News Ireland daily BLOG by Donie

Monday 4th January 2016.

Former Irish Nationwide chief Fingleton loses court action

Action was to stop Central Bank from starting inquiry into regulatory breaches

    

In his High Court proceedings Michael Fingleton sought various orders and declarations from the court in respect of the Central Bank’s decision to launch an inquiry

Former Irish Nationwide Building Society chief executive Michael Fingletonhas lost his High Court action aimed at preventing the Central Bank from conducting an inquiry into alleged regulatory breaches at the financial institution.

Mr Fingleton, along with several other former officials of INBS, are the subject of a Central Bank inquiry, under Part III C of the 1942 Central Bank Act, which is due to commence hearings in February.

He challenged the Central Bank’s decision to subject him to an inquiry claiming it was unfair and unreasonable.

The Central Bank, which wants to inquire into allegations certain prescribed contraventions were committed by both INBS, and certain persons concerned with its management, between August 2004 and September 2008, opposed the application.

Giving judgment today Mr Justice Seamus Noonan, dismissed Mr Fingleton’s action, clearing the way for the inquiry to proceed.

In a lengthy and detailed ruling Mr Justice Noonan said Mr Fingleton had “not satisfied me that there is any unfairness inherent in the inquiry process to which he is subject.”

Mr Fingelton was not present in court for the decision.

The inquiry, in the event of any finding of wrong doing, has the power to impose a fine on an individual of up to €500,000. INBS was nationalised and merged with the former Anglo Irish Bank into IBRC in 2011.

The Central Bank estimates the collapse of INBS cost the tax payer €5billion, although the figure is disputed by Mr Fingleton.

  • Michael Fingleton action to stop Central Bank inquiry opens

In his action Mr Fingleton sought various orders and declarations from the court in respect of the Central Bank’s decision to launch an inquiry which he claims is disproportionate, oppressive and unreasonable.

Mr Fingleton also claimed that proceeding with the inquiry is a breach of fair procedures and an unlawful breach of his right to a fair hearing.

Mr Fingleton argued the Central Bank cannot conduct an inquiry of this nature. This is because Mr Fingleton, who retired in 2010, is no longer involved in the management of an entity that was a regulated financial service provider.

It was also claimed there was a delay by the Central Bank in bringing the inquiry, he had been subject to prejudicial adverse media coverage, and was made the scapegoat for the banking crisis.

Mr Fingleton is also the subject of proceedings before the Commercial Court, also arising out of events at INBS before it was nationalised. Mr Fingleton also claims that at the very least the inquiry should not be conducted until those proceedings have been concluded.

The Central Bank had rejected all of Mr Fingelton’s arguments, and said there was nothing preventing the inquiry from proceeding as planned.

In his decision Mr Justice Noonan dismissed all grounds of Mr Fingelton’s case. The 1942 Central Bank Act applies to Mr Fingleton, the Judge said, the former INBS CEO was lawfully subject to the inquiry.

There had been no culpable delay by the Central Bank in conducting its investigation into Mr Fingleton resulting in any unfairness to him.

The inquiry, and the elaborate procedures provided for in the 1942 Act, ensured Mr Fingleton’s right to a fair hearing “is guaranteed,” the Judge added.

“It seems to me that the public interest is well served by a credible system of financial regulation and enforcement such as that provided in the 1942 Act,” the Judge said.

Much of Mr Fingelton’s claim, the Judge said, was “an attempt to to preempt in advance issues before the inquiry that may or may not arise, or be determined by the inquiry itself.”

Any suggestion Mr Fingleton will be subject to any prejudice by the inquiry, the Judge found, was “devoid of substance and without merit.”

Rejecting Mr Fingleton’s claim the inquiry would occasion significant financial hardship on him as he would have to bear the legal costs associated in preparing for the inquiry.

The Judge noted that the Central Bank referred in a sworn statement said annual reports for INBS from the years 2003 to 2008 show Mr Fingelton’s remuneration package amounted to €9.77 million.

The Central Bank also avers that when his pension fund matures it is worth approximately €30 million. Mr Fingelton had not replied to that evidence, the Judge said.

“In the light of that the applicant’s complaints about equality of arms and the unfair costs burden on him of participating in the inquiry ring somewhat hollow,” the Judge said.

The Judge adjourned all outstanding matters in the case, including the issue of legal costs, to January 14th.

FF makes a proposal on ‘arrears crisis’ in sub-prime mortgages

Michael McGrath says situation is ‘absolutely disastrous’

    

Fianna Fáil finance spokesman Michael McGrath.

Fianna Fáil has said the Government’s failure to deal with the “spiralling arrears crisis” in the sub-prime mortgage market is “disastrous” as the owners of such loans are amongst “the most aggressive in the market” at seeking court ordered repossessions.

New figures provided by the Central Bank indicate that 20,338 mortgage accounts issued by sub-prime lenders were in arrears of more than 90 days at the end of September 2015. This compares to 19,935 at the end of December 2014.

The sector now accounts for 22.5 per cent of all residential mortgages in arrears more than 90 days compared to 15.5 per cent a year previously.

