AnalysisA range of possible punitive measures, including criminal prosecutions, are to be examined by a number of State agencies arising out of the NIB inspectors' report.
The Director of Corporate Enforcement, publishing the report yesterday, said he would now examine whether grounds existed for bringing a criminal case against the bank.
Mr Paul Appleby also said he would also look at the possibility of taking a criminal action against some of the 19 people against whom adverse findings were made in the inspectors' report.
He said that as well as company law, the content of the report would have to be examined in the context of tax, insurance and general criminal law "possibly including conspiracy to defraud. There are many potential areas for examination."
The material contained in the inspectors' report can be used for guidance in the preparation of any criminal prosecution though any incriminating interviews given by any individual to the inspectors, cannot be used. The inspectors' findings can be used in civil proceedings as can the facts outlined in the report.
The Irish Financial Services Regulatory Authority (IFSRA) is also to examine the report with a view to taking possible action. It has the power to ensure that the "fitness and probity" of individuals working in positions of significant responsibility in organisations operating in the financial services sector, is of the standard required. It can cause directors or senior executives to step down from their position and prevent the future appointment to such positions, of persons whom IFSRA holds are not of sufficient probity. Mr Liam O'Reilly, chief executive of IFSRA, said the type of activity described in the report was "utterley unacceptable".
"As a regulator with a strong consumer manadate we are absolutely determined to ensure that there is no place for this type of activity in the financial services industry of today."
He said the message that was coming through from recent events was that banks who put short-term profits before customers, would suffer. "The cost of engaging in unacceptable behaviour has been proven to be very high, in both financial and reputational terms." IFSRA is currently engaged in an industry-wide exercise seeking to ensure there are adequate systems and controls in place.
The report is being sent to the Institute of Chartered Accountants in Ireland, the body which has responsibility for monitoring standards, and administering penalities where appropriate, to its members. Mr Appleby said the report was being sent to the institute so it could decide if any action was required against KPMG, the firm that acted as outside auditors to NIB. Also, some of those named in the report may be members of the institute.
The inspectors found that KPMG should have asked management to quantify the potential liability arising from retrospective DIRT, a potential liability that had been identified, but not quantified, by an internal audit which KPMG saw in 1995.
The inspectors' report is also being sent to, amongst others, the Director of Public Prosecutions, financial services regulatory agencies in Australia, the UK and the US.
