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  This report should have had serious implications for Irish Nationwide. It explicitly warned the society that it was overexposing itself, not only to individual borrowers but also to particular segments of the market, including development land. As the society prepared to go on a massive lending binge, the Central Bank knew that it was ill prepared to cope if anything went wrong.

  Irish Nationwide was a black box, into and out of which billions flowed while only its chieftain, Fingleton, and a small number of others fully knew what was going on. Yet for some reason, no effective action was taken by the Central Bank. The KPMG report was instead allowed to gather dust on the shelves of the society and the Central Bank. Nobody followed through on it, even though year after year KPMG, when preparing the society’s end-of-year report, would submit yet more memos to the Central Bank pointing out that essentially the same flaws identified in the 2000 report were only half-heartedly being rectified.

  The report was a crucial document given to Michael Walsh for his personal review in the months before he moved from being only a director to becoming chairman of the society in May 2001. Walsh, as we shall see, failed to fully act on the report.

  ——

  As the KPMG report was being prepared for the Central Bank there were other public signs that the society was not working as well as it should.

  One day in 2000 a Cork businessman and property dealer, Denis ‘Starry’ O’Brien, rang Frank Connolly in his office in the Sunday Business Post. Connolly was on a formidable roll of stories at the time. He had brilliantly exposed the Fianna Fáil minister Ray Burke as being on the take from builders in return for getting them planning permission. The clamour created by this and other stories led to the setting up of the Flood Tribunal, a full state inquiry into such matters.

  Out of the blue, O’Brien told Connolly that he had made a payment of £50,000 to Bertie Ahern, then Minister for Labour. The payment, O’Brien said, involved him lodging £100,000 from a Cork developer, Owen O’Callaghan, in his account in Irish Nationwide’s Cork branch. He then withdrew half the money in the form of a cheque for £50,000. He gave this cheque to Ahern, he claimed, in the car park of the Burlington Hotel in Dublin in or around September 1989. He alleged that he made a second payment of £50,000 to an unnamed politician in a similar manner, using his account in Irish Nationwide.

  The money, so O’Brien’s story went, was paid over to help O’Callaghan secure planning permission for a large shopping centre he was building at Quarryvale, near Lucan, Co. Dublin.

  Connolly waited months before publishing the story. Critically, O’Brien had documents describing the movements of money in his Irish Nationwide account in Cork to support his claim.

  Eventually, on Sunday 23 April 2000, Connolly published an article that said the tribunal was investigating an alleged payment of £50,000 to an unnamed senior Fianna Fáil figure. It was explosive stuff, and swiftly Ahern’s name emerged as the man accused of taking an illicit payment after a senior Fianna Fáil figure assured a rival journalist that they would not be sued for making such a link. O’Callaghan immediately denied the story, as did Ahern, who sued O’Brien for defamation. He did not, however, sue the Sunday Business Post.

  While the facts of Connolly’s story were later proved to be untrue, he was right that the tribunal was taking O’Brien’s allegations seriously. How Michael Fingleton responded to the tribunal says much about his attitude towards authority.

  In February 2000 the Flood Tribunal wrote to Irish Nationwide seeking all records of deposits and withdrawals made at the St Patrick Street branch of the society in Cork. It wanted to look at files from 15 March 1987 to 15 April 1989 and from 1 June to 30 September 1989, dates that encompassed O’Brien’s allegations.

  Irish Nationwide struggled to come up with what it was ordered to produce. In the witness box, Fingleton said that statements and cheque counterfoils for the period concerned had been destroyed. ‘We have a policy to destroy certain things after six years,’ he said. ‘There is no guarantee that everything will be destroyed in any organisation, it can be haphazard from time to time, but I am satisfied that we have nothing, no bank statements relating to this period.’

  Irish Nationwide had even lost its back-up records for its Cork branch, Fingleton said, after a flood in its Grafton Street office in Dublin. It was all very unfortunate.

  In frustration, senior counsel for the tribunal, Patrick Hanratty, said he found Fingleton’s attitude ‘cavalier in the extreme.’ Fingleton rejected this. ‘I refute any inference that we’re avoiding giving the information,’ he said.

