A former senior funds industry executive at the centre of a flawed Central Bank of Ireland investigation – exposed in a scathing High Court ruling last week – says he has been largely unable to work for six years and may lose his home as the fallout continues.
“I’ve lost my career over this,” he says in an interview with The Irish Times, on condition of remaining anonymous, as he considers he next steps. “I have been drawing down my pension to survive. It is now almost gone.”
He also says he is in danger of losing his home, with his mortgage classified as non-performing as he has only been able to pay interest on the loan for years.
The Irish Times has seen copies of bank communications stating his loan was non-performing and documents showing how his pension pot has been largely run down.
His stress has been compounded by his wife becoming seriously ill in recent years, after training for a profession to help with the household finances, he says.
[ High Court strikes down Central Bank sanction over ‘serious errors’ in investigation of fund manager ]
High Court president Judge David Barniville’s ruling was published last Friday – more than three years after hearing the case that was to confirm a one-year prohibition issued to the man and 11 months after informing both parties confidentially of his decision. It was strongly critical of the investigation into the manager, finding that his right to natural justice and fair procedures were breached.
A Central Bank decision to prohibit the individual for 12 months in 2022 was ultimately made by Annemarie Britz, a director in the organisation who was named last week as the next chief financial officer of RTÉ. As required by investigation procedures, she had no role in the inquiry, which was led separately by an enforcement team led by another official, Eoghan O’Regan.
The man at the centre of the case resigned in February 2020. He says this was because the investigation left him unable to tick a box in his annual fitness and probity review to say he faced no issues.
He says the harm is continuing as the court has only been able to assess the bank’s fitness and probity investigation process, rather than merits of the case, which, he insists, would have exonerated him.
He alleges that a statement from the bank after the ruling was published on Friday “wrongly gave the impression that I was guilty but that they just screwed up in the process”. That statement has since been amended on foot of a complaint by the man’s solicitors.
A Central Bank spokeswoman declined to comment on a number of questions put to the regulator.
The ruling echoes a highly critical judgment in 2024 from the Irish Financial Services Appeals Tribunal about the Central Bank’s refusal to approve a board nominee for a fund. The independent tribunal said the regulator’s decision-making process in the case was “flawed” and the appellant was “denied fair procedures at every stage”. The regulator overhauled its executive vetting system in the wake of that case.
The facts of the High Court case date back eight years, when the man was an executive director of an Irish investment management company, referred to in the judgment as EF Fund ManCo. The company is wholly owned by a Swiss-listed group.
The Irish company managed a number of Irish-registered sub-funds that fed into master funds managed from the UK by another arm of the wider group. They included five sub-funds, with €2.5 billion of assets at the time, that fed into investment pots holding a total of €9.5 billion of bonds, managed by an individual, referred to as GH, out of the United Kingdom.
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The Swiss parent group announced on July 31st, 2018, that GH had been suspended. A later UK Financial Conduct Authority (FCA) investigation shed more light on the matter, concluding GH – who had since been fired – had failed to manage conflicts of interest and breached the investment group’s gifts and entertainment policy. The FCA fined him and the UK unit.
EF Fund ManCo informed the Central Bank here of the suspension on the day it was announced and temporarily stopped investors from withdrawing money from the sub-funds.
Meanwhile, the Central Bank began asking EF Fund ManCo questions about its awareness of issues in the UK unit before the Irish redemptions suspension.
It told the Irish executive on July 31st, 2019, that it was commencing a fitness and probity investigation into him. This ultimately led to a decision to prohibit him February 2022 from holding a senior finance sector role for a year, subject to confirmation by the High Court.
The Central Bank investigation would conclude that the man did not take appropriate steps to inform it or the Irish board of issues in the UK company, even though he had joined a working group a month earlier that had been set up by the wider group to deal with any fallout from the internal investigation into GH.
The man responded by letter to the regulator within six weeks, completely denying the allegations and suggesting it had a mistaken understanding of his role in the process that led to GH’s suspension, according to case details in the judgment. He contended that he acted at all times with regulatory and board obligations in mind, supported by legal advice from the Irish firm’s lawyers, Dillon Eustace.
The Central Bank also took issue with the fact that the man did not raise the investigation in a normal meeting with supervisors on July 24, 2018 – a week before the announcement – when asked if there were any issues he wanted to raise. The regulator concluded that he was “not candid and truthful and was not full, fair and accurate in all respects in his dealings with the Central Bank”.
He would argue in subsequent correspondence with the Central Bank that the draft report on the investigation was only issued a day after that meeting and that he had previously been informed that the most likely outcome was that GH would retire early at the end of that year.
He highlighted to The Irish Times the Central Bank’s own fitness and probity guidance at the time – in a frequently asked questions document – on whether regulators should be informed at the start or conclusion of an internal investigation into an individual.
It stated firms should “take a practical approach and investigate such matters before going to the Central Bank with potentially unrealised concerns”. It should be notified immediately once an investigation found against an individual, it said.
The investigator declined to take oral evidence from people the man listed as being able to give testimony around the facts of the case. The man had been unable to be interviewed when initially invited by the investigator in August 2020 as he had just been diagnosed with hyperthyroidism, put on medication with serious side effects, and was advised that he faced an increased risk of infection at a time when Covid-19 was spreading, according to the judgment.
The investigator wrapped up his information-gathering on November 27th that year, without going back to the man’s personal solicitors at Arthur Cox to check again if he could give an interview.
Responding to a suggestion in the investigator’s final report that the man had refused to be interviewed, Arthur Cox insisted in correspondence that it had been “made clear” that he was willing to be interviewed, notwithstanding his health issues, according to the judgment.
The man did take up an opportunity to be heard by Britz on September 17th, 2021, as he considered the investigator’s report recommending prohibition. In his submission, which lasted 22 minutes, he claimed there were several factual errors in the report and that some relevant material had been ignored.
Britz said she had no questions to ask before bringing the meeting to an end. When the man and his lawyers were informed that she was veering towards issuing the prohibition notice they responded, claiming that the interview had been “nothing more than a perfunctory box-ticking exercise”.
“In my view, it was incomprehensible that no question was asked of the [manager] at the meeting … including in relation to the allegation that he was not candid and truthful in his dealings with the Central Bank,” the judge said.
The judge said this meeting seemed to him “a belated attempt to rectify the absence of fair procedures at the investigation stage”.
“To my mind, it was an entirely empty and ultimately futile exercise and did nothing to remedy the serious breaches of fair procedures at the investigation stage, but rather compounded those prior breaches,” the judge said.
The former executive says that the Central Bank’s language on the need for a sanction in this case to “prevent potential serious damage to the financial system in the State and ensure the continued stability of that system” is at odds with the one-year prohibition it wanted the High Court to rubber stamp.
The man said that investors in the funds and sub-funds got all their money back as they were liquidated. “But I also discovered to my cost that while directors and officers (D&O) liability insurance will cover your legal fees while you are fighting a case, it does not provide you with any income protection,” he says.
He says he has consistently been told by recruitment companies since he left the firm that they couldn’t recommend him for roles, even outside of finance. However, he did manage to find a “small contract role” doing some internal work for a company.
“I did work for two years for them. I was finishing up my second audit for them when I got word that the president of the High Court was going to deliver his decision. I told them of my situation and how I was fighting the case,” he said. “They never spoke to me again.”
The former executive noted that a key principle the Central Bank has when it finds issues in regulated companies affecting consumers is that the firms stop the harm and pay compensation. “Where is the compensation for someone like me that has been wrongly accused of something and suffered enormously as a result?” he asks.
He says he is now “exploring options” for his next step.
