EBS chief hires top US advisers as review nears
EBS CHIEF executive Fergus Murphy has become the second Irish banker to hire an expensive US consultancy firm to help him prepare his submission for the Central Bank's review of directors who were involved in the financial crisis.
The Irish Independent has learned that the EBS boss brought in US advisers Promontory in early December, when he learned that he would have to make a detailed submission to the Central Bank on his tenure at the former building society.
Promontory was retained by Bank of Ireland back in August, to advise its chief executive Richie Boucher in his dealings with the Central Bank and to work with some other senior executives.
The third executive whose tenure is being examined – Irish Life & Permanent chief Kevin Murphy – has not hired thirdparty advisers.
The trio have been asked to make submissions as they are the only three bank directors whose tenure predates the bank-guarantee scheme of September 2008.
Sources last night confirmed that Promontory had “about three” people on site at EBS for a week in December, and that there were executives at EBS's offices this week preparing the final details of Mr Murphy's submission. Legal advice Mr Murphy is also believed to be getting legal advice from A&L Goodbody.
“Fergus Murphy is responding to the Central Bank in a highly professional manner and EBS has no further comment to make on the matter,” a spokesman for the former building society said last night.
Firms like Promontory typically charge thousands a day for their senior executives, though more junior staff cost less.
Sources last night confirmed that the costs were borne by the institutions involved and not the individuals.
It is understood that Mr Murphy initially responded to the Central Bank's fitness and probity review personally, and only drafted in Promontory when his case was being referred to external reviewers.
The review is into whether legacy directors of bailed-out banks contributed to their institutions' demise and, if so, whether they are “fit and proper” to continue in their roles.
Mr Murphy is set to argue that he was not responsible for EBS's bailout because he only took the reins at the building society in early 2008 – after the then-building society had built up its sizable property-loan exposure.
Promontory was selected by EBS without a tender as the former building society had done some work with the US firm previously and was familiar with its work on the Rusnak investigation at AIB's All First subsidiary.
Promontory is also a former employer of the Central Bank's head of banking supervision, Jonathan McMahon. A spokeswoman for the US firm last night said it had “absolutely not" leveraged this connection to get work.
"Promontory has worked extensively in Ireland for over a decade," she said. "The firm's recent work in Ireland grows out of its long-standing expertise in banking and regulatory matters worldwide, as well as its deep understanding of the Irish banking system."
A spokeswoman for the Central Bank said Mr McMahon had "no involvement" with Promontory since taking up his role at the regulator's office in March 2010.
Sources also stressed that independent case attorneys, rather than Central Bank staff, would asses the latest submissions.