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  Judge Peter Kelly dismissed this explanation. ‘If the Irish Nationwide Building Society had felt Mr Martin was abusing the order of making life impossible for them, then their course was clear. They could have come back to court at any time and sought to have the order dissolved or varied.’ The society, he concluded, had taken the law into its own hands by dismissing Martin and humiliating him by taking his office keys, credit card and society car from him without trial.

  The case had been highly embarrassing for Fingleton and had been quietly and expensively settled over the summer months, while the courts were closed.

  Hogan and Burgess also made reference, though not explicitly, to an even worse episode in Fingleton’s career. ‘The society has also made substantial settlements under confidentiality agreements with ex-employees. These awards reduce the profits of the society and ultimately reduce the value of the windfall.’

  This was a reference to an article published in the Sunday Tribune on 3 November 2002. It stated that the society had paid €200,000 in a confidential settlement with an employee called Fiona Couse. She had worked her way up from being a mortgage administration manager in the 1990s to becoming head of compliance. She had worked closely with Fingleton for twenty years before suddenly leaving at the beginning of 2002. She had taken her case to the Office of the Director of Equality Investigations. A public hearing was due on 16 October, but Fingleton decided to settle the case, which the Sunday Tribune said at the time could have been ‘highly embarrassing for the society. It is understood that Couse brought her case against Irish Nationwide after her close working relationship with the chief executive deteriorated and negotiations failed to reach a conclusion satisfactory to both parties.’

  In truth, Fingleton was more than close to Couse. They had enjoyed a love affair. It was only on 1 March 2011 that this became public in the Irish Mail on Sunday under the headline ‘Fingleton’s mistress got £200,000 payout.’

  Couse, a one-time captain of the Irish women’s hockey team, was confronted at her home by the paper. She said the pay-out happened only a ‘significant period of time’ after the affair ended. ‘It wasn’t linked to it at all. It has absolutely nothing to do with it. It was a sexual … it was a harassment and bullying action that was taken under the guise of the Director of Equality Investigations. And that’s what that settlement was in relation to. It was in relation to nothing else.’

  Fingleton neither confirmed nor denied the affair but insisted that Irish Nationwide had acted properly in response to what was an internal employment claim. ‘The matter was settled at the time for good and proper reasons,’ he said, ‘and in the best interests of the Irish Nationwide Building Society, and all matters in relation to this case were dealt with by the chairman of the society at that time.’

  He categorically denied any suggestion that the complaint had been hushed up to save his embarrassment. He refused to say whether board members who approved the payment to Fiona Couse knew of his previous relationship with her.

  Couse claimed the settlement had been dealt with by Harte and Purcell, but not Fingleton. ‘He wasn’t even involved in it … Maurice Harte was the person involved with it, and the company secretary. And it was unlikely that he [Fingleton] could have been involved in so far as he was a named individual. So he would have been there from the point of view if it was necessary to have a witness or something like that.’

  Harte declined to comment on the issue, and declined to say whether Fingleton had played a role in the settlement, saying, ‘I’d prefer not to answer that.’

  The paper then approached Con Power, a board member present at the time of the payment. He told it he was unaware of the nature of the settlement and that his understanding at the time was that it had been an unfair dismissal claim, which had eventually been settled amicably. ‘The details had never been discussed by the board,’ he said. Neither Power nor Harte recalled a letter that Couse was reported to have written to the Central Bank in which she outlined a number of compliance concerns.

  Fingleton’s salary also came under fire. The letter noted that his package was ‘similar’ to the scale of the chief executives of AIB and Northern Rock, ‘which are far larger and more complex companies. His package is approximately three times the size of the package paid to the chief executive of the EBS, the only comparable institution in Ireland. His undoubted experience in cost-cutting and litigation might well be counter-productive to the more marketing orientated skillset required to sell the company.’

  A new managing director was required to lead the society during the demutualisation and sell-off phase, it said. ‘Vote AGAINST any motion of confidence in Michael Fingleton.’

  Burgess and Hogan also took on the wording of the board’s motion on demutualisation and the future direction of the society. They argued that its motion on demutualisation was ‘essentially meaningless,’ as it set no deadlines. They suggested it should demutualise within eighteen months and be sold immediately afterwards.

  They put on the agenda three items of concern to borrowers. The first was the sore point of standard variable rates, which the society was finally proposing to introduce years after their rivals. They called for this not only to be offered to anyone taking out a new mortgage from January 2002 but to be extended to all.

  The second item was the ‘treatment of borrowers,’ who were banned from attending AGMs or voting on the society’s direction. The rebels argued that the society should give borrowers these rights so as to ensure that the society was run in a fairer way. ‘Much of the financial strength of the society has been developed at the expense of borrowing members,’ they claimed.

  The third item was the society’s decision to finally ‘abolish penalty interest on home loans.’ The rebels urged members to vote for this motion but also to become more lenient with any borrower in trouble. They called on the society to adopt a ‘less aggressive approach and to use the courts only as a last resort.’

