KPMG wanted Fingleton back on INBS board in 2008

KPMG recommended Michael Fingleton be promoted back on to the board at Irish Nationwide in 2008, just two months after the government introduced the bank guarantee, which left taxpayers liable for €5.4 billion in losses at the building society.

KPMG, the accountancy firm, completed a major review of corporate governance in Irish Nationwide on November 14th, 2008, which identified dozens of corporate governance failings in the society.

But it found nothing after its five-month review that was sufficient to recommend sacking Mr Fingleton, who instead walked away with a €1 million bonus and a gold watch. KPMG’s report was also sent to the Central Bank.

KPMG instead advised that Mr Fingleton should be promoted again to the society’s board, a position from which the organisation’s rules had required him to step down on his 70th birthday.

“Given the exceptional market circumstances, we believe that the current chief executive [Mr Fingleton] should be a member of the board,” KPMG said. It also found that the rules should be changed to allow Mr Fingleton back on the board he had dominated for decades.

The accountants did say that the society needed a “succession plan” to replace Mr Fingleton, but did not place a timeframe on this, or conclude that there was enough wrong to dismiss him, despite its 44-page report finding that Irish Nationwide had many corporate governance failings.

Special powers

KPMG said special powers previously granted to Mr Fingleton in 1994, which allowed him to lend billions without the usual checks expected in other banks, had not been “updated” to reflect his position of being no longer on its board. The delegation of special powers to Mr Fingleton by the board of INBS is today one of the main reasons KPMG, as special liquidator of Irish Nationwide, is suing the society’s former directors.

Mr Fingleton and his fellow directors intend to use a series of KPMG’s reports into the society, which date back to 2000, in their defence of their decision-making.

KPMG’s 2008 report also praised the “successful” way in which Irish Nationwide lent to developers and described its “speed of decision-making” as “a competitive advantage”.

Yesterday KPMG said: “The special liquidators have commissioned a review by Eugene F Collins into decisions taken by the former board of INBS concerning litigation involving former directors of the society and the appropriateness of joining other parties, including KPMG its former auditors.”

“The EFC review is well under way and it is expected that they will be reporting on their findings in the near future,” it said.

KPMG said EFC had all relevant documents and reports.

“The special liquidators of IBRC will not comment on matters that pertain to KPMG’s role as auditors to INBS, ” it added.