Senior management and staff at NIB could face civil action and the bank itself could face criminal proceedings in the wake of the findings of the High Court report into malpractice at the bank.
Speaking at the release of the report this morning, the Director of Corporate Law Enforcement, Mr Paul Appleby, said he and his legal team would be "seriously considering" civil proceeding against some of the people named in the report that could lead to them being disqualified from holding directorships.
Mr Appleby added he will be liaising with the DPP in regard to the possibility of pursuing criminal action against the bank. Among the areas that will be looked at are breaches of company, insurance and tax law and may also include conspiracy to defraud.
The 400-page report, which took six years to complete, found:
- The creation and maintenance of bogus non-resident accounts was widespread. Fictitiously named accounts were opened allowing customers to evade tax.
- Clerical Medical International policies were promoted to customers as secure investment for funds not disclosed to the Revenue authorities.
- Special Savings Accounts had taxes deducted at a reduced rate.
- There was improper charging of both interest and fees and even when this was discovered the bank made no effort to refund customers.
Among those named in the report include Mr Jim Lacey, former chief executive of NIB, Independent TD for Mayo Ms Beverly Flynn, and Mr Nigel D'Arcy, former head of NIB's financial services division, which sold the notorious CMI insurance policies.
The report found Ms Flynn and her colleagues who worked in the financial services division "were aware that monies being invested in CMI were undeclared to the Revenue".
The report adds that the group - which was known within the bank for its aggressive sales culture - "assured their customers that their investment was completely confidential from everyone, including the Revenue".
The report asserts that Mr Lacey, "failed to discharge his responsibility" in ensuring that all the bank's accounts were DIRT compliant. "Mr Lacey should not only have been aware of the failure of the branches to hold properly completed non-resident account declarations but should also have been aware that bogus non-resident accounts existed throughout the branch network," the report adds.
Mr Appleby said some of the bank's practices ranging from loading of bogus "management fees" and the creation of fictitious transactions as well as the CMI scheme "went way beyond breaches of company law".
As a result of the scale of malpractice, the bank itself as a separate legal entity could be criminally prosecuted. However, if the bank is found guilty of criminal behaviour, the current maximum penalty is £100,000 though draft legislation recommends a fine of €5 million.