  Walsh was having none of it. Despite his amiable private meeting with the rebels, when it came down to it he backed the status quo. In a separate note to members he attacked the rebels’ concerns, and their motivation. ‘The board emphatically rejects the innuendo contained in the statement that the managing director is in some way unsuitable to continue to lead the society.’ Irish Nationwide’s profits spoke for themselves, he said. ‘The reserves of the society, which are the property of the members, increased by a multiple of more than two thousand times during the period, and pre-tax profits in the year 2002 were also more than two thousand times the level of thirty years ago.’ The society’s mortgage book was up ‘seven hundred times,’ and €3 billion in new business had been lent. ‘Far from adopting a very aggressive approach to borrowers in arrears, the society only goes to the courts as a last resort,’ he said. Irish Nationwide had not repossessed any residential property in the current year (2003) and had made only one repossession in 2002 and two in 2001. ‘The number of cases of difficulty is indeed tiny relative to the mortgage book of the society, and it seems to the board that the high profile and imbalanced presentation of some of those cases is now being used in an emotive and selective manner as the context for totally subjective and personalised criticism of the managing director.’

  The 128th AGM of the society took place in the Burlington Hotel on Thursday 24 April 2003. Walsh began the proceedings by addressing the members present. ‘The results announced by the society today reflect once again the exceptional financial strength of the Irish Nationwide, particularly in a market that is increasingly competitive and over-supplied and where margins continue to be squeezed on both sides of the balance sheet.’

  Despite private reservations, Walsh boasted to the society’s members that its ratio of cost to income of 22 per cent was ‘the lowest of any financial institution in Ireland.’ The society, he said, had a ‘high level of lending,’ pumping out €1 billion in each of the previous two years. ‘We could not lend this level of funds unless we were clearly compet
itive, which we are.’

  Pre-tax profits were up 26 per cent, to €97 million, and the financial achievements of the previous ten years were ‘outstanding.’

  To give a picture of growth over the past thirty years, the net book representing shareholders’ interest has increased from €210,000 in 1972 to €438m in 2002. Assets have increased from €5.6m in 1972 to €5548m at the end of 2002.

  The foregoing statistics once again clearly demonstrates that your society continues to be a very strong, well-managed and an independently viable financial institution. We have continually outperformed other financial institutions, some of them many times our size.

  Fingleton was the key to the society’s success, was Walsh’s clear message. Walsh then turned to the society’s view of Ireland’s property market, which was already showing signs of overheating. He said that the Planning and Development (Amendment) Act (2002) brought in by the Minister for the Environment, Martin Cullen, provided a ‘welcome boost’ for the housing market. It was a good thing that the amendment had ‘abolished the two year planning rule which threatened to freeze the supply of housing going forward.’

  This change had effectually taken the brake off the already supercharged housing market. In addition, it amended part 5 of the planning Act (2000) to remove the requirement on builders that one in five houses in their developments should be social housing, or failing this to pay a fee to the city or county council. This move too was designed to help developers, who were concerned that it would dampen the crazy prices they were able to charge for small houses and apartments if they had to make some of them available to less fortunate people.

  Walsh told members that he was not sure if the affordable-housing changes would ‘help or hinder the supply of houses in the future.’ He was aware, however, of the views of the big developers who had become so important to the society. ‘Some developers believe that the amended provision will be negative for the industry. Only time will tell.’

  Walsh then made a telling statement about the society’s views of the property market. ‘The society does not subscribe to the school of falling property values and expects prices to increase in the coming year by 8 to 10 per cent, particularly in the urban and greater Dublin area.’ Outside those areas, price increases will be ‘more moderate.’

  It would be some time in the first half of 2004, he said, before supply would equate to demand. Demographic changes, low interest rates and modest unemployment were the fundamentals underpinning this prediction, he said. Competition, Walsh said, was strong among banks for new business. ‘There is now no prospective borrower who complies with the normal lending criteria who cannot get a loan to buy a house.’

  Updating members on his view of the society’s future, Walsh said the Department of the Environment had established a review group and that he was confident that section 102 of the act would be amended and the five-year rule would go, allowing the society to be sold. In the meantime Fingleton would remain in the saddle, charged with continuing to ‘build up shareholder value.’

  In conclusion, I would like to state that the Irish Nationwide is an exceptionally well managed modern progressive building society with a record of achievement second to none. We would be very concerned if after many years of successful growth that the society would be damaged in any way. The controversy currently prevailing is not helpful to the overall interests of members. Members who deliberately misrepresent the society and damage it have no place in the organisation.

  The rebels’ direct threat and detailed criticism ignited fury at the top of the society. A decision was made somewhere near the top that their motions must not only be beaten—which was almost certain—but trounced. The hope was that this would intimidate them into never trying again to oust Fingleton and win a fair deal for borrowers. To achieve this object, the rules would have to be broken.

  In the weeks before the AGM the rebels became aware that the society appeared not only to be canvassing for votes but to have failed to pass their criticisms on to members. Both actions were illegal under the Building Societies Act.

  Burgess received a phone call from one borrower, Brendan Gavin, who told him he had gone for a meeting with his local building society manager. While there he had been given a sheet of paper and asked to tick all the boxes in favour of Fingleton and the society. The manager told him his vote was needed to see off some troublemakers who were damaging the value of the society.

