beggan had fallen out badly with Fingleton in a prolonged dispute over his failure to repay his personal loans. In July 2009, four months after Fingleton resigned, Beggan was sacked.
As with Alex Tarbett so many years before, Fingleton was prepared to turn against someone he had once enjoyed socialising with but now perceived to have stepped out of line. He was not intimidated by Beggan, who retained his powerful build from his years on the football field.
Beggan was accompanied into the tribunal by his partner, Olivia Greene. He stared hard at his old boss, but neither man said a word.
At 10:40 a.m. the tribunal began in a room unaccustomed to being filled with journalists eager to hear what might be said in a rare public appearance by Fingleton. It heard that Beggan had begun borrowing from the society in 1999. It was tiny stuff compared with the kind of deals the society was doing with its f
avoured developers at the time; and, unlike some of them, Beggan was on the hook for all his debts.
In 2002 Beggan had decided to dabble in development by buying a small site. He borrowed €1½ million and built three houses. His borrowings were now many multiples of his income, but this did not bother his employers. In 2004 he sold the houses for €800,000, and his solicitor told him there was not enough money left over to repay his loans to the society. He was in trouble.
The following year Beggan claimed he had met Fingleton to tell him about his problems. He said the two men came to an agreement that he would be given time to repay his debts.
Fingleton’s version of events was rather different. He denied he had ever had an agreement with Beggan. Instead he said the society had decided to investigate Beggan when it realised his loans were ‘excessive.’ In particular, Fingleton said, the society was annoyed that he had sold properties and not used the money to pay off his debts. (It was richly ironic to hear Fingleton complain about excessive borrowing and deals allegedly being done behind his back.)
Fingleton denied ‘actively encouraging’ members of the staff to get into property by borrowing big multiples of their income. He insisted that the decision by Beggan’s partner, Olivia Greene, to give evidence in a High Court case in 2007 in favour of the action of the former manager Brian Fitzgibbon against Irish Nationwide was not connected to its decision to sack him. Revenge had nothing to do with it.
Beggan disagreed and maintained that his relations with Fingleton became ‘extremely frosty’ after Greene’s testimony. He said he believed this was the real reason he was sacked. He was now taking an unfair dismissal case because he believed he had been singled out because his partner had crossed Fingleton.
Fingleton appeared as a witness in Beggan’s case on 12 December 2011. He had been following reports in the media and was not pleased at what had been said. At a hearing earlier that year Greene had claimed that Fingleton ran Irish Nationwide like a ‘personal bank.’ Angrily, Fingleton said Greene’s comments were ‘slander’ and denied that he issued loans at his own discretion.
I want to refute in the strongest possible terms the claim that I ran Irish Nationwide as a personal bank. That is an absolute slander. I worked under the policy of the society as laid down by the board. In relation to the claim that I gave loans to some customers and they didn’t have to pay them back, that is a totally outrageous accusation.
Afterwards Fingleton tried to leave the tribunal by the staff door. Confronted by a mob of journalists and cameras, he was forced to turn abruptly into a consultation room. For fifteen minutes he waited there; then, at 12:30 p.m., he put on his trademark black hat and headed out at a fast pace.
Journalists shouted out questions as he left. Would he repay his €1 million bonus? Would he return his €11,500 watch? Fingleton just ignored them. As he got into his car, Beggan roared at him that he ‘wouldn’t get away with it all.’ Fingleton remained stonily silent as he made it into the front passenger seat of the car.
Beggan lost his unfair dismissal case in January 2013. But his action was still significant; for the first time, Fingleton had been publicly questioned on how he ran the building society—not by a politician, not by a regulator, but by a former employee.
——
Three years had now passed since the state’s disastrous decision to guarantee Irish Nationwide. The public knew by then that the size of the bill it was being asked to pay was €5.4 billion, but little enough else. It had little idea of the true extent of the rottenness it was now being extorted to tighten its belt to pay for.
The state had produced two hefty reports on 31 May 2010 into its banking crisis. They were erudite and succinct big-picture explanations of events, prepared in the context of carrying out a much deeper investigation into Irish banking that was expected to take place soon after their publication.
The first of these reports was prepared by Patrick Honohan, the academic turned governor of the Central Bank. It is called The Irish Banking Crisis: Regulatory and Financial Stability Policy, 2003–2008. Incredibly, Michael Walsh, chairman of Irish Nationwide, is acknowledged in the report among seven insiders who were owed a ‘special debt of gratitude’ from Honohan for his ‘extensive time’ spent helping with the preparation of the report. It was as if Walsh had not spent almost a decade giving Michael Fingleton credibility by remaining year after year as chairman of the society. The opportunity to grill Walsh about his total failure as a chairman was missed. Rather than being held publicly to account by the governor of the Central Bank, his thoughts were not publicly recorded.
