Former directors of Irish Nationwide Building Society (INBS) who were sued for €6 billion for alleged mismanagement during the Celtic Tiger era took "a ball of money from their own pockets" to settle that case, the High Court has been told.
Despite that settlement one of those directors is facing a "double jeopardy" situation arising from an investigation by the Central Bank, John Rogers SC said.
John Stanley Purcell, who like the other INBS directors was never told of an expert report for the Central Bank in 2005/06 that the property bubble was about to burst, was being "hung out to dry", counsel said.
Mr Rogers was opening a challenge by Mr Purcell, former INBS director and financial controller, to the Central Bank’s proposed administrative inquiry into a number of former INBS directors over past conduct of the building society’s affairs.
The Central Bank opposes two actions brought by Mr Purcell, one for judicial review and the other for damages, over claims his reputation and right to earn a living have been damaged.
The inquiry should not be permitted to proceed because, among other reasons, the Central Bank is biased due to its own significant failings in regulation of the financial services industry during the relevant time, 2004 to 2008, said Mr Purcell.
Mr Rogers said the Central Bank, by holding the inquiry, was going to be a judge in its own cause in circumstances where it had discussed and agreed regulation matters with INBS during the relevant period.
The Central Bank, during its contact with INBS between 2004 and 2008, did nothing more than mark issues involving that institution as having “medium priority”, he said.
Other institutions which “went down for far more than the €6 billion” were designated “high priority” but have never been subsequently pursued, he said.
Earlier, Mr Rogers said Mr Purcell remained on working for INBS after it was merged with Irish Bank Resolution Corporation (IBRC), until he was required to resign by the minister for finance in 2010.
Mr Purcell, against whom there was no suggestion of ethical wrongdoing or dishonesty, had during this time assisted an Ernst and Young (E&Y) investigation by INBS about the society's operations and methodology. In August 2010, E&Y started another investigation for the Central Bank dealing with "legacy issues" in INBS, he said.
In July 2011, Mr Purcell and INBS received a letter saying an examination was under way which may involve the Central Bank inquiring into those legacy issues under the administrative sanctions procedure which Mr Purcell is now challenging, counsel said.
In March 2012, IBRC issued proceedings against Mr Purcell and other former directors claiming €6 billion largely on foot of the same allegations underlying the Central Bank inquiry, he said.
One of those claims was that the INBS delegated powers to its managing director Michael Fingleton, and failed to properly monitor and regulate that delegation.
Around this time IBRC issued a letter saying it had no contemporaneous knowledge of the contraventions alleged by the Central Bank because there was “nobody there to deny anything”, counsel said.
Notwithstanding this, in late 2014, following mediation, the action for €6 billion against the former INBS directors was settled.
“Mr Purcell himself and other directors put their own hands in their pockets and produced a ball of money to pay the Central Bank to settle that action,” counsel said. That settlement did not involve Mr Fingleton and the case against him is still alive.
What was happening here was clearly “oppression” of Mr Purcell, counsel said.
Mr Purcell claims a statement issued by the Central Bank in relation to the settlement and the Central Bank’s publication of a statement about that have damaged his reputation. The Central Bank denies this.
The case continues before Mr Justice John Hedigan.
