An interim report on the sale of offshore bonds by National Irish Bank is to be presented to a High Court judge today.
The report, by High Court inspectors Mr John Blayney SC and Mr Tom Grace, is to be raised in court so that applications may be made or orders sought.
The inspectors were appointed to a subsidiary of the bank, National Irish Bank Financial Services Ltd (NIBFSL), on June 15th last.
Although their investigation is being hampered by an ongoing legal challenge by staff over whether they must answer the inspectors' questions, the inspectors have right of access to extensive documentation relating to the establishment and operation of the bank's financial services division.
They also have right of access to examine the accounts of individual policyholders. Between 1990 and 1998 just under 500 policies involving about £48 million were effected by NIBFSL in three offshore insurance companies which were not authorised to conduct business here. The companies are: Clerical Medical International and Scottish Provident International, both based in the Isle of Man; and Old Mutual Ltd, based in Guernsey.
An authorised officer, Mr Martin Cosgrove, who was appointed under the Insurance Acts to inquire into the policies and who reported to the Tanaiste, Ms Harney, in June, found that of 77 policies examined, 80 per cent created concerns under the regulations set out in the Insurance Act, 1989. Ms Harney referred this report to the Director of Public Prosecutions.
On foot of Mr Cosgrove's report, Ms Harney applied to the High Court for the appointment of the inspectors to NIBFSL. The court was told Ms Harney believed there were circumstances suggesting that the company's affairs were conducted with intent to defraud the Revenue Commissioners and/or for an unlawful purpose.
The inspectors were asked to look at the effecting of the insurance policies through NIBFSL, the roles of NIBFSL, its officers, servants and employees in connection with the effecting of such policies, and the purposes behind the execution of such policies.
They were also asked to report on the knowledge of the management and board of directors of NIBFSL, of the effecting of the policies and the identity of those responsible for or aware of the effecting of, and the purposes behind, the policies.
The Revenue Commissioners are also conducting an inquiry into the sale of the bonds and have been furnished with a list of the names of the policyholders involved. It is understood a number of settlements and prosecutions are likely to result.
Mr Blayney and Mr Grace are also conducting an inquiry into the issue of interest and fee loading by the bank. Last week NIB said it was returning just over £130,000 plus interest to 370 customers following inquiries it had carried out into interest loading.
The bank is giving financial support to over 100 managers and senior executives who are appealing a High Court ruling that they must answer questions put to them by the inspectors. The appeal is likely to be heard by the Supreme Court in November.