The High Court has found that former National Irish Bank general manager Frank Brennan’s conduct made him unfit to be concerned in company management, and said a disqualification order was appropriate. It declined to make an order under one part of the Companies Act application, and deferred deciding how long the disqualification should last and whether Brennan could have any permitted involvement in companies.
In a judgment dated 22 April 2008, Mr Justice Roderick Murphy considered an application by the Director of Corporate Enforcement under section 160 of the Companies Act 1990. The application followed a report by court-appointed inspectors into National Irish Bank and National Irish Bank Financial Services, published in 2004. The inspectors identified improper practices including bogus non-resident accounts, CMI insurance policies promoted to holders of undisclosed funds, and improper customer charges.
The judge found that Brennan, a senior manager and a director of National Irish Bank Financial Services, had a continuing responsibility to supervise and control the bank’s operations, including areas delegated to other managers. Although he issued instructions and memoranda about tax rules, the court found that his efforts did not effectively stop the widespread non-compliance involving bogus non-resident accounts or address potential retrospective tax liabilities. It also found failures in his response to the CMI arrangements and to improper interest and fee practices.
The judgment acknowledged that Brennan acted decisively to eliminate fictitious and incorrectly named accounts, for which the inspectors made no adverse finding against him. The judge also accepted that Brennan was sincere in describing his shock at the bank’s misconduct and his regret at having failed the bank and its customers. The court nevertheless concluded that the persistence of non-compliance, including after a 1995 audit and management meeting, showed a serious failure of supervision and control.
The Director had sought orders under section 160(2)(b), (d) and (e). The court refused relief under subsection (b), finding insufficient evidence that Brennan had breached his duties as an officer under the Companies Acts. It held that his failure to supervise and control as a senior general manager made an order appropriate under subsections (d) and (e).
The court did not set the disqualification period in this judgment. It said it would hear counsel on the proposed duration and on any proposals Brennan had for involvement in companies.