  Eventually the society did manage to dig up a few documents, but they were incomplete. By then it was clear that O’Brien was back-pedalling on his story, and the matter was dropped by the tribunal. Questioned afterwards by a member of the society over the tribunal’s criticism of his attitude, Fingleton was disdainful. There were ‘no skeletons’ in Irish Nationwide, he insisted.

  Meanwhile Bertie Ahern’s legal action against O’Brien went ahead in the Circuit Court in July 2001. O’Brien threw in the towel before the case began by admitting that his story was false. ‘There is nothing in it for me,’ he said. ‘I was sucked into this, and I am now unsucking myself.’ Nonetheless Ahern pressed ahead with the case. Among the evidence he produced was an affidavit by Fingleton swearing that the Irish Nationwide documents O’Brien had produced were forgeries. The Circuit Court backed Ahern, and in July 2001 he was awarded £30,000 in damages, the maximum then possible in the Circuit Court. ‘I am delighted that my character has been utterly, completely and absolutely vindicated,’ Ahern told the press afterwards. ‘These things were fairly devastating. It said I was a fraud. It said I was a gangster. It said I was corrupt.’

  Later Ahern would be found by the Mahon Tribunal to have in fact received large amounts of cash from businessmen, other than O’Callaghan, in the form of a ‘dig-out’ when his personal finances were in trouble. In his final report the chairperson of the Tribunal said he did not find Ahern’s evidence in relation to various payments a ‘truthful account.’

  But for Frank Connolly, publishing O’Brien’s false claims left his reputation in tatters, and he resigned from the Sunday Business Post. Writing after the publication of the report in 2012, he reflected on the O’Brien affair. ‘No defence was put up; no reason ever given for O’Brien’s coming forward with his detailed cock-and-bull story,’ he wrote.

  In his book Bertie: Power and Money (2011) the reporter Colm Keena concluded: ‘The case had the effect of dampening media interest in any rumours about payments to Ahern out of fear that they might again be sold a pup. What was motivating O’Brien in all this was never disclosed.’

  From a banking point of view, despite a public dressing-down by a statutory tribunal, nobody in Irish Nationwide or the Central Bank moved to ensure that from then on the society kept its files better. Another problem was left stored up for the future.

  ——

  Irish Nationwide would also play a cameo role in other tribunals. In 2008 the Mahon Tribunal investigated what was called the B/T account in the Irish Permanent branch in Drumcondra, Dublin. The account, according to Bertie Ahern and his friend Tim Collins, was set up to hold funds for a building trust associated with a house in Drumcondra used by Ahern to manage his constituency business. The tribunal concluded that this was not true and that the account was used to hold funds for the benefit of Ahern and Collins.

  It also discovered that Ahern’s then partner, Celia Larkin, had bought a house in Phibsborough, Dublin, in 1993 using money from the B/T account. When the Mahon Tribunal began investigating this matter, Fingleton personally fast-tracked a loan to Larkin of €40,000 in a matter of hours to allow her to repay the money she had taken from the B/T account.

  In the Moriarty Tribunal also Fingleton played a role. Here Michael Lowry gave evidence about going to Fingleton when he was a government minister in August 1996. He was instantly approved for a 100 per cent loan to buy a house in Blackrock,
Co. Dublin. Lowry also held an offshore bank account in Irish Nationwide in the Isle of Man, into which £147,000 was paid in October 1996. The tribunal believed this money had been paid to him by Denis O’Brien in return for making sure he obtained a valuable mobile phone licence.

  Lowry, however, maintains that the account was set up for him by the late David Austin, a Fine Gael fund-raiser. He told the tribunal that the money was a loan from Austin to pay for the renovation of his new house in Blackrock. The tribunal again faced difficulty in extracting information from Irish Nationwide on this affair.

  Fingleton’s regular appearances or mentions at the tribunals never damaged him. He was, after all, in the excellent company of powerful politicians and wealthy developers who then called the shots in Ireland. Reflecting on these matters today, the broadcaster Matt Cooper concludes:

  Michael Fingleton was almost like Forrest Gump in the way that he turns up at the side of all of the major figures of the major business and political scandals of the last twenty-five years.

