Court lifts order to disqualify ex-banker

A FORMER head of finance with National Irish Bank (NIB) has won his Supreme Court appeal against an order disqualifying him from involvement in the management of any company bar his own consultancy firm on grounds of unfitness.

The order against Patrick Byrne was among several sought by the Director of Corporate Enforcement against senior NIB managers and officials based on the report of the inspectors who investigated the tax evasion scandal in the bank between 1988 and 1998.

The three-judge Supreme Court yesterday unanimously agreed to quash the disqualification order granted by the High Court against Mr Byrne (49), St Helen’s Road, Booterstown, Co Dublin, head of finance and strategy with NIB from 1994-1998.

Mr Justice Roderick Murphy had stayed, pending appeal, the order disqualifying Mr Byrne for four years from involvement in managing any company except Mr Byrne’s consultancy firm, Business Consultancy Advisory Services Ltd.

In allowing the appeal, the Supreme Court ruled the High Court applied the wrong legal test in imposing the order on the basis of finding Mr Byrne displayed “a lack of commercial probity” in discharging his responsibilities to the bank and its creditors, including the Revenue Commissioners.

That “commercial probity” finding could not be allowed stand when neither the director nor the NIB inspectors alleged any dishonesty against Mr Byrne, the court ruled.

The conduct necessary for a disqualification order under Section 160 of the Companies Act must go beyond failing to exercise an appropriate degree of responsibility, it said.

The Supreme Court also ruled the High Court went beyond the findings of the inspectors concerning Mr Byrne, including by rejecting his explanations for not raising issues of tax evasion and the bank’s potential retrospective tax liability after receiving the Dirt Theme Audit Report (DTAR) in early 1995.

That report highlighted extensive non-compliance within NIB with documentary requirements for non-resident and special savings accounts.

Mrs Justice Susan Denham said NIB branches and not Mr Byrne were responsible for the “accuracy” of returns relating to Dirt. Mr Byrne’s responsibility was to compile the figures into a general return to be made in a “timely” manner to the Revenue.

While the inspectors had found Mr Byrne should have realised the consequence of branches’ non-compliance for the accuracy of Dirt returns being made by him to the Revenue, this amounted at most to criticism “for not exercising a responsibility he did not have and which he did not realise arose”.

While the inspectors also found Mr Byrne had a shared responsibility for defects in circulars sent to branches with a view to addressing Dirt related issues, this was at most “a drafting criticism” and not the type of conduct meriting disqualification, she added.

In a separate concurring judgment, Mr Justice Nial Fennelly said the “fitness” of a person must be assessed by looking at their behaviour and record as a whole. There were degrees of honesty, probity and integrity and the finding of unfitness could not stand here where there was no allegation of dishonesty against Mr Byrne.

It was “telling” the inspectors had not attributed to Mr Byrne any knowledge false recording of non-resident accounts was taking place, “as it undoubtedly was”, in the NIB branches, the judge added.

While Mr Byrne failed to raise the issue of the bank’s potential retrospective tax liability after receiving the Dirt DTAR, he was “not alone” in that failure. No one in NIB’s senior management appeared to have addressed the issue and nor did the bank’s audit department nor its external auditors, KPMG, “a most eminent firm”.

Both judges, with whom Ms Justice Fidelma Macken agreed, also affirmed findings by the High Court there was no evidence of gross negligence or total incompetence by Mr Byrne and that he represented no danger to the public.