Irish Nationwide's MD admitted not reading audit reports before its collapse

In June 2018, former Irish Nationwide Building Society managing director Michael Fingleton admitted at the Central Bank's inquiry into the society's EUR5.4 billion collapse that he failed to read internal audit reports at the society and signed letters to the financial regulator without reading them. The inquiry had established that INBS told regulators in 2005 that its credit committee saw regular reviews of its commercial loans, even though the committee received no reports at all.

Pressed by senior counsel Brian O'Moore about a May 12, 2007 letter he personally signed, undertaking that the credit committee would review all reports submitted to it, Fingleton said he 'just signed the document and off it went'. He agreed there was no good reason why 'this misinformation' was included in the letter to the regulator. Of an August 2007 internal audit report he said: 'I would just have looked at the overall rating' - it was 'good' - and 'put it down'. He objected to oral submissions scheduled for September because 'that's my holiday month'.

Asked why the credit committee's board-approved terms of reference included scrutinising commercial loans in arrears when he saw 'no benefit' to it, Fingleton said 'it was put in by whoever it put it in'. By 2007, he said, his 'total focus' was the sale of the society. The inquiry was focusing on Fingleton, former finance director Stan Purcell, Tom McMenamin and Gary McCollum, who ran the society's UK business.

The credit committee's terms of reference promised oversight of loans in arrears that its own managing director called purposeless and never delivered.

INBS told the regulator in 2005 that credit reviews were happening regularly when no reports were ever submitted to the committee.

The MD signed regulator correspondence unread, so a letter misdescribing the society's controls went out under his signature.

Internal audit output was skimmed to a one-word rating: a 'good' overall mark meant the detail was never examined.

Telling the regulator that oversight exists is not oversight: a credit committee that received no reports, and an MD who signed letters unread, meant controls were theatre.

The Central Bank inquiry into the EUR5.4 billion collapse continued, examining whether the credit committee failed to scrutinise large commercial loans in arrears, the society's exposure to specific customers, and whether risks were highlighted. Fingleton conceded under questioning that his practice may have reflected 'what was happening within the society', while contesting suggestions that his memory failures were convenient.