Former NIB director has exclusion quashed

AN ORDER disqualifying a former executive director of National Irish Bank (NIB) from involvement in managing any company for nine years over “lack of a proper standard of conduct” of affairs at the bank during his two-year tenure has been overturned by the Supreme Court.

The three-judge court ruled yesterday Barry Seymour’s conduct of NIB’s affairs while he was executive director between 1994 and 1996 did not justify the High Court making a disqualification order against him under Section 160 of the Companies Act.

The Director of Corporate Enforcement (DCE) had failed to show actions or omissions of Mr Seymour amounted to negligence or incompetence of the high degree necessary for a disqualification order, the court ruled.

A “grave failure” by Mr Seymour to ensure Dirt payments were properly returned to the Revenue may justify a less draconian order, it said. It was certain Mr Seymour was “the wrong man in the wrong place at the wrong time” for the post he took over in 1994, Ms Justice Fidelma Macken said.

He had taken steps to remedy certain matters, was not alleged to be responsible for four out of five improper practices found by the inspectors who investigated NIB and no claim of dishonesty was made against him by the inspectors, she said.

While a disqualification order on grounds of deterrence was not justified in this case, “such a strong statement” might be necessary in other cases given the current financial landscape, she said.

The judge said the appropriate order in this case was a five-year restriction order under Section 150 of the Companies Act. Before making a final Section 150 order, the court said it will hear representations as to whether that would impact on Mr Seymour’s involvement with various community and church bodies, and adjourned the matter to a date to be fixed.

Mr Seymour had no previous complaints against him in his 42-year banking career, she noted. He is retired and involved in charities and other organisations.

The DCE sought the Section 160 order following the 2004 findings of inspectors who investigated the affairs of NIB and National Irish Bank Financial Services (NIBFS) over 10 years to 1998.

The inspectors concluded both NIB and NIBFS were involved in a number of unlawful and improper practices, including the opening and maintaining of bogus non-resident accounts which enabled customers to evade tax. Responsibility for the practices “rested with senior management” of the bank during the period of their investigation, the inspectors said.

In his High Court decision, Mr Justice Roderick Murphy said Mr Seymour was the single most senior and responsible employee in NIB between April 1994 and July 1996. Given the serious nature of irregularities during his tenure, the judge ruled a Section 160 order was appropriate.

The appeal by Mr Seymour, in his late 70s, from Amersham, Bucks, England, against that decision was opposed by the DCE on grounds including the purposes of Section 160 orders included deterrence. Giving the Supreme Court judgment, Ms Justice Macken found the High Court made an implicit finding of lack of commercial probity on the part of Mr Seymour, when no such allegation was made against him by the inspectors in their report.

It appeared from the report and Mr Seymour’s evidence he had no knowledge of the existence of “bogus non-resident accounts” in NIB even if there were “pointers” to such accounts, she said. Numerous others with access to the same information and far more qualified in the areas of tax legislation and tax evasion, including NIB’s audit committee and external auditors KPMG, had failed to appreciate or point out any problem, she said.

It seemed obvious, if Mr Seymour was alerted to the problem, he would have tackled it immediately, she added. She found the High Court failed to make necessary findings against Mr Seymour in line with the legal test for a declaration of unfitness [to be involved in managing companies] leading to a disqualification order.

The reasoning for a decision of unfitness must be clear, based on an identifiable legal test or tests and on findings made under those tests within the ambit of the DCE’s claim. That was not the position in this case, the judge found.