National Irish Bank (NIB) has withdrawn from the controversial investment bond sales scheme which is being investigated by the regulatory authorities and has admitted that there are unsatisfactory aspects to its handling of it.
NIB has also claimed that the public disclosure of its involvement in the scheme followed the unlawful removal of documents from its premises. The scheme involved the promotion and sale by the bank of investment bonds on behalf of Isle of Man-based Clerical Medical International (CMI).
As the Revenue Commissioners and the Central Bank continue independent enquiries into the sales, which are alleged to have been used to hide funds from the Revenue, NIB said it does not "condone, encourage or knowingly engage in tax evasion".
The bank also claimed in a statement yesterday that its own internal investigation had established that "confidential documentation" was unlawfully removed from the bank "by disaffected parties with malicious intent". It added: "The information has been provided to the media and political sources through an intermediary in a manner designed to inflict maximum damage on the bank, its staff and customers. The bank has a duty of confidentiality towards its customers and will vigorously pursue legal avenues to recover this stolen material and to bring to account all parties associated with the theft. The resources of its parent are being utilised in this respect."
An international audit and compliance team from the bank's parent, National Australia Group Europe, in conjunction with NIB lawyers, is conducting an investigation into the basis for allegations which were first broadcast by RTE last Friday.
The Fine Gael finance spokesman, Mr Michael Noonan, claimed in the Dail on Wednesday that NIB deposit holders who were hiding money from the Revenue, were approached by sales executives who encouraged approximately 188 depositors to invest a total of £30 million in an "ingenious" scheme.
Mr Noonan said the move had occurred because "someone" in the bank had decided that the money in the depositors' accounts, some of which were non-resident accounts, was not safe from the Revenue.
The bank said that the allegations being made relate to less than 0.1 per cent of the bank's accounts and have been selectively presented to create a misleading impression "and one which is not representative of the manner in which the bank conducts its business".
In 1994 the bank's management first identified "certain shortcomings" in the selling and administration of the product. "Action designed to deal with these matters was taken, which included moving the (CMI) deposits from the branches where they had been based, to a central location." It is understood the central location was the bank's headquarters on Wilton Terrace in Dublin.
The investigation currently underway had identified further shortcomings which are not in accordance with the bank's policies and "fall short of the standards expected by the NAB Group". Last night a spokesman would not say what these shortcomings were. It is also investigating whether the CMI product was authorised for sale in Ireland.
"In retrospect it is clear that there were unsatisfactory aspects of NIB's management of this area of the bank," the statement added. In view of this, the bank is restructuring its operations and discontinuing the sale and promotion of the CMI bonds.
See also NIB statement in full page 2; Story of the Week, page 7
