FORMER MANAGING director of Irish Nationwide Building Society (INBS) Michael Fingleton wrote to then taoiseach Bertie Ahern in 2005 demanding an “urgent and early meeting” because of delays in legislation to demutualise the society.
Mr Fingleton wrote to Mr Ahern at his constituency office in St Luke’s, Drumcondra, in June 2005 to say he was taken by “surprise and indeed alarm” to have read a letter written by then minister of state for the environment Noel Ahern expressing doubt about the legislation going ahead.
The letter, released to The Irish Times under the Freedom of Information Act, was seen by Mr Ahern. It is stamped “Seen by Taoiseach” and also includes a handwritten manuscript note stating: “Prepare a reply with the information from Dick Roche.”
Mr Roche was the minister for the environment at the time, whose department was responsible for the legislation.
While there are no records indicating if a meeting took place between Mr Ahern and Mr Fingleton arising from the correspondence, the taoiseach did specifically ask for a “speedy” reply to be sent to Mr Fingleton.
The INBS managing director had been lobbying for changes in the building society Acts since the mid-1990s. Mr Fingleton had sought a relaxation in the laws that prevented the takeover of a mutual society for a period of five years after demutualisation.
The amendment would have allowed the INBS to be taken over by a bigger financial institution immediately after demutualisation, leading to immediate windfall profits for its members. The Government approved the amendment in principle in 2004 but drafting of the legislation was delayed because of concerns by the Education Building Society (EBS) – which strongly wished to remain a mutual society – that an easing of the laws might make it vulnerable to being forced to demutualise against its wishes.
Mr Fingleton’s personal letter to Mr Ahern was written after Noel Ahern wrote to a shareholder of INBS in June 2005 saying it was “unlikely” that the legislation would be changed to facilitate Irish Nationwide.
In his letter, Mr Fingleton contended the Department of the Environment had “no intentions” of progressing the proposed legislation.
“I would appreciate an urgent and early meeting to clarify the position as this would create serious problems for [INBS] going forward as well as for more than 100,000 members,” Mr Fingleton wrote.
He said the members, their spouses, and “adult children” were expecting a financial payout on the sale of the society sooner rather than later.
“In all up to 250,000 people might be affected directly or indirectly,” he asserted.
He concluded: “I will contact your office to arrange an appointment at your convenience.”
At one point in 2005, the demutualisation of the society was expected to yield €1.5 billion. That would have resulted in a windfall of €15,000 for its 120,000 members, in addition to a prospective once-off payment to Mr Fingleton of €15 million.
The Building Society Amendment Act became law in the autumn of 2006. The legislation relaxed the five-year rule, paving the way for INBS to demutualise. It also protected institutions such as the EBS, which wished to remain mutual.
A number of foreign financial institutions expressed interest in INBS. They included the German bank Hypo Real Estate, and the Icelandic bank Landbanksi, both of which became high-profile victims of the global banking crisis. In the event, the sale of INBS to a private buyer did not materialise.
