A former senior manager at collapsed lender Irish Nationwide has told the High Court he was “completely appalled” to learn Michael Fingleton Snr allegedly gave a “get out of jail free card” to a borrower who failed to repay a multi-million pound loan.
Conall Regan, who joined the bank after Mr Fingleton snr left in April 2009, told the High Court on Wednesday that the defendant allegedly wrote to a lender who had lent almost €6m to buy land in County Meath in October 2007, confirming that the money given to him was “non-recourse”.
A non-recourse loan means that the loan debt is secured only by collateral and the borrower cannot be sued by the lender.
The High Court civil case against the former chief executive and managing director of Irish National Building Society (INBS), Mr Fingleton Snr, now in its third week, alleges he mismanaged the building society and engaged in property “gambling” with high net worth individuals in an informal and speculative manner in the mid-2000s, leading to catastrophic losses.
Mr Fingleton Snr (87), who is unable to give evidence due to ill health, joined the construction lender in 1971 and retired in 2009 as both managing director and chief executive. At its peak in 2007, INBS reported assets of €16bn but was one of the high-profile victims of the 2008 financial crisis.
Liquidators at the Irish Banking Resolution Corporation (IBRC) have launched proceedings against Mr Fingleton senior, who denies allegations of negligence and mismanagement.
INBS's total losses are estimated at €6 billion. However, IBRC is only seeking €290 million in reimbursement for five specific loans allegedly approved by Mr Fingleton senior.
The court was told that Mr Fingleton senior allegedly “nodded” for top-ups and extensions of accounts to certain customers without the knowledge of the company's board.
In the High Court on Wednesday, former INBS manager Mr Regan, who joined the organisation in late October 2009, claimed he faced “significant” problematic “loans” from the lender.
When Mr. Regan checked and verified the loans made to the lender, the lender informed him in a letter that all the money advanced to him were “non-recourse” loans.
Lyndon MacCann SC, liquidators for IBRC, Mr Regan said a letter of February 2009 from a lender to a manager of Nationwide referred to a list of loans from the lender and others and said “nobody is getting any younger”. The witness noted that the manager responded that all loans to the lender were made on a non-recourse basis.
Mr Regan said he could find “nowhere” in the documents any reference to a non-recourse element in the loans made to the lender for the 21,700 acre Meath lands worth €5,987,850.
Mr. Regan said he had reviewed the lender's loan files and that “nowhere was there any mention of non-recourse. Nowhere.”
Mr Regan told the court he asked the manager “why in God's name” the confirmation letter had been issued, to which the manager replied: “I was just doing what the boss told me to do.”
“I just couldn't understand how anyone could think that this letter would override agreements or legal documents that were signed in the normal course of things. And suddenly this, and it just doesn't make sense,” Mr Regan told the court.
Mr. Regan said he had reviewed the lender's loan files and that “nowhere was there any mention of non-recourse. Nowhere.”
Mr Regan told the court he asked the manager “why in God's name” the confirmation letter had been issued, to which the manager replied: “I was just doing what the boss told me to do.”
Mr McCann asked who he was calling “boss”, to which he replied
Sourse: breakingnews.ie