In recent years, there have been several loan books sold in Ireland. There are 7,461 mortgages now in the hands of non-bank lenders and vulture funds.

GE Money disposed of its subprime mortgages to Pepper in 2012. Among the other buyers of mortgage books was US private equity fund Tanager who bought 2,000 distressed home loans from Bank of Scotland Ireland.

Permanent TSB sold around 2,200 home loans to Mars Capital while the IBRC liquidation also saw loans originally issued by Irish Nationwide sold off to various vulture funds.

Fianna Fáil finance spokesman Michael McGrath said the situation in relation to mortgages issued by sub-prime lenders was “absolutely disastrous”.

“While the mortgage arrears crisis generally has shown some signs of easing, the trend in relation to these mortgages has been steadily deteriorating in the face of complete indifference from the Government,” he said.

“It is clear from court reports that sub-prime lenders account for a disproportionate level of legal action being initiated in many Circuit Courts. The fact that 61 per cent of the outstanding balance on these mortgages are in arrears is of huge concern.

“In many ways, this is not surprising given the very high interest rates and income multiples associated with these loans.

“Most of the originators of these loans have now sold them on. In my view there is a clear need for a specific response to the problems of this sector including clear targets for resolution measures.”

He said Fianna Fáil was putting forward three proposals to tackle the issue.

Firstly, he said the party was calling for an extension of the Mortgage Arrears Resolution Targets, which currently only apply to the six main banks operating in the State.

He also called for the establishment of a dedicated mortgage to rent scheme targeting this group of loans, and for the Central Bank to be obliged to publish a specific report on how current owners of these loans are complying with the Code of Conduct on Mortgage Arrears.

“Significant fines should be imposed in cases where breaches of the Code take place,” said Mr McGrath.

“This issue is now reaching a crisis point and unless action is taken we will be facing a massive social problem.”

Banking Inquiry final report could now be published in late January

    

The final report of the Banking Inquiry could be published at the end of this month.

The Inquiry has opened its right-to-reply phase today, meaning any of the 80 people named in the document have 21 days to contest certain elements of the report.

Senator Susan O’Keeffe (pictured) co-authored the finxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxl report which was signed off by the Inquiry members on New Year’s Eve.

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She said it is intended to publish the report on Wednesday, January 27, but this could be affected by potential challenges.

“People will be aware legal challenges are complex and take time, and are not easily resolved,” she said.

“I guess if someone were to make a legal challenge, it would delay the publication, but I can’t say that for sure.”

Irish Business owners are not happy about the new minimum wage

The wage increased from €8.65 to €9.15 per hour last week.

  

Thousands of jobs could be at risk due to the recent increase in minimum wage, according to the Irish Small and Medium Enterprises Association (ISME).

In its final Business Trends Survey for 2015, the organisation says there is the potential for 60,000 new jobs in Ireland if costs for businesses are curtailed.

The survey finds that current and future sales are at their highest in eight years, with owners and managers “generally positive in expectations for the new year”. Ten out of the 12 economic indicators tracked have increased.

However, the report warns that job creation will decrease due to the minimum wage increase. As of 1 January, it was upped from €8.65 to €9.15 per hour. The survey lists the euro exchange rate as “the biggest area of concern” for businesses.

Mark Fielding, CEO of ISME, noted: “Following on from a mixed-bag of results in the previous quarter it is a relief to see such a positive report coming from owner-managers this time round. The recovery might finally be trickling down to SMEs but it is important that we focus now on managing our costs and nurturing this growth.”

Fielding said that despite some improvements “SME competitiveness has taken many blows this year”.

Rents, insurance, energy and legal costs have all increased while the slack consumer demand has dictated that pricing and margins have reduced. This means that small businesses operating on increasingly tight margins cannot afford any more cost increases.

“The increase in the minimum wage due in January will be a difficult adjustment for labour-intensive sectors and may force some businesses to reduce staff hours.”

He added that, as the general election draws closer, “We are being treated to more and more outlandish political promises and policies”.

“Labour’s promises to impose a ‘living wage’ during the next administration will result in cost-conscious employers delaying and cancelling job creation which will be unaffordable if those increases are introduced.”

The living wage

Last month, Joan Burton said introducing a living wage of €11.50 per hour makes sense.

The Tánaiste said the next government should look at a €2 increase over four years – 50 cent per year.

“I don’t see any threat in the fact that people would earn a decent wage,” she stated.

The ISME survey was conducted in the third week of December, with 956 SME respondents. Some 54% of respondents employ less than ten people, while a further 36% employ between 11 and 50 people and the remaining 10% employ between 51 and 250 people. Geographically, 32% are from Dublin with 59% spread across the country, while 9% operate from multiple sites.

30,000 new jobs

The Small Firms Association (SFA) published its outlook for 2016 today. The survey found that 77% of owner-managers feel the business environment is improving, with just 4% indicating it is getting worse.

Domestic economic growth was highlighted by over 40% of businesses as their biggest opportunity in 2016. Other positive factors identified were specific sectoral opportunities (14%), exporting (12%) and bringing new products to market (10%).

Over 65% of survey respondents indicated their intention to recruit over the coming year, up slightly since the last survey in June.

