Monday, February 25, 2013

Fingleton used special account for politically sensitive loans

Irish Nationwide had a special bank account called the 'No. 3 account' which was used to immediately disburse funds when required for sensitive situations.

The account was jointly controlled by Michael Fingleton, the building society's boss, and just one other member of staff between 2002 and 2008. It could make payments without formal limits and was used for purposes including granting loans to politically sensitive figures or for the settlement of disputes.

The existence of this unorthodox bank account was one of many unusual practices identified by forensic accountants from Ernst & Young, who were asked to trawl through the society by the State, post the bank guarantee.

Ernst & Young also identified issues relating to individual borrowers that it considered unusual, including loans to some of the society's biggest borrowers.

These and many other issues are revealed in a new book called Fingers, by Tom Lyons and Richard Curran, which is to be published by Gill & McMillan next week.

This book identifies a range of unusual deals, including a payment of €435,000 to a firm which the society's records say has an address on Madison Avenue, New York.

Ernst & Young was unable to find any evidence of this company at that address and concludes that the beneficiary of this payment is a Luxembourg bank account.

It also identifies multimillion sums being paid out for "consultancy services" to entities related to some of the society's borrowers. It also lists a range of other payments sanctioned by Fingleton that Ernst & Young found required further questioning.

The book reports on other shortcomings of the society, identified in April 2009 by consultants Deloitte. These include the fact that not all commercial loans were subject to review by the credit risk department; adherence to the credit committee's terms of reference were not always met and the society stopped producing quarterly reporting packs on credit-risk management in September 2007.

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