ANALYSIS:It has taken 13 years to disqualify the head of a delinquent bank, which bodes ill for swift action on recent controversies

IT WAS like a blast from the past, particularly given the recent crisis that has gripped Irish banking.

But while the overcharging (that euphemism for stealing from customers) and bank-sponsored tax evasion at National Irish Bank from 1986 to 1998 involved tens of millions of euro rather than the tens of billions in current bank bailout costs, the issues are no less scandalous.

Jim Lacey, who ran NIB from 1988 to 1994, was disqualified by the High Court yesterday for his role in the affair which emerged publicly in 1998.

Mr Justice Roderick Murphy’s judgment could not be more timely given the investigation on which the Central Bank is about to embark involving executive and non-executive directors at the Government-guaranteed lenders.

The head of financial regulation, Matthew Elderfield, said that corporate governance standards had to be raised above international standards because of failures in this area leading to the banking crisis.

Elderfield is starting with fitness and probity checks on board members at bailed-out banks. “I don’t underestimate the legal challenges we might face in using our new powers, but we are prepared to make difficult judgments on fitness and probity,” he said.

The judgment in the Lacey case shows responsibility for behaviour within a bank runs right to the top of the organisation.

Elderfield should not underestimate just how long any legal challenges may take. It took the High Court inspectors six years to complete their report into NIB (following legal contests) and has taken six more years to bring disqualification actions against nine former NIB directors and managers.

And the remaining cases are far from over. Only one disqualification order secured by the Office of the Director of Corporate Enforcement (ODCE) has gone uncontested.

Three more have been appealed to the Supreme Court, one of which is awaiting judgment. The other two have to yet be heard. The ODCE lost a further two High Court cases but is appealing them, while another disqualification was set aside by the Supreme Court and one final action is to come before the High Court.

It is 13 years since the NIB affair broke, and the legal fallout is ongoing. This should give some indication of the challenges ahead for the Anglo Irish Bank investigations and indeed any legal actions over the Central Bank fitness and probity checks.