Kildare thumbprints in banking bust

Former Irish Nationwide  MD Michael 'Fingers' Fingleton, speaking at the AGM of the company's 2006 AGM.
ANYONE wanting to get something of a feel for the Celtic Tiger property boom and bust as it affected Kildare, could not do much better than start with the recently published book by Tom Lyons and Richard Curran on the former head of the Irish Nationwide Building Society.

ANYONE wanting to get something of a feel for the Celtic Tiger property boom and bust as it affected Kildare, could not do much better than start with the recently published book by Tom Lyons and Richard Curran on the former head of the Irish Nationwide Building Society.

Kildare has its substantial thumbprints all over “Fingers – The Man Who brought down the Irish Nationwide and cost us €5.4bn.”

Recently, RTE 1 ran a documentary based on the research included in the book, which goes into much detail about the man who ran the former building societies with an immense amount of personal power.

The authors describe how Sligo born, Michael Fingleton, who once trained to be a priest and did charity work in Biafra, earned over €2m a year from Irish Nationwide Building Society (INBS). This was essentially, not unlike a credit unions, owned by members/savers. He built up a huge pension fund, later managed by himself, of €27m.

While the Society was initially set up as a way of providing mortgages to average or near average households, under Fingleton it got increasingly into commercial lending to property developers to the point in 2007 where mortgage amounted to only 20% of total lending.

Helping what was to become a problem for most of us was the fact that too much of the other 80% was lent out to a relatively small number of developers, nearly all of whom went legally broke and were reduced to €200,000 annual salaries from NAMA.

It lists a catalogue of poor lending practices by the INBS and poor oversight by Government and those directly responsible for financial regulation.

Unfortunately, the authors did not provide an index to the cast of characters in this property opera which was all too real.

It lists a catalogue of poor lending practices by the INBS, which had around 180,000 depositors - and poor oversight by those responsible for financial regulation

The book refers to many Kildare names.

These include its native son and former Minister, Charlie McCreevy, who borrowed €1.6m from INBS at one point; the Durkans and their company, Devondale Ltd, who battled objectors to build on land at Donaghcumper, Celbridge; Alisdair Jackson of Moyvalley Hotel; Ray Grehan, who built the Glenroyal Hotel in Maynooth.

It also features football legend and former Kildare GAA manager, Mick O’Dwyer - Irish Nationwide spent €40,000 on sponsoring and launching his autobiography in 2007 - and the Johnstown-based Jack and Jill Foundation – lucky recipient of a donation from INBS.

Other Kildare people and organisations mentioned in the book include; the K Club, with Michael Smurfit and Gerry Gannon; Jim Mansfield and Weston; Sean Dunne, who built many houses in Celbridge and who borrowed through an Isle of Man company to buy the Zed Candy site in Kilcock and the Whitewater centre in Newbridge; Mountbrook Homes; Clongowes Wood College; Sean Mulryan of Ballymore Eustace,;O’Flynn Construction, which, with Sean Dunne, got €65m for a 65 acre site in Celbridge.

Treasury Holdings, which owned land between Intel, also mentioned, and the M4, is also examined. The book mentions Arthur French, the Leixlip auctioneer; Alan Dukes, a former Minister for Finance, who came to mop up at Anglo Irish bank, and even, Intel Ireland.

Kildare journalist Eoghan Corry’s 1971 interview is quoted.

It said Fingleton being described by one business man as “a Communist third world groupie,” following the latter’s return from Nigeria.

Among their many criticisms, the authors describe Charlie McCreevy’s decision on decentralisation of Government departments as “a mad plan.”

They describe numerous ventures by Fingleton, including those where the INBS took a share in developments for which it was lending, and an INBS board, containing some expertise and business experience, which largely failed to question the business model.

One of these joint ventures was a 50% joint venture with Roscommon developer, Gerry Gannon, who had a share in the K Club.

It involved the buying of sites in north Dublin. The book said that Arthur French, received “auctioneer’s fees” of €529,000 for his role, said to include the introduction of Seamus Ross of Menolly Homes to the project.

It describes how in the late 1990s the INBS bought plant and equipment with a view to leasing it to Intel. The value amounted to €175m.

In the mid 2000s Intel transferred these assets to another company and then back to itself. This was done for a nominal sum, described as “tax written down value,” a legitimate or legal form of tax avoidance.

It describes Sean Dunne’s purchase of the Kilcock Zed Candy site and another one nearby for €38 via Waterside Kilcock Property Company, which registered in the Isle of Man (meaning, among other things, that the company’s accounts did not have to be available publicly.)

It got planning permission for 180 apartments and a shopping centre but An Bord Pleanala turned it down.

INBS wrote down the value of the loan to just €5m but Dunne gave a personal guarantee of €35m. The loan was transferred to NAMA but Dunne’s personal guarantee was virtually worthless, said the authors.

Lyons and Curran said this story illustrated how INBS was complacent towards large borrowers but could be much stricter with very small borrowers.

The book also said that low key staff at INBS were relatively lowly paid compared to the top people and their peers in other financial institutions. Did their hopes of getting a cash windfall from the privatisation of the Society, which never happened, prevent effective whistle blowing?

The book describes the efforts of a few, notably INBS member, Brendan Burgess, to challenge the operation of the Society at the peak of the boom, but to little avail or support from other members.

Those seeking the history of the planning objections to some of the above projects will have to await another day but that is not a criticism of this very good book.

Now gone, it has cost the Irish people €5.4 billion or roughly €1,176 for every person in Kildare.

The authors quote a comment by John McManus in the Irish Times to the effect that basically we allowed all of this to happen before our eyes.

So far there has been little or no prosecution in the Courts.

There are other sides of the story. It was not the function of the book to look at the opposition to some major planning scheme from the community and group like the Kildare Planning Alliance and An Taisce.

Perhaps some day, we will get a very good tell all autobiography from some of the players.

Lyons and Curran quote Fingleton from an Irish Times interview in 1991, as saying: “Stress means nothing to me. I never get over excited and I don’t take myself too seriously and I have never believed in the cult of my own personality. I am very practical and down to earth in may approach to running my business.”

Unfortunately, the Troika did appear to get stressed about Ireland and have imposed some harsh conditions on the citizenry, including, the unfortunate staff of the INBS, who were expecting around 15% of the proceeds of the boom time sale or demutualisation of the Society to compensate for below average salaries.

We now know the result. The book is a lesson in how to create disaster.

Perhaps, its best advice comes from a quoted December 2009 interview with Charlie and Noeleen McCreevy. The latter told RTE’s Miriam O’Callaghan: “As I keep saying to James (the McCreevy’s son), its a great time to be a student. Stay there for another while.”

“Fingers – The Man Who brought down the Irish Nationwide and cost us €5.4bn,” by Tom Lyons & Richard Curran (Gill and Macmillan, €16.99)