Scully 'off the hook' as society under pressure
Auctioneer told €130m loans were non-recourse
AUCTIONEER Louis Scully was issued with a letter by Irish Nationwide in the thick of the financial crisis that stated €130m of loans linked to him were all non-recourse. Non-recourse is a banking term which means a bank can pursue a customer only for the asset they borrowed for and cannot pursue them in a personal capacity.
The Sunday Independent has learned the letter was sent to Mr Scully, a long-term associate of Mr Fingleton, on April 2, 2008, by a senior official in the society, at the same time as the society was under huge financial pressure as Irish banks began to collapse.
Despite the domestic and global upheaval one of the society's key officials issued the letter to Scully.
The taxpayer today faces losing tens of millions on loans given to Scully-related entities, which were issued to buy sites around the country.
Mr Scully first wrote to Irish Nationwide claiming that none of his loans were in a personal capacity – on February 18, 2008 – and he asked the society to confirm this.
However, Irish Nationwide's new management, appointed post Fingleton's departure in April 2009, later examined the underlying documentation on Scully's loans and concluded that based on what was available many of them were on a full recourse basis. This would have placed him firmly on the hook for tens of millions.
Mr Fingleton, now a retired multimillionaire, claimed in a letter to the society on March 21, 2010, that the auctioneer did not personally owe Irish Nationwide a cent and that all loans given by the society to the auctioneer were given on a joint-venture/profit-sharing basis.
And Mr Scully insists that, as his loans were non-recourse, there is no reason for him to give a statement of his affairs to the society.
One loan to a Scully-related entity was to purchase 21 acres in Navan, Co Meath, with €5.9m from Irish Nationwide.
The application for this loan was made on October 16, 2007, and an offer was made by the society later that day, which Mr Scully accepted on October 18. Credit committee and board approval were only granted in November 2007. This was in contravention of the society's own internal rules. There is no suggestion of any wrongdoing by Mr Scully.
This Meath site is now worth 95 per cent less, meaning the taxpayer has lost €5.5m on the deal if the loan is non-recourse as Mr Scully maintains.
Mr Scully did not return requests for comment but he has previously denied any impropriety.