Fingleton cannot be forced to repay €1m
Former Nationwide chief clings to bonus
FORMER Irish Nationwide chief Michael Fingleton cannot be legally forced to hand back a controversial €1m bonus despite promising to do so.
The revelation that Irish Nationwide is legally powerless to demand he repay the cash sparked a wave of outrage yesterday.
It is also a source of acute embarrassment for Finance Minister Brian Lenihan who is faced with the prospect of pumping millions of euro of taxpayers' money into Nationwide to keep it afloat.
Government sources admitted last night there was no legal way for either Irish Nationwide or the State to make Mr Fingleton repay the money.
"If Michael Fingleton was an honourable man, he would live up to his word," said one source.
It is understood that the Department of Finance has been aware for some time of the building society's repeated efforts to recoup the money from the banker of choice to some of the country's biggest property developers.
However, Mr Lenihan was only officially advised this week by the chairman of Irish Nationwide, Daniel Kitchen, that the money had not been repaid -- despite repeated requests from the society.
The bonus was paid out late last year -- within weeks of the State's €440bn banking guarantee scheme coming into effect.
The 71-year-old bowed to intense public and political pressure last March in agreeing to hand back the bonus, though he insisted he was legally entitled "beyond any doubt" to the massive payout.
Five months after making the promise, Mr Fingleton has still not returned the money. It brought his total pay package for 2008 to €2.3m -- in a year when he presided over the society posting a pre-tax loss of €243m, its first in living memory, after the setting aside €464m to cover bad loans to developers.
Attempts to contact Mr Fingleton yesterday were unsuccessful, with his mobile phone ringing out with an international tone. He is reportedly holding out until "several outstanding issues in relation" to the repayment are resolved.
It is believed that one of the issues relates to Mr Fingleton seeking access to a report in the possession of the society's board on his own pay.
Irish Nationwide confirmed that it has, on a number of occasions, sought the return of the bonus, without any success.
Irish Nationwide is expected to transfer three-quarters of its €10.4bn loan book to the so-called 'bad bank' -- making it, proportionately, the most reliant institution on the NAMA plan to establish a viable future.
Analysts believe that the bank will need a taxpayer bailout of up to €1bn as discounts it will be forced to take on the NAMA-bound loans leave a massive hole in the society's balance sheet.
Labour Party finance spokesperson Joan Burton demanded yesterday that the minister outline clearly what action he intends to take in relation Mr Fingleton's failure to repay the bonus.
She said the payment "was an outrage and should never have happened", adding that it was public and media pressure that shamed Mr Fingleton into promising to repay the bonus -- rather than any action on the part of the Government.
Ms Burton said that despite the promises made by ministers, there has been "little real regime change and little change of attitude" in most of the financial institutions who have benefited from the bank guarantee scheme.
"When the taxpayers are again being asked to take an enormous NAMA gamble to save the banks and the property speculators, there is an obligation on Minister Lenihan to state clearly what action he intends to take in regard to Mr Fingleton's failure to repay the bonus," he said.
The bonus, sanctioned by the board in April last year, was in effect a loyalty payment as Mr Fingleton agreed to stay on as chief executive for another year following his 70th birthday.
The society received opinion from former Justice Minister Michael McDowell at the height of the controversy that the bonus did not breach the terms of the €440bn guarantee scheme.
It is understood that the Attorney General's office also provided the same advice at the time.
Yesterday, no one was home at Mr Fingleton's secluded residence close to the village of Shankill. Two cars, a 07 reg Mercedes CLK and a Ford Focus, were parked in the gravelled driveway.