Irish Nationwide chief executive Michael Fingleton directly approved the loan of €4.1 million to solicitor Michael Lynn for the purchase of a property in Howth, a court heard yesterday. Dominic Coylereports.
In an affidavit, head of home loans at the building society, Brian Fitzgibbon, also said Mr Fingleton was personally responsible for bypassing the financial institution's own procedures.
Mr Fitzgibbon said a credit committee set up by the Irish Nationwide Building Society to approve home loans over €1 million was merely "a device" to satisfy the Irish Financial Services Regulatory Authority and, in practice, there was "limited compliance" with the rules of the society.
Loans were "entirely informal and controlled by Michael Fingleton", he said.
The court heard that Mr Fingleton, managing director at Irish Nationwide, had also approved a loan previously turned down by Mr Fitzgibbon after an appeal by a local branch manager.
Mr Lynn and Mr Byrne between them owe Irish Nationwide more than €20 million, according to the society. Both solicitors' practices have been closed by the Law Society.
Irish Nationwide is one of three, possibly four, financial institutions to have given Mr Lynn loans of more than €12 million to buy Glenlion House, a property in Howth, Co Dublin. The property, worth €5 million, has since been put on the market by a receiver.
Mr Fitzgibbon, who successfully secured an injunction stopping action by the society to suspend him from duty, claims he is being scapegoated by Irish Nationwide over their exposure to Mr Lynn and Mr Byrne.
Mr Byrne owes the building society €10.5 million; Mr Lynn owes it more than €10 million.
In total, the two men's known liabilities stand at €127 million. However, this could rise.
In his affidavit, Mr Fitzgibbon said he had not had any direct or personal dealings with those solicitors.
In relation to Mr Byrne, Mr Fitzgibbon said he had refused two loan applications for him and had only given a 70 per cent loan on another property. One of his refusals was appealed to Mr Fingleton, who had agreed to proceed with the loan, he said.
Mr Fitzgibbon said he was extremely concerned that his employment would be terminated and that his reputation might be irreparably damaged unless Irish Nationwide was required to confirm his position and his good standing.
The revelations come at an inopportune time for Irish Nationwide, which is currently on the market.
The building society is expected to sell for between €1 billion and €1.5 billion, bringing a windfall of about €10,000 for 100,000 building society members.
First bids are expected in the coming weeks through Goldman Sachs, which is advising the society.