The Spying Game: How Ireland's top banks snoop on us
The normally secret world of Ireland's private detective industry is coming under unprecedented scrutiny as banks and insurers admit to using covert surveillance in legal rows with their customers
Published 13/07/2014 | 02:30
The spying game is big business in Ireland - and the secret is out. The clandestine world of private investigators is coming under unprecedented scrutiny as debt-riddled banks admit to snooping on high-roller clients and state-appointed liquidators hire their services to help unravel the global network of shell companies and offshore tax havens used by developers in elaborate ownership structures.
Where once insurance fraud and divorce cases were the bread and butter of private investigators' work in Ireland, the property crash and banking collapse has led to a surge in demand for corporate private detectives and 'financial spies'.
Not surprisingly, Ireland's major banks and insurers are reluctant to talk about their links to private detective agencies. But their cover has been blown by a number of high-profile cases in recent weeks which have shone a light on this covert world - with costly court battles over claims of invasions of privacy and data protection breaches likely to follow.
Ulster Bank has been forced to admit it hired private detectives to spy on the homes of a property developer it is fighting in a legal battle over a major Dublin land deal. Solicitors for Michael Taggart, a Derry-based property developer who was once described as one of Ireland's richest men, have threatened to sue Ulster Bank over alleged "harassment" by a private detective conducting surveillance on its behalf. Taggart is suing the bank for €100m after it put his business into receivership, and the bank is counter-suing over an alleged €4m debt.
Ulster Bank has admitted hiring the private detective but assured Mr Taggart that the surveillance was "lawfully undertaken". Its solicitors defended the actions of the private eye hired to conduct a so-called 'lifestyle report' on their erstwhile 'high-net-worth' customer.
Ulster Bank did not respond to queries from the Sunday Independent.
However, covert surveillance of clients is not uncommon when legal rows break out over bank debts. Ulster Bank's parent company RBS was accused of hiring private detectives who accessed a UK customer's credit report to get the lowdown on his finances ahead of a court case.
Hertfordshire-based businessman Gary Gadston was engaged in a legal battle with the bank earlier this year over a property deal and alleged that he found his Experian credit report had been accessed by detective agency Hogan International, a high-profile Surrey-based firm used in the hunt for Madeleine McCann.
RBS settled the case but said afterwards: "In common with other financial institutions, we occasionally use agents to provide financial status reports on customers with whom the group are involved in litigation."
But with banks, insurers and liquidators under ever-increasing pressure to recover debts, combat fraud and recover assets, there is a massive demand for "ever deeper" background checks on clients, claimants and bankrupts, said one industry insider.
It's when the basic paper trail ends - involving a trawl of credit ratings agencies, court judgements and Company Registration Office filings - that forensic accountants and gumshoes take up the chase.
Of the 70 or so private detectives operating in Ireland - the majority of whom are ex-gardai or former military personnel - most of them have seen a surge in demand from financial institutions seeking "lifestyle reports" and covert surveillance of bank debtors who claim they cannot afford to repay loans.
Most private eyes also serve summonses from banks on mortgage defaulters and conduct employee screening for firms.
The larger private investigation agencies and asset recovery specialists target blue-chip corporates and recruit specialist staff from the likes of the Office of the Director of Corporate Enforcement or the Garda's Criminal Assets Bureau and Fraud Squad.
However, because the industry is unlicensed and there are no barriers to entry, it can attract people who are the less than scrupulous. So, as pressure grows to produce results, rogue operators can be tempted to bend and break the rules.
Indeed there are concerns that the use of rogue private investigators by insurers and financial institutions could embroil both industries in a scandal as big as the UK phone-hacking saga.
Ireland's Data Protection Commissioner is watching the detectives very closely - and taking up the fight against rogue operators.
Insurance companies Zurich, Travelers and FBD hit the headlines in 2012 when they pleaded guilty in the Dublin District Court to keeping social security information allegedly leaked to private investigators by an official in the Department of Social Protection.
The companies admitted to having data on individuals' dates of birth, social security numbers, addresses, employment history and information on previous claims, in clear breach of the Data Protection Act. In some cases, the files also included information on spouses.
All three insurance firms were registered with the Data Protection Commissioner to process certain personal data. However, this did not include the 'leaked' social welfare information, which is not publicly available.
The companies were spared criminal convictions after agreeing to donate €20,000 to charity.
The Office of the Data Protection Commissioner has confirmed to the Sunday Independent that there are "a number of private investigators currently under investigation" in relation to suspected breaches of the Data Protection Acts.
"Further prosecutions may be taken against other private investigators at a later date," a spokeswoman confirmed.
The data privacy watchdog has warned banks and insurers which hire private investigators they "must satisfy themselves that any data processing activities that are carried out on their behalf are done lawfully and in full compliance with the requirements of the Data Protection Acts".
Given the reputational damage from such cases of malpractice, an industry insider has urged banks and insurers to vet private investigators thoroughly before hiring them.
"It's not just data protection. They need to watch out for other activities that, while legal, are highly undesirable," he said, pointing to the "widespread" practice of private detectives attaching magnetic tracking devices to vehicles to avoid the risky business of following a car without being spotted.
The use of tracking devices, either radio or GPS-based, are easy to obtain and cost just €150-£250, he said, and the accompanying mapping software can be downloaded onto an ordinary iPhone. And in case you think these 'dirty tricks' sound like the stuff of crime fiction, think again.
Only two years ago it was revealed that the private bank accounts of nine Irish Rail employees were "inappropriately accessed" by a private detective hired by the semi-state firm, a GPS tracking device was fitted on the car of an employee of a contractor of Irish Rail, and the emails of 35 employees were monitored.
The revelations emerged in 2012 during a High Court dispute between Irish Rail and a senior manager who was involved in investigating alleged fraud in the company.
The Data Protection Commissioner's office said Irish Rail "acknowledged" the "unacceptable level of surveillance" on employees: "It was apparent to the investigation that one senior manager at Irish Rail authorised the surveillance and accessing of bank accounts without the knowledge or approval of management," it said.
It's just another open and shut case in Ireland's ever-expanding spying game.
Sunday Indo Business