BUSINESS OPINION:It seems implausible that Michael Fingleton did not know about Seán FitzPatrick's loans

THE IMPLOSION of the Irish banks has raised many questions, but one really sticks out. It is: Why is Michael Fingleton still in charge of the Irish Nationwide Building Society?

The revelation that Seán FitzPatrick was warehousing his director’s loans from Anglo Irish Bank with Irish Nationwide cost him his chairmanship of the bank. It also cost David Drumm, the chief executive of Anglo Irish, and the finance director Willie McAteer their jobs.

But Fingleton, who ran the business which facilitated this deception, remains in situ and apparently under no pressure either to resign or explain why he went along with FitzPatrick’s wheeze.

And anyone who really thinks that he did not know what was going on should have a read of the affidavit of Brian Fitzgibbon, the Irish Nationwide manager who took an unfair dismissal action against the building society in 2007, saying he was being scapegoated for its loans to rogue solicitors Thomas Byrne and Michael Lynn.

In the course of his affidavit he described the way the building society works. In it he says: “The credit committee existed simply to satisfy the requirements of the Financial Regulator. I say that the practice within the defendants’ society during my time as home loans manager was that many loans were approved without any or limited compliance with the procedures in place.

“While protocols existed, they were never adhered to and the entire ethos of the society when it came to lending as entirely informal and controlled by Michael Fingleton.”

Fitzgibbon goes on to say: “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.”

Of course Fitzgibbon is a disgruntled employee and that must be taken into account. But it’s telling that the Financial Regulator has instructed the society to strengthen its management team by hiring a chief operating officer, a chief financial officer and a chief risk officer.

Amazingly, Irish Nationwide was able to function without them until now under Fingleton. It seems implausible that Fingleton did not know about FitzPatrick’s loans. But even if you choose to give him the benefit of the doubt, his position at the head of the building society which he has run for decades is no longer tenable or desirable.

In the same way that the entire Anglo board has been made walk the plank over the directors’ loans controversy, if he didn’t know, then he should have.

Yet he seems unassailable. The board of the society seems powerless, despite the presence of two Government-appointed directors: Rory O’Ferrall, a former senior accountant with Deloitte; and Adrian Kearns, outgoing chief executive of the National Development Finance Agency.

The former chairman Michael Walsh made it clear that he thought there was a need for a change of management in his resignation letter of last month, copied to the Minister for Finance and the Financial Regulator.

In his letter he says that “the board and ultimately the Minister should have the opportunity to provide new oversight and leadership”. Yet he appears to have been unable to effect that change himself and have come to the conclusion that stepping down himself is the best way to bring it about.

So we find our selves in a situation where Irish Nationwide has been directly implicated in a banking scandal that has cost two executives at another bank their jobs and forced a host of resignations across a swathe of other boards.

On top of that, the regulator has made it clear that it is deeply unhappy with the way the society is run and has its staff crawling all over the organisation in relation to the Anglo Irish directors’ loans. And the cherry on the cake is that the taxpayer has extended a blanket guarantee over the society’s debts.

In return Fingleton has extended the two fingers to Merrion Street and the taxpayers by refusing to show anything that even comes close to accepting responsibility for Irish Nationwide’s shameful role in the Anglo Irish directors’ loan affair. Bizarrely, Fingleton does not even have an employment contract, his current contract having expired last month.

But still the Department of Finance does not act despite having a range of options at its disposal, ranging from the Building Societies Act to the administrative sanctions procedures of the Financial Regulator.

The presumption must be that the department has not forced the issue at Irish Nationwide as it has more than enough on its plate trying to save the main banks.

If that is the case then it is yet another case of expediency getting in the way of the correct course of action. And if there is a lesson from the debacle at Anglo Irish it is that such a course of action only leads to more trouble.

If Fingleton will not go, he should be sacked.