ANALYSIS:TODAY MARKS the three-year anniversary of the Government bank guarantee, and €64 billion of cash injections into banks later the State is no closer to bringing a banker to account for steering their institutions onto the rocks.

While Anglo Irish Bank is the largest wreck, the full extent of the reckless decisions at Irish Nationwide which has cost the State €5.4 billion, has not been charted in anything like the same detail as its new parent company, Anglo.

Two weeks ago a former loans supervisor at Irish Nationwide testified that veteran banker Michael Fingleton who led Irish Nationwide for 38 years ran the building society like a personal bank, confirming what was widely known within Irish banking for years.

Customers of Irish Nationwide dubbed Fingleton “Fingers” in part because of the in-depth personal oversight he took in the transactions that his lender bankrolled.

Olivia Greene, a home loans supervisor at the building society from 2000 to 2008, told the Employment Appeals Tribunal that Fingleton operated different lending criteria at the society for members of the government, the media and his close friends.

(Greene was giving evidence in an unfair dismissal case taken by her partner Brendan Beggan, a former manager at the lender).

Greene’s account supported claims made by former Irish Nationwide manager Brian Fitzgibbon who said in a High Court case in 2007 that “the entire ethos of the society when it came to lending was entirely informal and controlled by Michael Fingleton”.

The building society’s credit committee “existed simply to satisfy the requirements of the Financial Regulator” and that “while protocols existed they were never adhered to”, Fitzgibbon claimed.

“I am also aware of a significant number of high-value loans which were personally approved of by Mr Fingleton without any recourse to or compliance with the normal procedures,” Fitzgibbon said.

These decisions have had a direct consequence on the public cost of bailing out the institution.

The National Asset Management Agency, which was set up to purge the banks of toxic land and development loans, bought €8.5 billion in debt from Irish Nationwide – more than 80 per cent of the society’s loan book – for the lowest amount of the five participating institutions, applying a haircut of 64 per cent on the loans.

Fingleton not only agreed high loan-to-value deals on development projects on low interest margins in some cases but set up the loan deals to take a share of profits from the project for the building society in the hope of benefiting from gains on the future sales.

Nama applied no value to these profit share arrangements in the deals when acquiring the loans from the building society.

Among the more bizarre lending decisions agreed by the building society under Fingleton was a €170 million loan to businessman Hugh O’Regan to develop the Kilternan hotel in south Co Dublin, a property now worth €55 million, according to the receiver appointed to it.

Older lending decisions have also blown up on the society.

Fingleton approved a €4.1 million loan to rogue solicitor Michael Lynn for a house in Howth, north Co Dublin, Fitzgibbon said.

Lynn drew down mortgages of more than €11 million from other lenders on the same house without each knowing of all the loans.

The property was later sold for €4.9 million, imposing losses on the mortgage providers.

The scale of the losses imposed by Nama on State-owned Irish Nationwide show the extent of the poor quality lending by the society.

Anglo’s growing investigation of past practices at Irish Nationwide, which began when the bank took over the building society in July, shows the extent to which Fingleton used expenses from the building society to entertain clients and get close to its biggest borrowers.

Fingleton has again refused to pay back the €1 million bonus he received in November 2008, shortly after the introduction of the bank guarantee – as he had publicly promised to do. He has also refused to return the €11,500 watch that he received on his retirement from the society in April 2009 as Anglo had requested in its letter last month.

The former Irish Nationwide chief responded to Anglo’s demands for the return of the bonus and watch in a letter dated September 10th. The watch was a gift given on behalf of management and staff of the building society, he explained in his letter.

He did not repay the bonus as the former minister for finance, the late Brian Lenihan, had failed to honour an alleged agreement he had reached with him, he said.

Anglo chief executive Mike Aynsley replied to Fingleton on Tuesday. He denied that any agreement with the former minister for finance existed. He said that the watch was bought by the lender and again demanded its return “so that it can be disposed of for the benefit of the taxpayer”.

Aynsley told Fingleton that his responses were “not satisfactory”.

“The request I made of you was to invite you to behave in a decent, proper and honourable way by recognising that the payment of the bonus should never have been paid to or accepted by you in the circumstances concerned,” wrote the Anglo chief executive.

