Michael Fingleton cannot properly defend case due to stroke, High Court told

Michael Fingleton is unable, for health reasons, to properly defend a case against him over alleged breach of his obligations while he served as chief executive of Irish Nationwide Building Society, the High Court has been told. 

 

Mr Fingleton (83) suffered a severe stroke in May 2018, which has left him physically and mentally incapacitated, Niall Clerkin, solicitor for Mr Fingleton, said. A series of cognitive assessments show a declining cognitive ability affecting his recall and ability to critically assess evidence, he said. 

 

Mr Justice Tony Hunt has begun hearing an application by Mr Fingleton that, on grounds of his ill health, the action brought against him by the special liquidators of Irish Bank Resolution Corporation, which took over INBS after it collapsed with losses of €6 billion, should be dismissed or permanently stayed. 

 

Reasons 

On Tuesday, Mr Clerkin said his client’s ill health plus the scope and breadth of the proceedings against him are exceptional reasons for the case to be halted. 

 

The complaints against Mr Fingleton include claims he enjoyed “excessive” control over the business of the building society and made several loans of more than €1 million without consulting the board, Mr Clerkin said. Up to 18 different loans to a variety of different borrowers were referenced, he said. 

 

That claim was “hotly disputed” by Mr Fingleton who says it is untrue and that the board of the society was “fully aware” of the loans at issue, Mr Clerkin said. 

 

If the case proceeds, it could result in a judicial decision that Mr Fingleton was a significant figure in the economic collapse of 2008, he said. While he appreciated “a lot of people believe that”, and accepted there “is a case to be heard here”, Mr Clerkin said that, when all the factors are balanced, the only realistic outcome is to dismiss this case or stay it permanently because Mr Fingleton just cannot defend it. 

 

The case is “so vast” and Mr Fingleton’s impairments “so severe” there is no reality of his personal and constitutional rights, including to due process, being vindicated, he said. 

 

The case could not be determined on foot of a review of the society’s documents, Mr Clerkin said. Mr Fingleton wanted to be able to explain what others, including Central Bank, auditors and economic commentators, had said at the time at issue, he said, 

 

When Mr Clerkin said there was “not a cloud on the economic horizon” in 2006 and the financial world was one of “self-congratulation”, Mr Justice Tony Hunt said that was “not entirely so”. 

 

The judge said that was “certainly the comfortable majority view” and there was disparaging of those who raised concerns, but the comfortable majority view was “not universal”, the judge said. 

 

Mr Clerkin said, while documents and other material provide some objective facts against which to measure Mr Fingleton’s subjective testimony, such matters could not be properly measured by the court in the absence of his subjective testimony. The judge will hear arguments on behalf of IBRC later in the application. 

 

Losses 

In proceedings initiated in 2013, IBRC claims the society’s €6 billion losses from 2008-2010 arose from development loans made when Mr Fingleton was chief executive. 

 

Had the true picture of INBS’ affairs been disclosed, Mr Fingleton would have been summarily dismissed for breach of duty by 2007 at the latest and not paid expenses allegedly inappropriately incurred, as well as some €1.2 million in performance bonuses for 2008 and 2009 when he left, it alleged. 

 

IBRC claims an “unusual” management structure operated at the INBS under which the board effectively delegated its powers over years to Mr Fingleton who allegedly authorised many loans without prior board approval in breach of the society’s lending policies. 

Other claims include Mr Fingleton’s alleged wrongful failure to disclose breaches of duty led to INBS suffering further losses and retaining him as chief executive from 2006 even after he resigned as a director, as required, when he turned 70. He was involved with the society from 1971, initially as a director, and later as chief executive, until 2009. 

 

The case relates to matters dating back to 2006 and centres on the conduct of some 20 transactions over three years to 2010 which have been subject to a forensic accountancy examination.