  A pile of printed papers seeking proxy votes was stacked on the manager’s desk. They were not attached to the notice of the AGM, which contained the rebels’ criticisms. Crucially, Gavin could prove this, as he kept his sheet, which did not have the serrated edge it should have had as part of the notice of the AGM. ‘It was very, very clear what they were doing was wrong,’ Burgess said. ‘People were just coming up and they said, Oh, Tom, look, there’s this fellow causing trouble and they’ve put down a motion of no confidence in Michael Fingleton. Would you mind giving the chairman your proxy? They’d say, Oh, not at all, and they just signed it. They wouldn’t have seen the arguments for or against.’

  Burgess began to make phone calls to his contacts working in the society and quickly found out that the canvassing was not confined to one branch but was part of a concerted attempt to trounce any attempt at reform. Each branch was given a target of between 200 and 300 votes in favour of Fingleton. ‘I was told this by people working in the Irish Nationwide … There were some seven whose job was to ring all the branches and check how many they had got and prove that they had met their target.’

  One of those charged with gathering proxies was the manager of the Monaghan branch, Brendan Beggan. He had joined Irish Nationwide as branch manager in 1996. He recalls responding to an advertisement for the job and going to Dublin for the interview in the old Irish Nationwide head office in Camden Street. His first impression of the building was that it was ‘pretty grotty’. Nevertheless he expected to be grilled by a team of three or four executives; but it didn’t go that way at all. ‘In walks Michael Fingleton himself. He was the only one. The interview wasn’t about lending or anything like that. He spent the whole time asking about the GAA and my own connections with it.’ Beggan had been an inter-county footballer with Monaghan and played with the prominent county team Scotstown. He recounts how Fingleton loved the GAA. ‘A lot of his managers were in the GAA. The higher up you were in the GAA, the better chance you had of getting a job.’

  Beggan recalls that the vote-gathering exercise was quite sophisticated in some ways. ‘I would be given a list of people to approach. Depositors’ names would come up in the overnight bags. I would tell them, If Michael Fingleton doesn’t get back in you won’t get your premium rates.’

  He says that as a branch manager he was given targets for proxies for the Fingleton vote. He called to houses and secured votes in various ways. ‘I used to get a phone call asking me how many I had got and how it was going,’ he said. He claims that Fingleton was aware of the proxy-gathering operation by the society and that he discussed it with him by phone.

  Unaware that all this was going on, Burgess was determined to follow up on the piece of evidence he had received. The document he had been given clearly showed that people were being presented with a paper to sign without knowing of the serious concerns about Fingleton.

  In an angry e-mail message Burgess complained to Con Power, the only director who had shown any interest in his criticisms. Power was furious. He had not been told about the canvassing. He attended a special board meeting to find out what was going on, and he insisted on being told the truth. Barely containing his anger, he began with the chairman. ‘Did you know about this, Michael Walsh?’

  ‘No,’ the answer came back.

  Staring hard at his unruffled chief executive, he asked, ‘Did you know, Michael Fingleton?’

  Fingleton gave a curious answer that was not an explicit No. ‘There is nothing happening that was initiated by the board.’ Turning then to Purcell, Power asked t
he same question. Purcell hesitated, then gave a staggered ‘No.’

  Power’s fury was unquelled, and he told his board they must cooperate with any investigation by the Central Bank. He was assured that this would of course be done.

  Burgess and Hogan meanwhile lodged a formal complaint with the Central Bank, and asked it to attend the AGM and block the vote until an investigation was concluded into what looked like illegal canvassing and the deliberate suppression of the dissidents’ arguments. ‘They said No, they wouldn’t,’ Burgess said. ‘They didn’t attend the AGM but they said they would investigate the matter.’

  The campaigners’ complaint was made to the Central Bank’s head of supervision, Con Horan. He was a career civil servant who had joined the Central Bank in 1979 and was firmly embedded in its ‘light touch’ culture. He would later emerge as the person who would oversee the regulator’s handling of Anglo Irish Bank in 2008 when it was embroiled in a scandal ranging from funding its own clients to buy its shares, to pumping up its balance sheet with billions from another financial institution.

  The campaigners thought they had a clear-cut case that canvassing was taking place, a clear breach of the Building Societies Act. Burgess meanwhile wrote a letter to the Central Bank outlining his concerns. ‘One supporter was sent an additional proxy form to his home address, complete with a stamped addressed envelope. We have reports of staff being asked to work late in recent weeks to phone members and canvass their votes. We have one particularly disturbing report of a non-member being offered his expenses and a “feed of drink” by a branch manager to go to the a.g.m. as a proxy because they need “arses on seats”.’

  Despite the mounting evidence that the rules were being flouted, the Central Bank dragged its feet and said it would not halt the meeting to run the vote again. ‘We think it is important that it goes ahead and that the issues we worked hard to get on the agenda are discussed,’ a spokesperson said. He assured the media that the matter would eventually be looked at. ‘When we come across any breach of the law, we would take follow-up action.’