RTÉ didn’t linger after January’s surprise resignation of Mari Hurley, who, in 18 months as chief financial officer, helped steady the broadcaster’s shaky finances and tightened financial controls after a series of scandals.
On Monday last week it unveiled her successor: the Central Bank of Ireland’s director of finance and business performance Annemarie Britz. Little known outside of financial circles, the South African has built a strong reputation for rigorous oversight of budgets, complex projects and an intricate balance sheet that at one stage topped €200 billion – while also being widely regarded in the bank as highly collegiate.
The timing of the announcement, however, wasn’t ideal. Within days, Britz appeared in a dense, 184-page High Court judgment on a flawed Central Bank of Ireland fitness investigation into a former senior funds industry executive.
Britz wasn’t the one to decide to carry out the inquiry. Nor was she the one to lead the investigation, which High Court president Judge David Barniville said was “irretrievably tainted” by errors. They were the responsibility of other officials, John Lynch and Eoghan O’Regan, respectively.
But she was the fresh set of eyes and ears appointed as decision maker – in a process designed to have various checks and balances – on whether the former manager should be sanctioned or not.
Barniville concluded the decision maker failed to recognise that the man’s “right to natural and constitutional justice and basic fairness of procedures” had been breached during the investigation phase when he was not given an oral hearing, especially when his “credibility and honesty were very much in question”.
Britz’s agreement to meet the man before making the decision to prohibit him for one year – subject to the court’s approval – amounted to little more than a box-ticking exercise, the judge said.
It was “incomprehensible” she did not ask any questions or challenge the man in any way during the meeting, when he claimed there were several factual errors in the investigation report and that some relevant material had been ignored, he added.
In fairness to Britz, this was far from her wheelhouse. The whole process raises questions as to why the central bank can call on any of its directors – from heads of data to economic statistics – to act as the final arbiters on such investigations. Surely these determinations should be handled by independent external parties that are experts in legal procedure and constitutional rights.
The man – who was not named in the ruling and who wished to retain anonymity in an interview with The Irish Times this week – was an executive director of an Irish investment fund management company that oversaw sub-funds that fed into master funds managed by a sister company in the United Kingdom.
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In a nutshell, the central bank contended the man should have informed it when he learned that the UK fund manager in charge of the master fund – referred to as GH – was the subject of an internal investigation that would result in him being suspended on July 31st, 2018. The suspension – and subsequent firing of GH for failing to manage conflicts of interest and breaching the group’s gifts and entertainment policy – would result in the Irish sub-funds being temporarily frozen.
The Irish investigation concluded that the man was “not candid and truthful and was not full, fair and accurate in all respects in his dealings with the central bank” – even though he was acting on legal advice on what should be disclosed and when.
Indeed, a central bank frequently asked questions document, published in 2018 on fitness and probity, addressed the very question.
It stated that firms should “take a practical approach and investigate such matters before going to the central bank with potentially unrealised concerns”. It should be notified immediately once an investigation found against an individual, it said.
The judge refused to rubber-stamp the prohibition. And he said that sending the case back to the central bank to do its homework again would give rise to another serious injustice if he were subjected to further investigation.
But there is no justice here for the man, who told The Irish Times this week of how he has run down his pension pot as he has struggled to find work, is behind on mortgage payments, and in danger of losing his family home.
The ruling was published six years after the man was forced to quit because he could not say he faced no issues in his annual regulatory review, and more than three years after the court heard a case ... concerning a one-year ban.
In the end, the court was also unable to look at the actual merits of the case.
There also doesn’t appear to be any obvious route to compensation for the man. How would the central bank have acted if a firm it regulates were to hold such a defective process?
This case, together with a highly critical judgment in 2024 from the Irish Financial Services Appeals Tribunal (Ifsat) about the central bank’s refusal to approve a board nominee for a fund, undermines the hard-won moral authority of the regulator. It reinforces a long-held view in financial circles that the pendulum has swung too hard the other way – at an institution scarred by coming out of post-crisis reports almost as badly as the firms they supervised.
It’s even more concerning in light of the regulator receiving additional powers in recent years, making it easier to go after senior executives in financial firms for potential wrongdoing. The Ifsat judgment, which found that the central bank “denied fair procedures at every stage” to that individual, saw the regulator overhaul its executive vetting system.
Sources say the Barniville ruling – communicated to both sides almost a year before it was published – will have a similar influence on fitness and probity investigations. It must.
The bank’s enforcement team, meanwhile, will be forgiven for feeling nervous about an Ifsat appeal taken last year by former PTSB chief executive David Guinane, after a central bank inquiry reprimanded and fined him €80,000 for the lender’s mishandling of tracker mortgages.
It is not clear when the findings of that appeal will emerge, but it could make for interesting reading.
