ANALYSIS:Michael Fingleton's involvement in the Cavan deal gave 'great comfort' to Ulster Bank

ULSTER BANK was confident that a €13.5 million loan to former Irish Nationwide chief Michael Fingleton and three other investors would be repaid because of his “perceived wealth” and because he was a “man of substantial means”.

The bank told the Commercial Court that, prior to giving the loan to the four men, including Fianna Fáil Senator Francie O’Brien, to buy a 50-acre development site at Swellan, Co Cavan, Ulster Bank had not dealt with Fingleton.

However, the bank was “at all times very conscious” of Fingleton’s involvement in the deal. He was “a particularly well known person in business and financial circles”, the bank said.

The bank’s manager Ted Mahon, who oversaw the loan, said he had seen from Irish Nationwide’s annual report in April 2009 that Fingleton was “the sole beneficiary of a pension fund worth €27.6 million”. Fingleton’s “perceived wealth” had “informed” the bank’s attitude to the loan on the Cavan land deal, particularly from January 2009 and April 2010 when interest arrears built up.

His involvement gave “great comfort” to the bank from the outset and through the relationship to around April-May 2010, and this played “a very significant factor” in the bank giving the loan, Mahon said in a court affidavit.

Fingleton had even paid two cheques – one for €42,875 in July 2009 and another for €34,842 in October 2009 – to cover part of the arrears.

The failure of the four partners, who included Monaghan businessmen Noel Mulligan and Charlie McGuinness, to secure planning for the site just outside Cavan town concerned the bank.

In November 2009, the loan was moved into Ulster Bank’s internal “bad bank”, which dealt with loans provided on non-income-generating land with development potential.

In December 2009, the bank asked for net worth statements and 2009 tax returns for each of the four borrowers as interest arrears remained on the loan.

When Fingleton sent a letter with a hand-written net worth statement on March 23rd showing his assets and liabilities, Ulster Bank discovered that it was “significantly less than was previously understood”.

This came “as a considerable surprise” as the statement did not include his pension and raised “serious issues” about the borrowers’ ability to meet interest payments, let alone the loan itself.

Ulster Bank wrote to Fingleton again last April, asking him to reassess his net worth statement.

The bank requested details of “all pension fund assets and liabilities, equitable interests in properties or companies held directly, indirectly or in beneficial trust for you, and deposit accounts held within or outside the jurisdiction”.

The bank was also concerned that Fingleton may have assigned his interest in his family home and lands at Shankill, Co Dublin, to his wife’s name in October 2009.

A €27 million pension would eclipse any asset on Fingleton’s statement. He listed his most valuable asset as an interest in a development site at Kotor, which is located on a bay in the Balkan state of Montenegro. He valued his interest at €4 million. Then came his family home and land at Liskeen, Shankill, at €3 million.

The next valuable are four apartments in the Mespil complex next to the Burlington hotel in Dublin 4 (€1.2 million), a house in Leopardstown (€950,000) and a retail property in Phibsboro (€900,000).

He listed cash deposits at €1 million. Controversially, Irish Nationwide paid Fingleton a bonus of €1 million for 2008.

Fingleton also said he had “initiated legal proceedings to recover €10 million plus held in trust by a third party from actual earned and received profits in relation to a major Northside development”. Fingleton issued proceedings against developer Gerry Gannon over a quarter share of a project in Clongriffin, north Dublin in 2009.

He said he had not yet prepared or submitted a tax return for 2009 but said: “My income for 2009 was in excess of €400,000”.

Discussing the potential of the Cavan site and seeking the bank’s continued support, Fingleton told the bank he had spoken to Arthur Ryan, head of retailer Penneys, the previous week and he had “expressed a strong interest” in the retail part of the project.

He told the bank that the four borrowers were keen to get Tesco rather than Aldi as a tenant on the developed site and that there was “little or no competition covering an area extending to Sligo”.

The site remains undeveloped. Yesterday the bank secured a €13.6 million judgment against the former Irish Nationwide chief.