THE GOVERNMENT expects Irish Nationwide chief executive Michael Fingleton to resign within weeks as the controversy surrounding his €1 million bonus and €27.6 million pension arrangements intensifies.
Last night, the Government had to defend its decision not to force the immediate repayment of the bonus which was paid after the building society’s deposits were guaranteed by the State last September.
“He may not last the month,” said a Government spokesman last night, who defended the decision of Minister for Finance Brian Lenihan to allow up to one month for an investigation into the matter to take place.
Mr Lenihan yesterday met the two directors of the Irish Nationwide who were appointed by the Government under the guarantee.
He told the pair – Adrian Kearns and Rory O’Ferrall – to inform the other board members that Irish Nationwide’s board and management team “must be reviewed having regard to the current market position, the plans of the society, and the appropriate mix of skills for the future of the society.”
An investigation into Mr Fingleton’s bonus should be completed by the two directors “within one month”, Mr Lenihan and Taoiseach Brian Cowen said last night.
Speaking to RTÉ, Mr Lenihan said he wanted the report on the management team “by next Monday”, but that issues surrounding the bonus “require some investigation and that investigation must take place”.
“Mr Fingleton and the society insist that this was agreed and negotiated upon long before the guarantee was put into operation,” said Mr Lenihan. “I have powers to make regulations for the future. I don’t have power at the stroke of a pen to take money off people which they are entitled to for the past. It has to be investigated.”
The Minister is concerned about the impact on international markets of suggestions that the guarantee should be withdrawn from Irish Nationwide if it refused to claw back the €1 million bonus. He is due to meet the Irish Nationwide board early next week. Last night, the Taoiseach’s spokesman said Mr Cowen agreed with the process put in place.
“The next step will be to secure sound information, rather than hearsay, that will be able to withstand legal challenge,” he said.
The Labour Party criticised Mr Lenihan saying he had insisted last September that the legislation introducing the guarantee gave him draconian powers to prevent misbehaviour by bank executives.
“Don’t even dream of starting your speech on April 7th (Budget Day) if you haven’t sorted Mr Fingleton out,” Labour TD, Joan Burton told the Dáil last evening.
Attorney General Paul Gallagher has queried whether arrangements for the bonus were in place before the guarantee even though it was paid afterwards.
Irish Nationwide is understood to be preparing to report close to €500 million in losses on its €12 billion loan book for 2008 , which would represent roughly a 10-fold increase on the bad debt figure in 2007.