Former INBS chief facing €12m loss on his ill-fated Montenegro hotel project
FORMER Irish Nationwide chief Michael Fingleton is facing a massive €12m loss on his ill-fated plans to turn a dilapidated Eastern European hotel into a lavish resort.
The Irish Independent has learned that Mr Fingleton is being sued for €6.5m by developer Louis Maguire, who was a minority shareholder in the project in Montenegro.
Mr Fingleton has also ploughed €5.5m of his own personal funds into the planned €95m development.
But the accounts of the company behind the Hotel Fjord project in Kotor, which Mr Fingleton has described as his most valuable asset, have now been frozen.
The development has also been placed into receivership by the Commercial Court in Podgorica, the capital of Montenegro.
Mr Fingleton did not answer calls when contacted yesterday.
Six years ago, the Hotel Fjord in Kotor was sold by the Montenegrin government to New Fjord Developments (NFD), a company in which Mr Fingleton is a director.
But two weeks ago, NFD was placed into receivership by the Montenegrin authorities during a closed court hearing in Podgorica.
The Irish Independent has obtained a copy of the court's ruling which shows that the accounts of NFD -- which is 75pc owned by Mr Fingleton -- have been frozen on foot of debts owed to creditors.
These include the local government in Kotor, which is trying to recover unpaid property taxes.
The accounts were frozen and the company placed into receivership after a creditor, who was owed more than €70,000, petitioned the Montenegrin courts to place the development company into receivership.
A receiver was appointed by order of the court on November 29 and a special hearing to examine all creditor claims will be held early next year.
The project is now lying in ruins and the first meeting of creditors will be held on December 29 ahead of a dedicated court hearing in February.
Meanwhile, Mr Fingleton is now being sued for damages of some €6.5m by Mr Maguire, whose company, United European Partners Montenegro (UEP), held a 25pc share in NFD and supported moves to place it into bankruptcy.
The origin of the funds is one part of a major dispute between Mr Fingleton and UEP, which has accused Mr Fingleton of "corporate negligence" in court proceedings in Montenegro.
UEP has complained that a failure by Mr Fingleton to provide evidence of the origin of the €5.5m used to fund the purchase contributed to the problems encountered by NFD.
The deal required a non-refundable €500,000 deposit and was funded by two subsequent wire transfers from Irish Nationwide Building Society (INBS) in May 2006.
Mr Fingleton was chief executive of the building society at the time.
The two wire transfers originated in Ireland and were cleared through AIB and a bank in Frankfurt before arriving in Crnagorska Kommercijalna Banka in Montenegro.
The first €1.5m tranche stated that the purpose of the funds was "investment of foreign capital".
However, the second €4m tranche, representing the balance of the €5.5m purchase price, did not state what the transfer was for.
The issue of Mr Fingleton's purchases in Montenegro was not part of "live" issues passed on to Anglo Irish Bank when it took over Irish Nationwide earlier this year.
During his time at INBS, Mr Fingleton maintained most of his accounts at the society.