COUNTY VIEW: A last sting of the Celtic Tiger

Those with a taste for black humour will be amused to learn that, 15 years on, the dark shadow of what was the Irish Nationwide Building Society still hovers over the country’s financial sector.
When the Irish banking system collapsed like a house of cards in 2010, the buccaneer building society was exposed as the entity which, more than most, reflected the prevailing Wild West approach to regulation, procedures and governance.
By way of recall – the Irish Nationwide was a once-small operation grown large on the runaway boom of the Celtic tiger, its profits once reaching €135 million. The captain of that ill-fated financial Titanic was Sligo man, Michael Fingleton, who had once studied for the priesthood and was an aid worker in Africa before returning to build the fledgeling Irish Nationwide into a supersonic jet.
However, all turned to dust when the Irish banking sector turned out to be built on sand. Irish Nationwide lost €6 billion in commercial loans in two years, and the taxpayer stumped up €5.4 billion to bail it out. The State then stepped in to merge it with its identical twin in chicanery, Anglo Irish Bank, to form what became Irish Bank Resolution Corporation, which in turn was liquidated in 2013.
But not everyone felt the pain equally. It later transpired that the teflon Mr Fingleton was paid a total of €2.4 million in 2008, the very year that the house was on fire all around him. To the chagrin of many, it was explained that the payment consisted of €1 million in salary, €1 million in bonus, and €450,000 in ‘unpaid holiday money’, causing an incandescent Leo Varadkar to call on Fingleton to repay the money – a demand which, it is generally believed, fell on deaf ears.
But back to the present, where a Central Bank inquiry is trundling to a finish after ten years, with the horse long since bolted. Five senior executives of Irish Nationwide have been summoned before the enquiry to explain their part in the fiasco. Three of the cases have been settled, one has been dropped (against Mr Fingleton, on grounds of his ill health). The last, against Finance Director John Purcell is nearly settled, with the banker suggesting that €100,000 would be an appropriate fine, together with a long disqualification from working again in financial services.
The collapse of Irish Nationwide was remarkable in that nobody seemed to know anything. That is, until the music stopped. And then all were ready to spill the beans. The Society’s former head of lending told the inquiry that lending was ‘entirely informal and controlled by Mr. Fingleton’. Any so-called policies and procedures, he said, needed to be taken ‘with a pinch of salt’. Not one single customer file was ever complete, he said, with corners being cut on every occasion. The Financial Regulator had been alerted to wrongdoing, it was claimed, but he was ‘mollified by bland assurances’.
The final nail came in 2008, when the saga of the revolving loans of Irish Nationwide’s identical twin, Seanie Fitzpatrick’s Anglo Irish Bank, came to light. Fitzpatrick, the chairman, had loans of €87 million from his own bank, which he did not want to reveal. To avoid having them exposed in the bank’s annual financial report, due yearly on September 30, Fitzpatrick concocted an arrangement which would put to shame a three-card-trick operator at Galway Races.
In mid September, with the willing cooperation of Fingleton’s company, he would transfer the loans to Irish Nationwide and then, a month later, would transfer them back to where they belonged, Anglo Irish. This went on for eight years until eventually, the scam was tumbled to.
From that, Pandora’s box was opened, the unravelling started, and to paraphrase George Hamilton, a nation gasped for breath.