Patrick Neary was appointed Financial Regulator in late 2005. Previously he was head of banking supervision. Neary had concerns about Irish Nationwide but did not take effective action to force the society to change direction. (© Photocall Ireland)
The Taoiseach, Bertie Ahern, and Minister for Finance, Charlie McCreevy, during the 2002 general election campaign. McCreevy was a supporter of legislating for the demutualisation of Irish Nationwide in the late 1990s but did not deliver on it while in office. The records show that McCreevy borrowed €1.6 million from Irish Nationwide to buy a house at the K Club in 2006, two years after ceasing to be Minister for Finance. (© Photocall Ireland)
The chairman and chief executive of Anglo-Irish Bank, Seán FitzPatrick (right), with its chief executive, David Drumm, pictured in February 2008 at their last AGM in charge of the bank. Later that year they were both forced to resign when details of the extent of their personal loans with the bank emerged. FitzPatrick had ‘warehoused’ loans totalling €87 million with Irish Nationwide over several years. (© Photocall Ireland)
Michael Fingleton with the veteran chairman of Irish Nationwide, Peter D. O’Connor. O’Connor retired as chairman in 2001. He had taken over the role from his father, Peter O’Connor. (© Irish Times)
Fingleton leaving the Moriarty Tribunal in 2001. He had the distinction of giving evidence at both the Mahon and the Moriarty Tribunal. He told the tribunal he could not direct employees of the society’s bank in the Isle of Man to come to Dublin and give evidence. Judge Moriarty expressed his disappointment that the subsidiary would not co-operate fully with the tribunal. (© Photocall Ireland)
Fingleton stands proudly over the financial results for 2003, which showed that lending had gone through the roof. He was by then rapidly increasing the society’s exposure to property developers. (© Photocall Ireland)
Irish Nationwide financed the purchase of the K Club by Michael Smurfit and Gerry Gannon in 2005 for €115 million. When Gannon ran into financial difficulties, NAMA sold the luxury venue to Michael Smurfit. (© Collins Agency)
Hotel Fjord at Kotor, Montenegro: Fingleton invested more than €5 million of his own money into buying the derelict hotel on the Montenegrin coast. He and his business partner Louis Maguire planned to build a luxury hotel and resort on the site. After they had sunk millions into the project, the Montenegrin property bubble burst and the development never happened.
The small borrowers’ advocate Brendan Burgess addresses the 2006 annual general meeting, at which he sharply criticised the board of the society. At the top table the secretary and chief financial officer, Stan Purcell, Michael Fingleton and the chairman, Michael Walsh, show little sign of engagement with the issues being raised. (© Photocall Ireland)
Con Power joined the board of Irish Nationwide in 2001. He clashed with Michael Fingleton on a number of issues, including the treatment of small borrowers who got into arrears. He also worked to get the legislation permitting demutualisation introduced, which eventually came in 2006. (© Photocall Ireland)
David Brophy (left) was a senior executive in the Smurfit Kappa Group. After being appointed a non-executive director of Irish Nationwide he joined Seán Mulryan’s (right) Ballymore Group. He ended up on the board of Irish Nationwide while also a senior executive in a group owned by the society’s biggest borrower. (© Irish Times)
Irish Nationwide lent more than €150 million for the redevelopment of the Kilternan Hotel in Co. Dublin. A brainchild of the publican Hugh O’Regan, the project ran out of money before it was completed. A receiver was appointed, and the unfinished building was placed on the market. (© Collins Agency)
The chief executive of the Irish Bank Reconciliation Corporation, Mike Aynsley, took control of the remnants of Irish Nationwide when the former building society was merged with the new agency. Aynsley immediately became active in seeking the return of Michael Fingleton’s €1 million bonus and a retirement gold watch. He also initiated legal proceedings against Fingleton and several other former members of Irish Nationwide’s board. (© Photocall Ireland)
Fingleton believed he had been offered a deal by the former Taoiseach Brian Cowen regarding the voluntary return of his controversial €1 million bonus to the society in 2009. (© Photocall Ireland)
Brian Lenihan pushed the former chairman of Irish Nationwide, Danny Kitchen, to seek the return of a controversial €1 million bonus received by Fingleton. Lenihan later asked one senior executive of the society, shortly before he left office because of his terminal illness, ‘Do you think we will ever get Michael Fingleton?’ (© Photocall Ireland)
Gerry McGinn took over as chief executive of Irish Nationwide a few months after Fingleton’s departure. A career banker and Northern Ireland public servant, McGinn and the new board hired Ernst and Young and the legal firm McCann Fitzgerald to conduct a review of corporate governance at the society over several years to get to the bottom of how the society was run. The reports have never been published. (© Photocall Ireland)
John McGloughlin became chief financial officer of Irish Nationwide after it was nationalised. He remained with the society through the transfer to the IBRC and remains its most senior executive. (© Photocall Ireland)
ACKNOWLEDGEMENTS
The authors would like to thank Fergal Tobin, publishing director at Gill & Macmillan. He both commissioned this book and provided invaluable support along the way. We would also like to thank his team in G&M, including Deirdre Rennison Kunz, managing editor, and Teresa Daly, publicist.
We are grateful to all the people who provided source material and answered our questions regarding the Irish Nationwide story. Many of the people who contributed to this book must remain anonymous, but we would like to offer them our heartfelt thanks. We could not have written this book without you.
