AN OFFICER with the Director of Corporate Enforcement has denied unfairness in the decision to bring court proceedings for an order disqualifying former National Irish Bank chief executive officer Jim Lacey from involvement in the management of any company on grounds of unfitness.
The director’s application was based on the findings of the inspectors who investigated the tax evasion scandal in the bank in the 1990s, including that senior management of NIB bore responsibility for various improper practices identified at the bank, Dick O’Rafferty said.
He said “substantial” material not available to the inspectors when compiling their 2004 report, but later made available to Mr Lacey by NIB and given by him to the director, had not persuaded the director to abandon the disqualification proceedings against Mr Lacey.
When John Gordon SC, for Mr Lacey, put to Mr O’Rafferty that this material was significant, Mr O’Rafferty said he would say “substantial” and he was “not sure it was significant”. Those documents did not promote any reconsideration of the decision to bring the disqualification proceedings, he added.
The inspectors had provided people with an opportunity to point out any limitations in the inspectors’ findings and the director took the view that “a very thorough process” was followed over the inspectors six year investigation, he said.
Mr O’Rafferty agreed the court was not bound by any findings or opinions of the inspectors.
He also agreed most of the bank’s internal audit reports during Mr Lacey’s time as chief executive had identified DIRT related matters and Non-Resident Account matters as matters of lesser significance.
Mr Gordon put to Mr O’Rafferty that it was inconsistent of the inspectors to give the audit reports a “clean bill of health” but criticise Mr Lacey for not addressing matters not regarded as important either by the internal auditors, the head of audit or the bank’s audit committee.
Mr O’Rafferty repeated that the director was relying on the inspectors report.
Earlier, he agreed the inspectors had not in their report criticised Mr Lacey personally for setting unreal targets or putting pressure on staff.
He also denied any intention to “colour” the court’s view towards Mr Lacey by including in an affidavit for the director the inspectors’ observations that the bank’s operating environment at the time of their investigation, 1988 to 1998, had to be taken into account and the behaviour of individual branch managers and staff had to be viewed in that context.
The inspectors had observed the NIB branch network was target driven with targets for fee incomes and deposits among others but with limited supports to help achieve those targets. They also observed that managers felt under pressure to meet those targets, which many considered were unreasonable.
Mr O’Rafferty said those observations were included because they represented “a significant conclusion” of the inspectors.
The inspectors had concluded responsibility for improper practices at the bank rested with senior management and Mr Lacey was one of those, he said.
Yesterday was the fourth day of the hearing before Mr Justice Roderick Murphy of the disqualification proceedings.
The court has heard the director is relying on the findings of the inspectors that Mr Lacey bore ultimate responsibility for six serious practices indicative of “a widespread culture of non-compliance” in NIB, including the existence of bogus non-resident accounts, fictitious accounts and improper charging of fees and interest.
The hearing continues today.
