The High Court found that former National Irish Bank general manager Michael Keane failed to discharge his responsibilities for addressing persistent compliance problems involving tax on deposit interest, insurance products and customer fees. It refused the Director of Corporate Enforcement’s application to disqualify him under section 160(2)(b) of the Companies Act 1990, but said it was minded to make an order under sections 160(2)(d) and (e). The court left the period of any disqualification undecided and said it would hear counsel on that question.
The judgment, delivered by Mr Justice Roderick Murphy on 26 May 2008, concerns an application following a report by court-appointed inspectors into National Irish Bank and National Irish Bank Financial Services. Keane was general manager of banking from 1993 to 1996, overseeing the branch network, and was a director of the financial services subsidiary from June 1994 to May 1997.
The inspectors identified concerns including bogus non-resident accounts and special savings accounts that did not meet the requirements for tax on deposit interest, the promotion of CMI insurance policies, and inconsistent fees charged to customers. Keane disputed that he knew the extent of the problems in time to prevent them. He said he had improved audits and procedures, issued instructions, and taken disciplinary action where irregularities were identified. The court also noted concerns about whether inspectors had received all relevant bank documents, including follow-up correspondence after audits.
The court concluded that Keane’s senior position and access to audit reports placed him in a position to address the problems. It found that, at the latest, he knew of the extent of the tax-related irregularities by the February 1995 meeting on the DIRT audit, but the problems persisted. The court said he had the main responsibility for addressing weaknesses disclosed through internal audits and had failed to resolve them effectively. It also found that he ought to have been aware of the inappropriate use of CMI policies and that the bank’s inconsistent fee-charging practices were a systemic weakness of which he was regularly notified.
The judgment distinguished fictitious accounts from bogus non-resident accounts: the court said Keane had acted promptly and diligently on fictitious accounts, and the inspectors had made no finding against him on that issue. It also said there was no evidence that he failed to make returns or breached specific administrative provisions of the Companies Acts. On that basis, the court declined to disqualify him under section 160(2)(b). Its decision on whether to disqualify him under sections 160(2)(d) and (e), and for how long, remained pending after this judgment.