By: Michael O’Farrell and Miranda Patrucic
DISGRACED banker Michael Fingleton and his son Michael Jr are facing a criminal investigation in the Balkan state of Montenegro, the Irish Mail on Sunday can reveal.
The probe by police and prosecutors was launched in April after Mr Fingleton’s partner in a major hotel project in Montenegro, developer Louis Maguire Jr, handed his files over to the authorities.
In a detailed criminal complaint Mr Fingleton is accused of filing inaccurate accounts, of abusing his position as a company director and of breaches of money laundering legislation. The complaint relates to New Fjord Developments Ltd – a local company set up to purchase and redevelop Hotel Fjord, a resort in the UNESCO-protected town of Kotor.
The hotel was purchased in 2006 with €5.5m provided by Mr Fingleton in a deal reportedly involving Veselin Vesko Barovic – an alleged cigarette smuggler and close associate of prime minister Milo Dukanovic.
Mr Fingleton planned to develop a €70m five-star hotel with 220 rooms, 150 exclusive apartments, a luxury spa and a private marina.
In return for bringing Mr Fingleton to the deal, Mr Maguire’s United Entertainment Partners Montenegro received a 25% stake.
But from 2008 relations appear to have soured, creditors went unpaid and Mr Maguire launched a series of commercial cases accusing Mr Fingleton of acting illegally.
Then, in 2011 two significant events occurred: New Fjord Developments was forced into bankruptcy by an unpaid creditor; and Montenegrin authorities launched a money-laundering audit because the company had failed properly to disclose the source of its funds to the Montenegrin Central Bank.
A joint investigation by the MoS and the Bosnia-based Organised Crime and Corruption Reporting Project has confirmed that a formal investigation into the allegations against the Fingletons has begun.
The MoS has independently verified that Mr Maguire’s criminal complaint against the Fingletons was lodged with local police in Kotor on April 23.
After an initial examination, police sent the file to the local prosecutor’s office on June 13.
But because the allegations involve sums in excess of €500,000 the file was then taken over by the SSP – Montenegro’s equivalent of the DPP – on July 31.
This week, the SSP confirmed that it had received the file and was beginning initial investigations.
The complaint alleges that the Fingletons are in breach of four articles of Montenegro’s criminal code including article 244, which deals with crimes of deception and false representation. Those convicted can be fined or imprisoned for up to three years.
It is alleged by Mr Maguire that Mr Fingleton sought an ‘illicit gain’ by submitting ‘disputable documentation’ to support a creditor’s claim for €7.2m during bankruptcy hearings. Mr Maguire claims this allowed Mr Fingleton to control the bankruptcy proceedings as the largest creditor.
It is also alleged that the Fingletons were involved in the filing of inaccurate accounts, which, under article 278, carries a possible prison term of three months to five years.
The complaint also deals with allegations of money laundering under article 268, which allows for a prison term of up to five years.
In a statement to the MoS this week Mr Fingleton said the criminal allegations against him were ‘unfounded, without merit and completely false’. He said: ‘All transactions in relation to this project to date were totally legitimate, fully transparent and fully funded by me from my own personal resources.’
The money-laundering complaint revolves around details of bank transfers that were uncovered when Montenegro’s money-laundering authority audited Mr Fingleton’s personal and company accounts. In particular, a January 2011 transfer of €128,498 from New Fjord Developments to the London account of Michael Fingleton Jr is mentioned.
The transfer is singled out in Mr Maguire’s complaint because it was part of a €148,925 transfer that Michael Fingleton Sr sent to New Fjord Developments for the stated purpose of ‘construction services’.
Separately, the SSP was asked to investigate the source of the €5.5m Mr Fingleton used to pay for Hotel Fjord because it came from an AIB account in Dublin in the name of Irish Nationwide Building Society.
The MoS has confirmed from Irish sources that an official Interpol request for information on the source of those funds was sent to Dublin last year. As well as denying all wrongdoing, Mr Fingleton Sr told the MoS in a statement that he had now repaid all debts related to Hotel Fjord and was proceeding with plans to develop the site.
‘As recently as May, I met Maya Catovic, the mayor of Kotor, who confirmed publicly that all taxes, surcharges and other financial obligations to the municipality had been fully discharged and that she was happy with the progress being made,’ he said. Ms Catovic told the MOS she would welcome any sign of progress. However, she also expressed doubts about the prospect of Hotel Fjord being developed.
‘It would mean a lot to us. That ugly building would be gone. But I am sceptical until I actually see something happening,’ she said.
‘I have a concern they are waiting for someone to pay well for it and they will get rid of it.’ A sale may have implications for the Government-appointed special liquidator to the Irish Banking Resolution Corporation, who is pursuing Mr Fingleton and other Irish Nationwide directors for tens of millions in damages.
The liquidator is aware of Mr Fingleton’s troubles in Montenegro because they have been asked to help identify the source of the funds Mr Fingleton used to purchase Hotel Fjord.
But last night a spokesman for the bank and liquidator said it was not possible to comment for legal reasons.
Michael Fingleton JR is playing an increasingly important role in matters relating to hotel Fjord, documents and emails from Montenegro reveal. He sits in on meetings and at one point in 2006 he was granted power of attorney to sign a loan document for his father’s Montenegrin company, new Fjord Developments ltd. In 2008, he was listed as a signatory on the company’s account. In an email to his father’s business partner, Louis Maguire, in April 2008, Junior described himself as his father’s agent. ‘All requests for funds are to be in writing and provided in the first instance to me, Michael Fingleton Jr,’ reads the email. This correspondence came from his Irish Nationwide email address in london where he oversaw the UK loan book. Further correspondence in October 2008 reveals Junior becoming angry with Mr Maguire. ‘You have no authority to employ or contract anyone without express written agrreement from either me or my father,’ he wrote.
An Adriatic idyll… but nothing at the Hotel Fjord is quite the way it seems
By Michael O’Farrell
In Montenegro
On the shaded terrace of hotel Fjord local men are engrossed in a mid-afternoon game of cards. A tanned visitor lounging beside the outdoor pool, raises a drink to his lips and beckons to a friend.
A short distance away, children dive from the hotel’s jetty into the crystal azure waters of the Adriatic.
And to the right, the hotel’s brightly coloured orange clay court is hosting an energetic doubles match watched from afar by passengers lazing on the deck of the Silver Spirit – one of the many cruise ships that routinely visit this unique location.
So far, all is very much in line with Michael Fingleton’s vision. He purchased the massive hotel in the UNESCO world heritage town of Kotor in 2006 for €5.5m.
His ambitious €70m redevelopment plan should have made the hotel Fjord Kotor’s most exclusive and largest resort hotel. It should also have been the sun-kissed crowning glory of Michael Fingleton’s retirement years and a swan song to his legendary banking career.
But nothing is quite as it seems at hotel Fjord.
The men playing cards are balancing on broken seats amid strewn rubbish, broken glass and empty drinks cans.
And the man by the outdoor swimming pool is a homeless alcoholic drinking from a two- litre plastic bottle of beer as an acquaintance feeds the pigeons beside the stagnant water.
Locals have commandeered the tennis court which is surrounded by a broken chain-link fence. And despite the scattered rubbish and the broken pavement of the hotel’s jetty, the location remains a favoured swimming spot for some hardy locals.
Now Mr Fingleton is being sued for tens of millions by the special liquidators of Irish Nationwide and has already had a €13m judgment registered against him by another bank.
And Hotel Fjord remains vacant with old paperwork and guest records scattered about the once lively reception desk and an old crumbling sign positioned above the main entrance.
