By: Michael O’Farrell and Paul Caffrey
A MASSIVE two-thirds of Irish Nationwide’s loan book was made up of unusual profit-sharing deals with developers who agreed to pay back cash to the bank in return for fast-track loans from Michael ‘Fingers’ Fingleton, new figures show.
Yet in some instances, now coming to light for the first time, no one at the doomed bank appears to have been made aware of these profit-sharing arrangements when deciding to grant the loans – except for former chief executive Fingleton.
Court documents show that on at least one occasion Fingleton handed €25m to a Monaco-based billionaire in a deal that was never – not even retrospectively – approved by the banks’s credit committee or board of directors. The revelation will raise questions as to the extent of a ‘kickback’ culture Nationwide under the stewardship of Fingleton.
Court papers filed this week reveal cases in which there are no references of profit-sharing arrangements whatsoever in the relevant minutes of board and credit committee meetings to which Fingleton brought loans to be approved.
There are no known instances in which Fingleton personally received any money in any such deals, but the issue is likely to be examined carefully in court by the special liquidator of IBRC and Irish Nationwide as Fingleton is pursued for repayment of his controversial €1m bonus and other generous expenses.
The fact that Fingleton also entered into personal business relationships with developers at a time when he was lending them millions in fasttrack loans granted without any assessment is also likely to be investigated.
Fresh details of profit-sharing loan deals sanctioned by Fingleton are contained in a statement of claim lodged before the High Court this week by the special liquidator charged with winding up IBRC and Irish Nationwide.
The explosive document reveals an extraordinary litany of multi-million euro loans allegedly handed out by Fingleton to developer associates without even basic credit checks.
In many cases, profit-sharing loan deals were agreed and paid out to borrowers by Fingleton before the loan proposal had even gone before the credit committee or board.
Typically, both were completely under the control of Fingleton, and would rubber-stamp the deals at a later date, the documents claim.
In one case British tax exile Cyril Denis, then a billionaire who frequently relied on Fingleton for funding in return for promised profit-share arrangements, took three loans of up to €25m each.
But ultimately he defaulted on all of them and they were transferred to NAMA at a cost of tens of millions to the Irish taxpayer.
One of those deals, highlighted in this week’s court papers, involved a £25m loan request in 2006 by one of Mr Denis’s companies – Coast and Capital – to assist in the purchase of 32 former BP petrol stations The bank initially sent an offer letter but never followed up with a lending agreement and neither the board nor the credit committee ever approved the facility, the documents claim.
Nevertheless, over the course of the next two years Mr Denis was able to draw down £25m and when the defaulting loan went to NAMA in 2011 in excess of £7m was still owed to the bank.
Two other retrospectively authorised loans to Mr Denis feature in the court papers, and both have cost the taxpayer millions. One involved a €26m December 2007 loan – together with a profit-sharing arrangement – for purchasing two hotels in the French ski resort of Courcheval.
The loan was advanced on December 11, 2007, more than a month before the board actually approved the loan agreement. A profit share deal, signed the day after the money was actually sent, is not mentioned at all in the board minutes.
But far from making profits, the hotel deal collapsed. The loan was transferred to NAMA in 2011 resulting in a €20m Irish Nationwide loss. A further €5m loss was realised when NAMA took over yet another Fingleton loan to Mr Denis, this time involving €7m to a company in Luxembourg to enable it to buy two sites in France to develop a hotel.
Once again money was advanced before loan approval. Once again the credit committee minutes make no mention of a profit-sharing deal and once again the taxpayer lost out as the bank incurred €5m losses transferring the loan to NAMA.
In granting these loans, Fingleton is accused by the liquidators of failing in his fiduciary duty because no personal guarantees were sought or provided. The liquidators, who are also suing four other Nationwide directors, say Fingleton should have been dismissed for his loans practices and should be held accountable for the €6bn that Irish Nationwide lost between 2008 and 2010.