In putting together a project of this kind we drew upon newspaper and broadcast reports from many journalists over the decades. The publications used are named in the text, but we would like to acknowledge some of the great journalists whose work or recollections helped us complete this book. In no particular order, they include Brian Carey, Simon Carswell, David Murphy, Matt Cooper, Ted Harding, Frank Fitzgibbon, Aine Coffey, Damien Kiberd, Miriam O’Callaghan, ‘Prime Time’, John McManus, Liam Collins, Shane Ross, Ronald Quinlan, Seán O’Rourke, Brendan Keenan, Paul Drury, Siobhán Creaton, Frank Connolly, Colm Keena and Dearbháil McDonald.
The authors would also like to draw attention to Bill Tyson, a fine journalist, who was prepared to challenge Irish Nationwide before anybody else dared to do so.
The authors would also like to thank all at Animo and RTE who worked on the Fingleton documentary.
Richard Curran would like to thank his parents, Noel and Betty, along with his brothers and sisters, Margaret, Eugene, John, Noel, David and Bridget, for their help and support throughout his career (especially Noel, who encouraged him to become a journalist in the first place). Most of all he would like to thank his wife, Kathy, for her incredible patience taking care of their sons, Dallan and Oirghiall, while countless late nights and weekends were spent putting this book together, and also her parents, Terence and Philomena Donaghy, who gave tireless support at home while he was away working on this project. He would also like to thank Cliff Taylor, editor of the Sunday Business Post, for his continued understanding of the demands of a project like this, and the entire editorial team at the Sunday Business Post, with whom he enjoyed working for six years. He would also like to thank Brendan Doherty from Drung in Inishowen, Co. Donegal, who provided a badly needed fax machine in emergencies!
Tom Lyons would like to thank Lynne for her love and support while putting this book together. He would like to thank his parents, Lorcan and Frances; his three brothers, Eoin, Lorcan and Vincent; all the Lyons and Foley clan; and his friends from school, university and elsewhere. Tom would like to thank all his colleagues at the Sunday Independent, including Anne Harris, Nick Webb, Shane Fitzsimons, Róisín Burke, Louise McBride, Daniel McCo
nnell, Niamh Horan, Jerome Reilly, Brendan O’Connor, Maeve Sheehan, Willie Kealy, Jody Corcoran and Campbell Spray. He would also like to acknowledge his friends at the Sunday Times, ‘Newstalk’, the Irish Independent and other media, including Ian Kehoe, Chris Donoghue, Niall Brady, Conor Brophy, Paddy McDonnell, Charlie Weston, John Mooney, Mark Tighe, Niamh Lyons, Gavin Sheridan, Mark Paul, Vinnie O’Dowd, Ian Guider, Neil Callanan, Douglas Thompson and Bryan Meade.
Gill & Macmillan
Hume Avenue
Park West
Dublin 12
Ireland
with associated companies throughout the world
www.gillmacmillanbooks.ie
© Tom Lyons and Richard Curran 2013
First published by Gill & Macmillan 2013
This ebook edition published by Gill & Macmillan 2013
978 07171 5583 5 (print)
978 07171 5581 1 (epub)
978 07171 5582 8 (mobi)
Cover design by www.grahamthew.com
Cover photograph © Collins Agency
All rights reserved. No part of this publication may be copied, reproduced or transmitted in any form or by any means, without permission of the publishers.
A CIP catalogue record for this book is available from the British Library.
The website addresses referred to in this book were correct at the time of first publication.
ABOUT THE AUTHORS
Tom Lyons is deputy business editor with The Sunday Independent. He is an award-winning journalist and was joint National Newspapers of Ireland Business and Economics journalist of the year 2011. He is co-author of The FitzPatrick Tapes.
Richard Curran is a business journalist and broadcaster. A former deputy editor of The Sunday Business Post, he has also been business editor of the Irish Independent and business correspondent with RTE News. He has made several documentaries for RTE Television including ‘Future Shock: Property Crash’ in 2007. He is the presenter on RTE Television’s highly successful ‘Dragon’s Den’.
About Gill & Macmillan
Gill & Macmillan’s story begins in 1856 when Michael Henry Gill, then printer for Dublin University, purchased the publishing and bookselling business of James McGlashan, forming McGlashan & Gill. Some years later, in 1875, the company name was changed to M.H. Gill & Son. Gill & Macmillan as we know it today was established in 1968 as a result of an association with Macmillan of London. There was also a bookshop, popularly known as Gills, located on Dublin’s O’Connell Street for 123 years until it eventually closed in 1979. Today our bookshop can be found online at www.gillmacmillanbooks.ie.
Gill & Macmillan is proud to publish a broad range of non-fiction books of Irish interest, from history to economics, politics to cookery and biography to children’s. Since 1968, we have published outstanding authors and groundbreaking books such as the Encyclopaedia of Ireland, David McWilliams’ The Pope’s Children, Noël Browne’s Against the Tide, Garret FitzGerald’s All in a Life, Augustine Martin’s Soundings — not to mention three generations of Ballymaloe’s Allen family on our cookery list.
We also publish a wide range of educational books and resources for all levels — primary, secondary, college and university — and we provide a distribution service for the majority of Ireland’s independent publishers.
For more information about us, our titles, or to join our mailing list, please visit www.gillmacmillanbooks.ie.
Fingers Page 42
