Fingleton loses High Court action to stop Central Bank inquiry

Monday 04 January 2016 23.29
Mr Fingleton is subject of Central Bank inquiry which is due to commence hearings in February
Mr Fingleton is subject of Central Bank inquiry which is due to commence hearings in February

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.

Mr Fingleton, along with several other former officials of INBS, is the subject of an inquiry under the Central Bank Act, which is due to begin in February.

He challenged the Central Bank's decision to subject him to an inquiry claiming it was unfair and unreasonable.

The High Court also rejected his claim that the inquiry would place a financial burden on him and said such a claim "rang hollow" when his multimillion euro pension was considered.

The Central Bank wants to inquire into allegations that certain contraventions were committed by both INBS, and some of its management, between August 2004 and September 2008.

Its lawyers had opposed the application in a hearing late last year.

Giving judgment today, Mr Justice Seamus Noonan dismissed Mr Fingleton's action clearing the way for the inquiry to proceed.

The judge said Mr Fingleton had not satisfied the court that there was any unfairness inherent in the inquiry process.

He dismissed all grounds of Mr Fingleton's case and said the 1942 Central Bank Act applied to him and he was lawfully subject to the inquiry.

He also ruled there had been no culpable delay in conducting the investigation.

The inquiry, and the elaborate procedures provided for in the 1942 Act, ensured Mr 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," the judge said.

Much of Mr Fingleton's claim, the judge said, was "an attempt to pre-empt in advance issues before the inquiry that may or may not arise, or be determined by the inquiry itself".

Any suggestion Mr Fingleton will be subject to any prejudice by the inquiry, the judge found, was "devoid of substance and without merit."

Rejecting Mr Fingleton's claim that the inquiry would occasion significant financial hardship on him as he would have to bear the legal costs associated in preparing for the inquiry, the judge noted that annual reports for INBS from the years 2003 to 2008 show Mr Fingleton's  remuneration package amounted to €9.77m.

The Central Bank also said that when his pension fund matures it is worth approximately €30m. Mr Fingleton had not replied to that evidence, the judge 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.

Mr Fingleton was not present in court for the decision.

The inquiry, in the event of any finding of wrong doing, 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 taxpayer €5bn, although the figure is disputed by Mr Fingleton.

In his action, Mr 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.

Mr 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.

Mr Fingleton argued the Central Bank cannot conduct an inquiry of this nature because he retired in 2010, is no longer involved in the management of an entity that was a regulated financial service provider.

It was also claimed that there was a delay in bringing the inquiry, that he had been subject to prejudicial adverse media coverage, and that he was made the scapegoat for the banking crisis.

Mr Fingleton is also the subject of proceedings before the Commercial Court, also arising out of events  at INBS before it was nationalised.

He argued that at the very least the inquiry should not be conducted until those proceedings have been concluded.

The Central Bank had rejected all of Mr Fingleton's arguments and said there was nothing preventing the inquiry from proceeding as planned.