Honohan’s report was nonetheless a good overview of what went wrong with Irish Nationwide, doubtless with any gaps filled in by Walsh. It was not, however, a proper investigation that would explain to the public who was responsible. In its 177 pages the report never mentions Michael Fingleton, or any other banker, by name. Nor does it criticise in any detail the people in the Financial Regulator’s office and in politics who facilitated him. Honohan, a talented and essentially decent man, did not see pointing fingers as part of his job. But on page 17 of the report there is an intriguing footnote.
The central management figure in INBS was seen as an overly dominating figure that needed to be surrounded by a stronger governance structure.
While it was understood by all that he was politically well-connected, the failure to resolve the issue is not attributed by anyone involved to his having a privileged status. While unconscious factors may have been at work, FR [Financial Regulator] management and directors agree that there is no evidence of political representations being made on his behalf aimed at influencing regulatory decisions.
The fact that none of the insiders interviewed by Honohan admitted that there had been political interference to protect or aid Fingleton down the years was hardly proof that nothing had occurred. Fingleton’s relationship with those in the corridors of political power was simply not investigated. He had spent decades making political donations, paying for political golf outings, dining with politicians in fancy restaurants, offering politicians free tickets to Croke Park. Irish Nationwide also directly subsidised political parties. In 2007, for example, it made three substantial political donations: €5,000 to the Progressive Democrats, €5,000 to Fine Gael, and €7,500 to the SDLP. In February 2008 it paid €2,500 to Fianna Fáil for a table at its spring fund-raiser at Leopardstown race course, which was attended by all its political bigwigs. This was in the interregnum when Bertie Ahern was preparing to step down as Taoiseach, to be replaced by Brian Cowen. The society almost certainly made many other donations over the decades, but there has been no thorough investigation of these financial links. It would take a phone call from the government to order one.
At board meetings too Fingleton would on occasion drop the name of a government minister he had met on the golf course. Politicians were his friends, his associates and his clients. The society had lent millions to politicians and their families and associates down the years.
On the night of the bank guarantee at least ten members of the Dáil had borrowings from the building society, according to a list of ‘PEP’ or politically exposed people who had borrowed from the society. Some of the loans down the years to politicians or people connected to them were given on generous terms, sometimes with little regard for paperwork or the creditworthiness of the borrower.
In May 2011 the society’s new chief executive, Gerry McGinn, had acknowledged that the society had reviewed its loans to politicians. ‘I have not come across a loan made to a public representative where there were special favours done [beyond Fingleton’s remit],’ he said. ‘There was nothing untoward in loans being given on slightly generous terms.’ McGinn said the type of loans enjoyed by this elite included loans that were interest-only or had capital repayment holidays. Fingleton had extraordinary powers to lend however he liked, so that saying he had not gone beyond his remit meant little. No information was given on whether or there were clusters of
loans in particular areas, or to the families of politicians.
Fingleton was amazingly close to the levers of power. At the same time he was somehow untouchable for decades at the top of his accident-ridden and scandal-ridden society. The possibility that these two facts might be related has never been investigated publicly. The answer to why Fingleton gave favourable loans to such people as politicians has never been given, because the question has not really been asked. There was little political will to dig deeper into the society’s relations with politicians.
The clearest example of this lackadaisical approach to investigating the society’s links to politics could be seen on the wall of the private members’ bar in Leinster House. A picture of a beaming Fingleton sponsoring the Oireachtas golf team hung in the bar for twenty years, showing politicians from the Progressive Democrats, Fine Gael and Fianna Fáil clamouring around him. As politicians relaxed over a pint after a long day working out new ways to cut back public spending, up on the wall behind them all through the financial crisis hung a photograph of Michael Fingleton. Nobody even thought of taking the picture down until April 2011, when Pearse Doherty, the recently elected Sinn Féin TD for Donegal South-West, called for it to be ‘taken down from its perch and placed in the dustbin of history once and for all.’
——
Ireland’s second report into its banking crisis was published on 31 May 2010 by the German banking economist Klaus Regling and a former deputy director of the International Monetary Fund, Max Watson. Their report was called A Preliminary Report on the Sources of Ireland’s Banking Crisis. This report again names nobody. Regling and Watson interviewed Fingleton in private, along with other senior figures from the society. According to well-placed sources, Fingleton was unrepentant when interviewed and defended all his actions. The public were denied the opportunity to hear his testimony for themselves. Even though everybody was paying for it with ever greater austerity, Fingleton’s views were kept secret.
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