This was welcomed by Patricia Callan, SFA Director: “Small firms already employ over half of the private sector workforce and almost two-thirds of our members will be hiring in 2016.

“Small firms have a crucial role to play in job creation around the country, reducing unemployment and attracting emigrants home to work. We expect small firms to create 30,000 jobs in 2016.”

Scale of diabetes timebomb laid bare with one in five retirees suffering from the condition

New figures show a 65 per cent rise in diabetes diagnoses in just a decade, as experts warn that the number of sufferers has now topped 4 million – and will reach 5 million in a decade

     

Experts say Britain’s soaring obesity rates is fuelling “alarming” levels of diabetes 

One in five retirees are suffering from diabetes as new figures reveal the scale of the middle-age time bomb facing Britain.

Spiralling obesity rates have fuelled a 65 per cent rise in diagnoses in a decade, with more than 4 million people now living with the condition, UK data shows.

Charities said the NHS will become “crippled” by the burden of the condition without urgent action to make “profound” changes to today’s lifestyles.

Experts called for measures to bring down the price of healthy foods, introduce clearer food labelling and bring an end to “couch potato” habits.

NHS figures, analysed by the charity Diabetes UK show the number of people with diabetes in the UK has topped four million for the first time and is on course to hit five million in less than a decade.

The latest figure includes 3.5 million adults who have been officially diagnosed – up 119,965 on the previous year and an increase of 65 per cent in 10 years.

The trend has been driven by soaring rates of obesity, which have left Britain the second fattest nation in Europe, second only to Hungary.

Almost two thirds of men and women in Britain are overweight or obese, with the figures rising with age.

Last month the country’s chief medical officer suggested that obesity poses such a threat to the country that it should be treated as a “national risk” alongside terrorism.

The four million people with diabetes means about eight per cent of adults are suffering from the disease.

But the figure rises sharply with age, with analysis of the latest figures suggesting that between 15 and 20 per cent of those in their 60s and 70s are now suffering from diabetes.

Experts warned that worsening lifestyles mean those numbers are set to continue rising, while the proportion of people succumbing to the condition earlier is also expected to soar.

Chris Askew, chief executive of Diabetes UK, said: “With four million people in the UK now living with diabetes, the need to tackle this serious health condition has never been so stark or so urgent.”

He said there was a need for a “concerted effort led by the Government to take active steps to address the fact that almost two in every three people in the UK are overweight or obese and are therefore at increased risk of Type 2 diabetes.

“Basic measures such as making healthy food cheaper and more accessible, introducing clearer food labelling and making it easier for people to build physical activity into their daily lives would have a profound influence.”

The charity said more than 24,000 people with diabetes die prematurely every year due to failures in accessing the best type of care.

This includes receiving eight annual checks in areas such as foot care and eyesight.

The checks – which only 60 per cent of people with diabetes currently receive – are designed to prevent complications which can lead to limb amputation, blindness, kidney failure and even death.

The charity also warned that people are missing out on education courses designed to help them best manage their condition, with more than a third of regions in England still not running them.

Furthermore, hospital care for people with diabetes is consistently poor and puts some lives at risk, it said.

Some 80 per cent of the £10 billion spent on diabetes every year by the NHS goes on treating complications that may have been preventable.

Mr Askew said: “Tragically, we are continuing to see too many people with diabetes suffering serious complications, and even dying before their time, and we know that key reasons for this are that they are being denied both the care and access to education that would help them to manage their condition well.

“It is vital that we start to see people with diabetes receive good quality care wherever they live rather than them being at the mercy of a postcode lottery.”

He added: “With a record number of people living with diabetes, there is no time to waste in getting serious about providing better care and diabetes education.

“Until this happens, the rising number of people with diabetes will continue to be denied the best chance of living long and healthy lives and the NHS will continue to be crippled under avoidable but escalating costs of treating poorly-managed diabetes.”

Putin to release an army of ‘cyborg rats’ with amazing sense of smell to sniff out ISIS explosives

Russian experts claim the rodents could be trained to find explosives and even human beings trapped in rubble

     

Bomb detecting rats could replace sniffer dogs in the battle against terrorism, scientists say.

Russian experts claim the rodents could be trained to find explosives – planted, perhaps, by ISIS militants – and even human beings planted booby bombs trapped in rubble like with the above rats used in Cambodia.

The creatures have keen senses of smell which could be harnessed for use by the police and military researchers believe.

Rats in Rostov-on-Don at the Laboratory of Olfactory Perception (LOP) have been shown with electrodes attached to their brains.

Dmitry Medvedev, the Head of the LOP, said, “Unlike a dog, a rat can get through the smallest crack where it seems it couldn’t go.

“This way it could find its way deep under rubble and by its brain activity one could understand if there are, for example, people who are still alive, if it’s worth clearing debris here or at another place, to rescue people more quickly”.

The scientists have discovered that rats differentiate between types of tea leaves through smell.

The experts admit, however, that it could be years before the rats are used for real-life work.

‘Sniffer rats’ are already used in parts of Africa to detect land mines and tuberculosis.

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