FORMER NATIONAL Irish Bank chief executive Jim Lacey has told the High Court the inspectors who investigated the tax evasion scandal in the bank in the 1990s could not have concluded he had ultimate responsibility for improper practices within the bank if “crucial” bank documents had been made available to them.
Mr Lacey said he believed the inspectors in their July 2004 report reached their conclusions related to him in the absence of important documents since made available, including documents showing a system of follow-up in relation to internal audit reports was in place during his tenure and “appeared to be operating well”.
None of the internal auditors, external auditors Touche Ross and later KPMG, the Central Bank or himself knew or had any reason to suspect the deficiencies identified in the internal audit reports were not being followed up and appropriate remedial action taken, he said in an affidavit.
Of 121 internal audit reports during his time as CEO between 1988 and 1994, no reports were graded unsatisfactory and six were graded poor, he said.
Mr Lacey said documents now available to him showed there was a “robust” follow-up procedure in place to address issues raised in the internal audit reports.
The lack of such follow-up documents by the inspectors “fatally undermines” the inspectors’ conclusions in relation to him, he said.
Had the inspectors been in possession of the documents they would not have reached those conclusions, he believed.
The documents had been made available in 2006 but were not complete.
Mr Lacey said the documents were not available because of serious deficiencies in NIB’s system of archiving documents.
He believed many documents relevant to and supportive of his claims were not available to him or the inspectors when he was interviewed by the inspectors for their report. He believed, for instance, there would have been other documents created by an official whom he had delegated to read internal audit reports, to bring to his attention any reports graded unsatisfactory or poor and to ensure any recommendations made by the internal auditors were acted upon.
The bank had also said quarterly audit reports covering his period as CEO were not available, he said. However, he believed a review of the minutes of the Board Audit Committee for that period confirmed none of the shortcomings identified by the inspectors were reported by the head of audit to the committee.
This indicated the head of audit did not regard any of the issues raised by the inspectors as of serious concern and that he was satisfied remedial action was being taken to address them.
It was also “highly significant” that the Central Bank, which carried out regular reviews of NIB’s business, had not during any time during his period as CEO raised any concerns in relation to any of the issues or shortcomings identified by the inspectors.
The affidavit and extensive documents were read to the court yesterday by Maurice Collins SC and John McGuigan, for the Director of Corporate Enforcement, in the continuing hearing of an application by the director for an order disqualifying Mr Lacey from involvement in the management of any company on grounds of unfitness.
The director claims there was “a catastrophic failure of governance” during Mr Lacey’s tenure as CEO of NIB and Mr Lacey must bear responsibility for “very serious wrongdoing” by the bank.
The inspectors, who investigated the affairs of NIB and NIBFS between 1988 and 1998, concluded the bank was involved in widespread tax evasion and imposed unwarranted fees and interest charges on customers.
They found several members of senior management, including Mr Lacey, bore ultimate responsibility for various improper impractices and failed to deal decisively with, among other matters, bogus non-resident accounts, the improper charging of interest and the handling of CMI policies.
The hearing continues today.
