No authority over offshore bank - MD

The managing director of the Irish Nationwide Building Society has said it has no authority to instruct a bank it owns in the Isle of Man to co-operate with the tribunal.

Mr Michael Fingleton, a member of the board of Irish Nationwide in the Isle of Man, said the bank's board discussed the matter and would not be complying with the tribunal's request that a bank executive attend to give evidence.

Mr Fingleton was asked by Mr Justice Moriarty to convey the tribunal's "keen disappointment" to the society's Isle of Man bank.

The tribunal is inquiring into an account opened by Mr Michael Lowry in October 1996 into which £147,000 was deposited by the late Mr David Austin.

Both Mr Lowry and the executors of Mr Austin's estate have given permission to the bank to co-operate.

Mr Fingleton said the Isle of Man bank, which deposits most funds with the society, is separate from the society. Two of its five directors are appointed by the society and three are Isle of Man residents, as are the management.

The bank had responded in writing to questions from the tribunal, and the chairman, Mr Peter Crellin, has agreed to attend to give evidence.

The Dublin society has recommended to the Isle of Man board that the bank co-operate. Dublin could not instruct the bank to comply, as this would shift control of the bank to Dublin, which could undermine the bank's offshore status, Mr Fingleton said. This could leave the bank open to successful attack by the Revenue.

The bank has taken the view that it has co-operated and that there is no need for an executive to attend. Mr Fingleton said questions about why the bank was taking this attitude should be asked of Mr Crellin.

Asked by Mr John Coughlan SC, for the tribunal, about a loan Mr Lowry took out with the society, Mr Fingleton said the former minister phoned his office near the end of August, 1996. He wanted to discuss a loan to purchase a house.

Mr Lowry met Mr Fingleton the following day and explained that he wanted a £200,000 loan to buy a house on Carysfort Avenue, Blackrock, Co Dublin. The loan was equal to the purchase price of the house. Mr Lowry said he had funds available for the renovation work needed on the house.

The loan was agreed. Mr Fingleton said he did not know until this year about Mr Lowry's account in the Isle of Man or that Mr Austin might have given Mr Lowry money to be used for the renovation of the Blackrock house.

"I believed he had the funds or could get the funds," Mr Fingleton said. He didn't seek details. He believed Mr Lowry had plenty of equity in his Tipperary home.

At the time, Mr Lowry told Mr Fingleton his salary was £65,000, his wife earned £20,000, and Mr Lowry earned director's fees of £20,000 from his company, Garuda.