FORMER IRISH NATIONWIDE Building Society chief executive Michael Fingleton has lost his High Court action aimed at preventing the Central Bank from conducting an inquiry into alleged regulatory breaches at the financial institution.
Fingleton, along with several other former officials of INBS, are the subject of a Central Bank inquiry, under Part III C of the 1942 Central Bank Act, which is due to commence hearings in February.
He challenged the Central Bank’s decision to subject him to an inquiry, claiming it was unfair and unreasonable.
The Central Bank, which wants to inquire into allegations certain prescribed contraventions were committed by both INBS and certain people concerned with its management between August 2004 and September 2008, opposed the application.
Giving judgment today Justice Seamus Noonan dismissed Fingleton’s action, clearing the way for the inquiry to proceed.
In a lengthy and detailed ruling Justice Noonan said Fingleton had “not satisfied me that there is any unfairness inherent in the inquiry process to which he is subject”.
Fingelton was not present in court for the decision.
The inquiry, in the event of any finding of wrongdoing, has the power to impose a fine on an individual of up to €500,000. INBS was nationalised and merged with the former Anglo Irish Bank into IBRC in 2011.
The Central Bank estimates the collapse of INBS cost the tax payer €5 billion, although this figure is disputed by Fingleton.
In his action, Fingleton sought various orders and declarations from the court in respect of the Central Bank’s decision to launch an inquiry which he claims is disproportionate, oppressive and unreasonable.
‘Scapegoat for the banking crisis’
Fingleton also claimed that proceeding with the inquiry is a breach of fair procedures and an unlawful breach of his right to a fair hearing. He argued the Central Bank cannot conduct an inquiry of this nature. This is because Fingleton, who retired in 2010, is no longer involved in the management of an entity that was a regulated financial service provider.
It was also claimed there was a delay by the Central Bank in bringing the inquiry, he had been subject to prejudicial adverse media coverage, and was made the scapegoat for the banking crisis.
Fingleton is also the subject of proceedings before the Commercial Court, also arising out of events at INBS before it was nationalised. Fingleton claims that at the very least the inquiry should not be conducted until those proceedings have been concluded.
The Central Bank had rejected all of Fingelton’s arguments, and said there was nothing preventing the inquiry from proceeding as planned.
In his decision Justice Noonan dismissed all grounds of Fingelton’s case. The judge said the 1942 Central Bank Act applies to Fingleton and the former INBS CEO is lawfully subject to the inquiry.
It was found there had been no culpable delay by the Central Bank in conducting its investigation into Fingleton resulting in any unfairness to him. The inquiry, and the elaborate procedures provided for in the 1942 Act, ensured Fingleton’s right to a fair hearing “is guaranteed”, the judge added.
It seems to me that the public interest is well served by a credible system of financial regulation and enforcement such as that provided in the 1942 Act.
Much of Fingelton’s claim, the judge said, was “an attempt to to preempt in advance issues before the inquiry that may or may not arise, or be determined by the inquiry itself”. He added that any suggestion Fingleton will be subject to any prejudice by the inquiry was “devoid of substance and without merit”.
Financial hardship
Rejecting Fingleton’s claim the inquiry would lead to significant financial hardship for him as he would have to bear the legal costs associated in preparing for the inquiry, the judge noted that the Central Bank referred in a sworn statement that annual reports for INBS from the years 2003 to 2008 show Fingelton’s remuneration package amounted to €9.77 million.
The Central Bank also noted that when his pension fund matures it is worth approximately €30 million. Fingelton had not replied to that evidence, Justice Noonan said.
“In the light of that the applicant’s complaints about equality of arms and the unfair costs burden on him of participating in the inquiry ring somewhat hollow,” the judge said.
He adjourned all outstanding matters in the case, including the issue of legal costs, to 14 January.
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