  The planning tribunal where he was central to Bertie Ahern’s partner Celia Larkin, he was very involved with Michael Lowry in various things along the way as well. He was secretive, unwilling to answer the questions that are legitimately asked of him, having excuses not to provide the answers. That’s exactly what you often want in a building society boss who just happened to have an offshore bank on the Isle of Man. You want someone you can rely on to be discreet, provide the money and who won’t tell tales.

  REBELLION

  But the sleepy world of the Central Bank that Irish Nationwide so easily danced around was about to be shaken up by an unlikely source: a small group of members who had the skill and the doggedness to take it on.

  As 2001 began, Peter Donal O’Connor finally retired after reaching the age of seventy, as he was required to do under the rules of the society. Along with his father, he had allowed Fingleton to strengthen his control of the society over the previous decades.

  ‘He was gently-spoken and a nice guy,’ Con Power recalled. ‘But he never took on Michael Fingleton. It was the absolute opposite. He held Michael Fingleton in absolute awe.’

  At O’Connor’s last AGM as chairman, on 18 April 2001, fewer than a hundred members showed up. Fingleton gave his usual upbeat assessment of the outlook for the society.

  The society announced also that it was going to appoint Terry Cooney, an accountant, to its board. Cooney shared his practice, which was founded in the early 1990s, with Paschal Taggart, a notably gregarious deal-maker. Taggart was a serious hitter in Irish corporate life, having joined a consortium including Noel Smyth, the solicitor, and Dermot Desmond, then an up-and-coming financier, in taking advantage of the collapse of the H. Williams supermarket chain to buy it for a song in 1987. Before that he had also worked for a time with Brendan Gilmore, a corporate adviser, who would later play a role in the Mespil Flats affair.

  Cooney, on the other hand, was a former inspector of taxes who preferred to keep a much lower profile than his partner. While he had considerable accountancy expertise, he was a deferential character who was unlikely ever to challenge Fingleton.

  There were only two real questions from the floor for the assured Fingleton. One member, Derek Collins, asked if the society could try to avoid any negative publicity in the future in relation to repossessions, a long-running sore point for the society. Fingleton assured him that the society always tried to avoid confrontation, before showing his steely side. ‘Inevitably these things happen, because individuals won’t pay you anything. You can write it off or go for the asset, and we can’t adopt the first option.’

  Another member questioned the society’s historically low pay rates and whether this meant that its staff were only second-rate and received inadequate training. Fingleton was again dismissive: the staff were getting the market rate of pay, he said.

  Entirely unquestioned was Fingleton’s own salary, which was the market rate and much more besides. In one of its many quirks designed to protect Fingleton, the society did not give a breakdown of its chief executive’s pay; instead it lumped Purcell’s and Fingleton’s pay under the same heading. In 2000 Fingleton and Purcell were paid a combined €962,000, made up of salaries and bonuses of €737,000 and pension contributions of €225,000. Asked by journalists afterwards if he would give a breakdown of his salary, Fingleton laughed. He had ‘no plans’ to do so, he said.

  The society’s board members, by contrast, received a salary of €25,000—not bad money, but nothing to write home about.

  On 1 May 2001 a new chairman took over, Dr Michael Walsh. Unlike O’Connor, this time the society’s chairman was steeped in formal banking and financial qualifications. A former professor of banking and finance at UCD, Walsh was a close lieutenant of Dermot Desmond, then a multi-millionaire financier who within a decade would become a multi-billionaire. In his role as a director of Desmond’s investment vehicle International Investment and Underwriting, Walsh was instrumental in helping Desmond become a very wealthy man. Along the way Walsh himself had made a small fortune. He had no need of the modest salary that went with the job of chairman of Irish Nationwide; nor was he short of something to do as the restless Desmond pushed into ever new areas, from owning London City Airport to successfully riding the technology bubble.

