The final person investigated in the enduring inquiry into ex-Irish Nationwide Building Society (INBS) officials, former finance director John Stanley Purcell, has received findings against him. These results were provided to Mr Purcell on April 30th, according to the inquiry’s chair, Marian Shanley, during a case management hearing this Monday.
Purcell was found to have participated in certain regulatory violations, known as specific prescribed contraventions, of which the INBS was found guilty. The exact offenses weren’t detailed by Ms Shanley, who indicated her intention to arrange a potential sanctions hearing come autumn. Despite initially proposing October 14th for the hearing, she decided to postpone finalising a date after learning it was inconvenient for all involved.
Shanley explained that the report contained the findings of the inquiry members that INBS committed defined contraventions, with 23 findings made against INBS out of 42 specific allegations. Some of these contraventions were indicated to involve Mr Purcell’s participation. Mr Purcell, when asked by Shanley, expressed that he had no queries or comments to make and has until mid-August to make submissions as requested by the inquiry.
The penalties can vary from a warning or reproof to a ban on working in financial services or a fine as high as €500,000. The case pertains to a time before 2013 when the maximum individual financial sanction was raised to €1 million.
Out of the initial five people under investigation when the inquiry started in 2015, Mr Purcell is the only one remaining. Since public hearings were initiated in 2017, three of the original five individuals, former INBS chairman Michael Walsh, Tom McMenamin who was previously in charge of commercial lending, and Gary McCollum the former head of UK commercial lending, have reached settlement agreements with the Central Bank.
The case against the failing lender’s longstanding managing director, 86 years old Michael Fingleton, was dismissed in December 2019 due to his poor health.
The investigation, which has intermittently conducted public examinations throughout its existence, was initiated to probe seven series of purported regulatory contraventions from July 2006 to September 2008. This included allegations that INBS, contravening its own policies, failed to properly administer loans, did not secure property collateral for business loans, did not procure accurate valuation accounts for assets against which it was providing loans, and did not put in place credit risk strategies for profit-sharing contracts with developers during the upsurge.
INBS, between 2008 and 2010, suffered financial deficits exceeding €6 billion, mainly due to the devaluation of its business loan portfolio. The financial turmoil subsequently led to INBS requiring €5.4 billion worth taxpayer funds for its bailout before it was subsumed into Anglo Irish Bank in 2011.
This resulting amalgamation, recognised as the Irish Bank Resolution Corporation (IBRC), was liquidated in 2013. Of the six state guaranteed lenders in September 2008, INBS had the most hazardous loan portfolio. In the midst of the crisis, when Nama assumed control of the commercial property assets of the sector, INBS’s loans were subjected to the highest reduction, up to 72 per cent.