A former partner in the liquidated stockbroking firm Bloxham alleges Danske Bank was negligent in lending him nearly €3.5 million to invest in the firm.
Niall Tinney, the former head of asset management at Bloxham, claims the bank could have discovered "the fraud" in Bloxham's accounts, upon which the loan was based, had it conducted "proper due diligence".
Bloxham collapsed at the end of May 2012 after the Central Bank found "financial irregularities" in its accounts. For the previous five years, the brokerage, which was audited by Deloitte, had been trading with a €5.3 million shortfall on its balance sheet.
Danske is pursuing Mr Tinney, who now works for Merrion Stockbrokers, for €3.47 million borrowed to buy out retiring Bloxham partner Angus McDonnell.
Restructuring
In the
High Court
on Monday, Mr Tinney’s lawyer,
Donnchadh Woulfe
, said a restructuring arrangement was agreed with his client in 2011 only months before Bloxham’s high-profile collapse.
He also claimed Bloxham's in-house accountant, Tadhg Gunnell, who arranged the loan, had acted as a "secret agent" of the bank.
The loan and guarantee documents had been presented to his client as a “fait accompli”, he said.
However, Judge Paul McDermott said “there was not a tiddle of evidence that Gunnell was the agent of the bank”.
In May, Mr Gunnell was disqualified by the Central Bank from managing a financial firm for 10 years and fined €105,000 over his role in the Bloxham controversy.
Investigation
Counsel for Danske
John Donnelly
claimed, however, Mr Tinney’s obligation and loan had been created well before any public knowledge of the Bloxham fraud.
“Dankse had no knowledge of the fraud when the loan was drawn down in September 2011,” he said.
Mr Woulfe highlighted a recent article in The Irish Times about an investigation into the role of Bloxham's auditor, Deloitte, as grounds to move the case to a plenary hearing so orders of discovery could be made.
This may reveal the bank could have acted more carefully with its borrower Mr Tinney prior to lending, he said.
Judge McDermott reserved judgment in the case until Friday.
In October, Danske obtained a €3.7 million judgment against Patrick Finnegan, former partner and head of private clients at Bloxham
The bank secured the judgment against Mr Finnegan arising from his personal guarantee of liabilities of his company, PTF Securities.
