The Office of the Director of Corporate Enforcement (ODCE) has taken High Court proceedings seeking orders disqualifying former NIB chief executive Jim Lacey and eight other former directors or senior managers of National Irish Bank from being involved in the management of any company.
The ODCE claims all nine engaged in conduct in relation to the affairs of NIB which makes them "unfit to be concerned in the management of a company".
The ODCE claims that it is clear from the report of the inspectors appointed to investigate the affairs of NIB between 1988 and 1998 that Mr Lacey failed to uphold or implement proper standards of corporate and banking behaviour during his period as chief executive of NIB from 1988 to 1994.
On the basis of the inspector's findings, the ODCE determined Mr Lacey demonstrated unfitness, a lack of commercial probity, negligence and/or incompetence in the discharge of his duties as an officer of the bank.
Mr Justice Peter Kelly was told yesterday that one of the nine, Nigel D'Arcy, of Castledillon, Straffan, Co Kildare, is to consent to the order being made against him. The application in regard to him was adjourned to October 7th.
Mr D'Arcy was said by the inspectors to have been recruited by Mr Lacey to establish the bank's financial advice and services division (FASD).
He began work with the Bank on May 1st, 1989, and remained head of the FASD until the inspectors were appointed in June 1998.
The ODCE claims that Mr D'Arcy breached his duty as an officer of the bank in failing to ensure that NIB's legal requirements were complied with and in failing to carry out his common law dutiues with due care, skill and dilgence. It is also alleged Mr D'Arcy engaged in conduct which makes him unfit to be concerned in the management of a company.
The other eight respondents - Mr Lacey, of Pine Haven, Grove House Gardens, Blackrock, Co Dublin; Barry Seymour, of Beaumond, Amersham, Bucks, England; Dermott Boner, of Chesterfield Avenue, Castleknock, Dublin; Michael Keane, of Corr Castle, Howth, Co Dublin; Frank Brennan, of Ardglass, Dundrum, Dublin; Tom McMenamin, of College Grove, Castleknock, Dublin; Patrick Byrne, of St Helen's Road, Booterstown, Co Dublin, and Kevin Curran, of Avondale Court, Blackrock, Co Dublin - are all opposing the ODCE's application and the proceedings in relation to them were adjourned for mention on October 10th.
The ODCE's proceedings arose following publication in July 2004 of the report of the inspectors appointed in 1998 by the Tánaiste, Mary Harney, to investigate the affairs of NIB and NIB Financial Services Ltd (NIBFS) between 1988 and 1998.
The inspectors concluded both NIB and NIBFS were involved in a number of improper practices, including the opening and maintaining of bogus non-resident accounts which enabled customers to evade tax, and the improper charging of fees and interest to customers.
They also held that responsibility for the improper practices rested with the senior management of the bank during the 10-year period covered by the investigation.
In his proceedings against the nine, the ODCE is seeking orders under Section 160 of the Companies Act disqualifying them from being appointed or acting as an auditor, director or other officer, liquidator, receiver or examiner or being in any way concerned in the promotion, formation or management of any registered company for such period as deemed fit by the court.
In relation to Mr Lacey, the ODCE claims he was the most senior executive in NIB from April 1st, 1998, to April 22nd, 1994, and that the inspectors had found, during that period, he was copied with internal audit reports and accordingly had notice of the deficiencies or "irregularities" which existed in the operation of DIRT-exempt non-resident accounts at branches.
The inspectors had also found that senior management failed to have a review conducted to ensure all existing non-resident accounts were genuine.
The Director of Corporate enforcement, Paul Appleby, said it was evident from the inspectors' report that Mr Lacey failed to act at all, or failed to act adequately, to deter or correct the numerous and regularly reported shortcomings in bank practices and procedures which were brought to his attention in internal audit reports and otherwise.
Mr Lacey had also failed to arrange for the developoment and implementation of policies and procedures which would have secured a culture of compliance with the law and adherence to professional standards within the bank, the absence of which clearly contributed to the nature and extent of the improper practices which prevailed, Mr Appleby said.
Responsibility for such practices rested with senior management in the bank and, by virtue of his position as chief executive, Mr Lacey was ultimately responsibile for the bank's associated legal and professional failures, he added.
In all the circumstances, it was clear that by his actions and omissions, Mr Lacey, while acting as an officer of NIB for over six years, breached his duties in failing to ensure that NIB's legal requirements were ecomplied with and in failing to carry out his common law duties with due care, skill and diligence.
It was also clear that Mr Lacey engaged in conduct which made him unfit to be concerned in the management of a company, Mr Appleby added.
In relation to Mr Seymour, who was executive director of NIB from April 1994 to 1996, the ODCE claims it is evident from the inspectors' report that Mr Seymour had inherited a situation where various improper practices prevailed within the bank and that progress was made during his tenure to correct a number of the practices of which he was aware.
The ODCE claims Mr Seymour was, with others, responsible for the continuation of these practices and for the failure during his tenure to address the bank's restrospective liabilities arising from a number of those improper practices.
By virtue of his position as executive director, Mr Seymour was ultimately responsible for the bank's associated legal and professional failure.
In relation to the other respondents, the ODCE claims the inspectors' report indicates these were all aware of "various improper practices" which prevailed within NIB and were, with others, responsible for the continuation of those practices.
In their report, the inspectors said Mr Boner was appointed NIB regional manager from June 1st, 1988. In October 1990, he was appointed head of retail, reporting directly to Mr Lacey. He became chief manager, retail in May 1993.
A reorganisation within NIB from January 1995 saw the retail business of the bank divided once more into three regions, one of which was headed by Mr Boner.
The inspectors found Mr Keane was head of marketing with NIB from June 1988, general manager, banking from May 1993 to August 1996, and general manager, marketing and distribution from August 1996 to 1997, and a director of NIBFS from June, 1994 to May, 1997.
The report said Mr Brennan was general manager, retail banking, held other positions between 1988 and 1997 and was also a director of NIBFS during the period which was the subject of the inspectors' inquiry.
Mr McMenamin was said to have been appointed a regional manager with NIB in October 1990 and to have reported to Mr Keane from 1995 to 1996.
Mr Byrne was described by the inspectors as NIB head of finance from April 1994 and later head of finance and planning and also a director of NIBFS.
Mr Curran was described as regional manager with NIB from June 1988.
He held other positions prior to his retirement in July 1997.
