Then INBS CEO Michael Fingleton was unembarrassed after a 2006 report by Deloitte identified major failings at the now bust lender.
The top Deloitte executive who presented the report to INBS described his “surprise” at the casual reaction of Mr Fingleton, pictured, to a litany of control lapses and governance failings within the organisation highlighted in the document.
Colm McDonnell, who led the accountancy firm’s internal assessment of INBS before the crash and again in 2008, told the Central Bank’s inquiry into alleged regulatory breaches at the lender, that if he had brought this “type of report to other management in a different organisation they would have had a completely different response”.
He claimed “other clients would be somewhat embarrassed and would certainly make assertions to fix this problem rather than be more relaxed”.
Pressed by Brian O’Moore SC, of the legal team assisting the inquiry, for the right adjective to charactise Mr Fingleton’s attitude back then to the damning Deloitte report, Mr McDonnell said “comfortable”.
So he wasn’t perturbed Mr O’Moore asked. “No,” Mr McDonnell replied and emphasised that Mr Fingleton’s view was: “This is the way we do things.”
INBS was bailed out at a cost of €5.4bn.
Deloitte’s initial 2006 report focussed on commercial lending and detailed four critical risk control and governance measures that required “urgent” attention by management.
It also identified that the credit committee’s terms of reference were not being fully adhered to, including loans approved beyond the committee’s €1m ceiling.
Mr McDonnell said he had a vivid memory of meeting Mr Fingleton in early 2006 in the Society’s board room – he was sitting in the full glare of the sun, which he claimed was shining “straight into my eyes”.
“A bad seat to pick,” Mr O’Moore said. “Unless it was given to you?”
Deloitte was called in by the Society to examine INBS’s books again following the 2006 assessment.
According to Mr McDonnell, Deloitte had also been asked by the regulator to broaden the scope of the audit expanding it to cover residential lending and “certain other matters including the credit committee.
In December 2007, the regulator had conducted an investigation of INBS’ top exposures, as part of a sweep of over half a dozen lenders, and in February 2008 again raised serious concerns with the Society’s board about the organisation’s governance and controls procedures. But Mr McDonnell claimed his team was not made aware of this and said it would have been “helpful” if he had been informed about these discussions.