National Irish Bank and some of its former top executives face possible criminal charges for overcharging customers and facilitating and encouraging tax evasion.
The report, compiled by the two inspectors appointed to the bank by the High Court and published yesterday, made negative comments against 19 individuals, including two former chief executives, Mr Jim Lacey and Mr Barry Seymour, as well as Ms Beverley Flynn TD.
The Director of Corporate Enforcement, Mr Paul Appleby, said the findings of the inspectors, accountant Mr Tom Grace and former Supreme Court judge Mr John Blayney, were "deeply disturbing". He said responsibility for the bank's wrongdoing rested with NIB's senior management. "My prime objective is to see to what extent the bank as an institution can be prosecuted."
The NIB chief executive, Mr Don Price, apologised to the bank's customers and said it "deeply regretted" the problems it had caused. "We have taken steps to ensure that customers and investors who may have suffered loss are reimbursed through comprehensive programmes to resolve these issues," he said.
NIB estimates the total financial cost to the bank as a result of its improper activities will exceed €75 million. More than €23 million will be repaid to customers.
NIB has already paid €1.9 million to customers who were overcharged on the rate of interest they paid on their borrowings and has set aside a further €10.6 million to be reimbursed to customers who are still owed refunds. It will begin to issue refunds in September.
NIB has approved settlement offers totalling €10.8 million to be paid to investors, who put funds into unauthorised offshore investments it sold. Some €8.9 million has been accepted by those customers.
Mr Price said it hoped to get some resolution about whether a prosecution would proceed in the near term, but the bank would have to wait and see how this unfolded. He said it had not considered taking legal action against the individuals whom the inspectors held accountable for the various malpractices carried out during the 1980s and 1990s.
The Tánaiste, Ms Harney, described the bank's conduct as outrageous and said she hoped that criminal prosecutions could be taken against some of the individuals involved.
The 19 individuals named in the High Court inspectors' report no longer work at NIB. Some continue to work in the financial services sector in the Republic.
Mr Kevin Curran, one of three former regional managers whom the inspectors found had failed to discharge their responsibilities in terms of ensuring the bank was DIRT compliant, is currently working on a contract basis, in the internal audit area, for Permanent TSB Bank. The bank said it would be studying the NIB report over the coming days.
Some of the harshest findings in the report concern the sale of offshore bonds by NIB's financial advice division, a division headed by Mr Nigel D'Arcy during the period investigated by the inspectors. Ms Flynn, one of a small number of managers in the division, was heavily involved in the sale of the bonds.
The inspectors found that the division targeted money that was being hidden from the Revenue, "engaging in a practice which served to facilitate the evasion of Revenue obligations by third parties".
Mr D'Arcy was not at his home in Straffan, Co Kildare, yesterday and could not be contacted. He works as a bursar for St Columba's College, Rathfarnham, Dublin. He is a director of two companies registered with the Companies Registration Office.
The Irish Financial Services Regulatory Authority described the type of activity outlined in the report as "utterly unacceptable". Its chief executive, Mr Liam O'Reilly, said it was now considering the fitness and probity of individuals named in the report and would take appropriate action against them.
Publication of the report will heighten expectations that NIB's parent, National Australia Bank, will sell the bank and exit from the Irish market. NIB refused to comment on this speculation.
MAIN FINDINGS
Bogus non-resident accounts were in widespread use
Improper interest and fees were charged on many accounts
Money not disclosed to Revenue was targeted for CMI offshore investments, earning substantial fees for the bank
19 former executives criticised for their role