“Without the State rescue, the society would definitely have failed, with catastrophic consequences, and the payment of your bonus, whether contractually or not, could not have been met.

“Not only this, you must surely recognise the inappropriateness of your receiving a bonus of €1 million at a time when it was already abundantly clear that dire consequences were flowing to this State and its citizens as a result of the extraordinary losses arising from reckless decisions made during your stewardship of the society.”

Anglo raised two other expenses that were claimed by Fingleton – a bill for €12,180 for dental work at the Blackrock Clinic in Dublin and a bill of £2,373 on a two-night stay at the five-star Dorchester Hotel in London for Fingleton and his wife after he had left the building society in April 2009.

“These certainly appear to have been claimed inappropriately and you have provided unacceptable and unsupportable explanations,” Aynsley said in the letter.

Anglo raised other expenses totalling €73,524 claimed by Fingleton between 2005 and 2009 which Aynsley said he considered “equally suspect where you have not provided either adequate explanation and/or documentation to evidence the legitimacy of the item as a company expense”.

In reply to queries raised about the expenses by the new management team at Irish Nationwide at the start of this year, Fingleton maintained that the various expenses were for the promotion of the society’s business and for relationships with customers. (He could not be reached for comment yesterday despite calls to his mobile phone.)

Of the €73,524 expenditure, almost €48,000 was spent at the upmarket K Club golf resort in Straffan, Co Kildare, including an annual membership subscription of €8,000 over a four-year period.

A further €5,323 was given to Fingleton in cash for several trips to the US and Moscow, and another €3,742 was spent on a week-long trip to Dubai in 2005.

Some €1,000 of the cash reimbursement paid to Fingleton was for a trip with “M Smurfit, Seán Mulryan and Arthur French”, according to Anglo’s letter.

The building society spent €2,360 on private chauffeur-driven cars in 2007 and 2008 for Fingleton and a major customer named “S Conway”.

There is another €6,000 expense owing to the building society dating back to 2006 which was paid to the charity, the Jack and Jill Foundation.

According to Anglo’s letter to Fingleton, the former Irish Nationwide chief personally bid on and purchased a Gucci watch at a charity auction, returned it to be re-auctioned and subsequently claimed the €6,000 bid as an expense to the building society.

A further €7,000 was spent on a two-night stay at the five-star Westbury Hotel in Dublin for Fingleton – who lives in Dublin – and five others, including an individual named “McCollum”, in February 2009 – two months before Fingleton stepped down.

Irish Nationwide’s €5 billion UK loan book and a further €1 billion in European loans were managed by just two people at the building society – the Belfast-based manager Gary McCollum and Fingleton’s son, Michael jnr, in London.

Anglo’s letter also shows that Irish Nationwide paid an additional €1,485 for two rounds of golf and a night’s stay at the K Club for Fingleton in 2007 as well as a €165 green fee at the Real Club de Golf at the Las Brisas course in Malaga, Spain in 2009.

The building society also spent €450 on a medical performed on Fingleton at The Well in Dublin on April 20th, 2009 – just days before his retirement.

“It is not at all acceptable for you to simply state that costs incurred reasonably on behalf of the society without providing verifiable details, including the reason and nature of the expense, receipts and other supporting documentation,” wrote Aynsley.

Anglo called on Fingleton to “behave in a decent, proper and honourable way by refunding these amounts without delay”.

Aynsley concluded his letter by saying: “It is plain that you should deal with each of the above matters by returning the watch to the bank, by providing full repayment of the bonus and by reimbursing the above inappropriate expense claims and that you ought to get on with doing so without further ado.”

The €1 million bonus and €11,500 watch give some insight into the type of spendthrift expenditure Irish Nationwide engaged in with its most senior manager.

However, the other expenses running close to €90,000, on which Anglo has raised further queries, shows just how closely the building society’s chief executive was to the customers of the now nationalised institution that has cost the Irish State €5.4 billion.

Judging from the tone of Anglo’s latest letter and the spate of new queries raised, the lender is showing no signs of dampening its efforts to recover the controversial €1 million bonus and a host of other costs incurred by Fingleton during his stewardship of Irish Nationwide.