Does the Special Liquidator from KPMG not have a serious conflict of interest?

[Brendan Burgess]

The Special Liquidators are from KPMG

Their duties include

IBRC’s claims against third parties, whether or not the subject of Court proceedings, will be unaffected by the winding up. The Special Liquidators will have the power to continue to manage any IBRC claims that currently exist and will have the ability to assert further claims where they arise. Alternatively, the Special Liquidators could sell IBRC’s interest in any such claims to a third party, or to NAMA, in which case the acquirer will be entitled to continue those proceedings.

The IBRC have initiated a case against the[broken link removed]

The bank’s proceedings relate to matters dating back to 2006 when the six men were directors of Irish Nationwide and centre on actions taken by Mr Fingleton and the board’s oversight of his role and management of the lender.




Speaking generally, Mr Aynsley said IBRC was required to pursue individuals believed to have breached regulatory and contractual obligations or fiduciary duties.

So the Special Liquidators will be required to make a call on whether the directors of Irish Nationwide breached the regulatory or contractual obligations or fiduciary duties. If he finds that they did, then the auditors of Irish Nationwide at the time would have questions to answer. They might well have very good answers to these questions and there may be no basis for a case against the auditors.

But the auditors at the time were KPMG
The Special Liquidators are from KPMG

If the case against the directors goes ahead, presumably the auditors will be called as witnesses. If I was a director, I would argue that partners of the plaintiff could not be called as witnesses.

I think that this is too serious a conflict of interest and should have prevented them accepting this appointment. There are many other insolvency practitioners who could have done this job.

 

[Brendan Burgess]

Under the Companies Act the auditor of a company cannot act as its liquidator.

So the auditors of IBRC/Anglo would be barred from acting as liquidator to IBRC.

As IBRC acquired the assets and liabilities of Irish Nationwide, KPMG would not be barred from being the liquidator. Anyway the appointment of the Liquidator is made under the new legislation, not under the Companies Act.

However, it seems that the principles behind the Companies Act are not being adhered to.

 

[Brendan Burgess]

KPMG were not just the statutory auditors of Irish Nationwide.

They also provided extensive services to the company including advice on Corporate Governance and help with the internal audit. They also conducted a report on their commercial lending practices on behalf of the Central Bank if I remember correctly.

They are just too closely involved to take a dispassionate view on this.

 

[Purple]

Does it matter?
Once the assets are transferred to NAMA the Special Liquidator will be out the door, won't he?

 

[Brendan Burgess]

No, I don't think he will.

He will continue to pursue legal action against the Irish Nationwide directors or not, as he sees fit.

Brendan