A retired Bank of Ireland senior executive has agreed with a suggestion that a former bank managing director accused of stealing over €570,000 had “no option” but to resign following an internal investigation.
Liam McLoughlin, who was Chief Executive of Bank of Ireland’s Retail Ireland division, agreed with defence senior counsel Brendan Grehan SC that his client “really had no option” but to resign.
Brendan Mullin (60) of Stillorgan Road, Donnybrook, Dublin 4, denies all 15 charges, which are alleged to have occurred between July 2011 and March 2013.
In his opening address to Dublin Circuit Criminal Court this week, prosecuting counsel, Dominic McGinn SC told the jury this was a case of “financial dishonesty” involving charges of theft, deception and false accounting.
The prosecution alleges Mr Mullin authorised payments by the bank to solicitors McCann Fitzgerald, accounting firm Grant Thornton and accountants Beechwood Partners for work that was carried out either for Mr Mullin’s company, Quantum Investment Strategies, or for him personally.
Mr Mullin is also facing charges of false accounting in relation to invoices from McCann Fitzgerald and Beechwood Partners, which the prosecution alleges he had changed from being addressed to his home address to being addressed to the bank.
The prosecution further alleges Mr Mullin stole €500,000 from Bank of Ireland during a breakdown in communication within various entities of the banking group, in relation to a pay-out owed to some life assurance customers.
Double payments
The jury was told double payments of €500,000 went to Bank of Ireland Private Bank due to a miscommunication and that against that background, Mr Mullin authorised a payment of €500,000 which was ultimately transferred to a company called Spice Holdings, registered in the British Virgin Islands.
The court has heard the sum of €500,000 was re-paid to Bank of Ireland Private Bank in July 2015 from Quantum.
When questioned by gardaí, Mr Mullin said the payment of invoices arose out of “clerical mistakes” and that in relation to the €500,000, Spice Holdings was nothing to do with him.
The jury was told it would hear Mr Mullin’s explanation as to why the repayment of €500,000 came about in the course of the trial.
On Wednesday, Mr McLoughlin gave evidence that his remit included oversight of Bank of Ireland Private Bank, though Mr Mullin did not report to him directly. He said an issue involving Mr Mullin was brought to his attention in March 2013 and he directed an internal review.
Mr McLoughlin told Mr McGinn that he later asked internal audit to complete an investigation and separately, authorised Mr Mullin’s suspension in March 2013.
He said the role of private bank managing director is a regulatory “pre-approved control function” and in light of “serious and grave” concerns, it was “not appropriate for Mr Mullin to stay in situ”.
Under cross-examination, Mr McLoughlin agreed that he met Mr Mullin in early April 2013, and while he told him it was a serious matter, had no recollection of discussing any specifics. He accepted the defence’s suggestion that Mr Mullin did not want to be suspended.
Mr Grehan noted that group internal audit started an investigation and Mr Mullin resigned in July 2013. Mr McLoughlin agreed with Mr Grehan’s contention that his client “really had no option” but to resign.
Earlier on Wednesday, Deirdre Flannery, former head of internal audit at Bank of Ireland, continued giving evidence. She has told the court she was involved in the internal investigation of Mr Mullin in 2013, and she told prosecuting counsel that there was no agreement in place by the bank to pay Mr Mullin’s personal expenses.
She said while four invoices were paid to McCann Fitzgerald solicitors, “more were issued”. The court heard that as a result of her enquiries, this money – amounting to €61,535 – was refunded by McCann Fitzgerald.
Internal review
Ms Flannery outlined that Bank of Ireland Private Bank became aware in August 2010 that some customers with a particular New Ireland policy were entitled to a benefit, which they hadn’t received. After an internal review, 12 policies were identified and Bank of Ireland Private Bank decided to make ex gratia payments totalling around €1.6 million to affected customers.
A subsidiary of the Bank of Ireland group initially agreed to cover €1 million of the €1.6 million. It paid €500,000 but later decided not to pay the remaining €500,000.
An agreement was then reached that New Ireland would pay €500,000 to Bank of Ireland Private Bank.
Mr McGinn took Ms Flannery through a number of internal documents and emails. These included an email from a Bank of Ireland Private Bank employee in July 2011 stating the €500,000 was a refund for a New Ireland client which Mr Mullin had agreed to facilitate.
Another internal email from the same time period stated the money was to be transferred to a Northern Trust account for Spice Holdings.
Jurors also saw internal screenshots and other documents which indicate a client asset account in the name of Spice Holdings was set up in Bank of Ireland Private Bank in September 2011.
Ms Flannery agreed with Mr McGinn that it appeared that the intention was for the €500,000 from New Ireland to go to this Spice Holdings account.
The jury were then shown internal emails from New Ireland about this payment, some of which expressed concerns. The €500,000 was ultimately transferred by New Ireland to Bank of Ireland Private Bank’s account on December 16th, 2011.
A completed payment instruction form with the same date, signed by Mr Mullin and another individual, authorised the payment of €500,000 to a Northern Trust account.
Ms Flannery told Mr McGinn that Spice Holdings was not a client of New Ireland Assurance, did not hold the affected policy and as such, was not due a payout.
She agreed with Mr McGinn that as far as she could ascertain the payment made by New Ireland Assurance to Bank of Ireland Private Bank “had nothing to do” with Spice Holdings.
Ms Flannery said the bank sought the money’s return and €500,000 was transferred to the bank’s solicitors by solicitors acting for Mr Mullin in July 2015.
Under cross-examination, she told Mr Grehan that she was not involved in the bank’s efforts to recover the €500,000.
Mr Grehan put it to Ms Flannery that it was “curious” that she had made a statement to gardaí five weeks after the €500,000 was recovered by the bank. “Are you saying there is no connection, other than pure coincidence, that your statement is made five weeks after the money is recovered by the bank?”
Ms Flannery said she was not aware of any connection and the bank initially contacted the authorities with their concerns in 2013 and later engaged with them when asked for a statement in September 2015.
She insisted her role was to carry out an investigation and she couldn’t comment on Mr Grehan’s suggestion that there was “no way back” for his client after his suspension in April 2013.
Mr Mullin has pleaded not guilty to one count of stealing €500,000 from Bank of Ireland Private Bank, Mespil Road, Dublin 4 on December 16th, 2011, along with eight other counts of stealing various amounts of money amounting to just over €73,000 from the bank on various dates.
He has further pleaded not guilty to one count of deception and five counts of false accounting. Mr Mullin was the managing director of Bank of Ireland Private Bank at the time of the alleged offences and he is a former rugby international who played for Ireland.
The trial continues before Judge Martin Nolan.