  Why someone so qualified became involved in such a banking disaster area remains unclear. Former employees of the society believe Walsh may have taken the job reluctantly after Dermot Desmond turned down an offer to be a director. Equally, being close to Fingleton and chairman of a building society was seen at the time as prestigious and influential as the society continued year after year to report record profits. Other sources suggest that Walsh may have believed he could help the society by using his expertise to clean up its act before a sale.

  Whatever his reasoning, Walsh would later tell friends that getting involved with the toxic society was his greatest regret in an otherwise distinguished career.

  ——

  Brendan Burgess, a chartered accountant, was sitting at his desk in his office in Baggot Street, Dublin, in early 2002 when he received an unexpected phone call. Burgess ran an accountancy recruitment company, but this call related to his sideline as a media commentator on consumer affairs for the personal finance pages of the Irish Independent. On the line was James Morrissey, joint founder of the Sunday Business Post, now a PR man, who was ringing Burgess to complain about a throwaway remark he had made about Irish Nationwide’s high interest rates. The society was Morrissey’s client.

  ‘[Morrissey] rang me one day to say that the Irish Nationwide was very annoyed,’ Burgess recalled. He could barely remember the article, as the comment on Irish Nationwide had been a small one in answer to a reader’s question that remarked that the society could on occasion vary the interest rates it charged ‘at will.’

  ‘James Morrissey got on to me and roared and screamed at me down the phone,’ Burgess said. It was the first time the two men had ever spoken. Until then Burgess had thought little about the society, although he was aware that the personal finance editor of the Irish Independent, Bill Tyson, had written several articles criticising the society’s treatment of some borrowers. Tyson was a very experienced finance correspondent. He had edited the business section of the Evening Herald for years and was bringing the personal finance pages of the Independent to a new level. He was giving more and more coverage to the real experiences of readers, relying on the letters he received from readers about their financial experiences. It was a far cry from the more traditional soft-focus stuff on investment products.

  Recalling recently how he began writing about Irish Nationwide, Tyson said that in many ways typical borrowers were similar to typical readers of the Irish Independent. ‘They represented middle Ireland, ordinary people who wanted to pay their way,’ he said. He didn’t get a lot of letters from readers about overcharging or overpayments, but almost all of them were to do with Irish Nationwide.

  Tyson ha
d been plugging away by writing about the experiences people had at the hands of Irish Nationwide. The society was deeply unhappy about this. One of the problems was that Tyson was perfectly entitled to write about the experiences of borrowers who got into trouble, after a close examination of their financial statements, while the society was not allowed to comment publicly on individual cases, as this would have been a breach of confidentiality. Fully cognisant of this, Tyson was meticulous in verifying facts and navigating the potential legal difficulties.

  At times things got nasty. ‘I remember one time Irish Nationwide contacted a woman who had written to me, and they told her it was a breach of confidentiality for her to have contacted me.’ The society’s application of penalty interest payments, which in one case Tyson found to be running at a de facto 36 per cent, featured strongly in his articles. ‘Irish Nationwide would go much further than other institutions. It is difficult enough to pay a mortgage, but when all of this penalty interest was heaped on, one person compared it to throwing water on a drowning man.’

  There were even more basic problems with how the society dealt with some borrowers. Some of them seem unthinkable now, yet it was only ten years ago. Tyson found that Irish Nationwide was not telling borrowers what interest it was charging them. In their statements they received a list of what they owed and how it was shooting up, under various penalty rates, if they fell into arrears. But it never said what the rates were. ‘There was a Clare schoolteacher who was clearly paying far too much. He just wanted to find out his interest rate. Next thing there was a memo went around telling managers not to tell anyone what their rate was. They had to contact head office in Dublin and enquire there.’

  Meanwhile Burgess’s curiosity was piqued by the tone of Morrissey’s criticism of his own article. Morrissey had a long association with Fingleton, which meant he felt the need to fight the fight for his client. In 1992 he had left journalism to go into business with the boutique deal-makers Gilmore and Associates. One of his first ventures was to help sell the Mespil estate in Dublin which had turned into a minor scandal for Fingleton and all involved. It had not damaged the gregarious Morrissey’s relationship with Fingleton, and they enjoyed a mutual love of gossip about the rich and powerful.