Bank official says permanent TSB didn’t ‘turn a blind eye’ to loan terms in multi-million theft lawsuit

A former senior bank official says Permanent TSB would not have ‘turned a blind eye’ to a condition that Michael Lynn repay a 1.9 million euro loan, his trial heard for theft of millions of dollars euros.

Former barrister Michael Lynn (53) is on trial in Dublin Circuit Criminal Court, charged with the theft of around 27 million euros from seven financial institutions.

The accused, of Millbrook Court, Red Cross, Co Wicklow, pleaded not guilty to 21 counts of theft in Dublin between October 23, 2006 and April 20, 2007.

The prosecution alleges he obtained multiple mortgages on the same properties in a situation where the banks were unaware that other institutions were also providing finance.

The financial institutions involved are Bank of Ireland Mortgages Bank Ltd, Danske Bank, Irish Life and Permanent, Ulster Bank, ACC Bank PLC, Bank of Scotland Ireland Ltd and Irish Nationwide Building Society (INBS).

Sean Alger, former head of the commercial division of Permanent TSB, testified today.

Asked by defense barrister Feargal Kavanagh SC, he said the bank had ‘robust’ procedures in place to analyze credit and borrowing and there was a ‘clear basis on which loans were made’ .

In April 2007, Lynn had borrowed €1.9m from the bank when he applied for a €4.9m loan to buy eight residential investment properties in various locations in Dublin, according to the trial.

The court heard that one of the conditions was that Lynn was supposed to have repaid that €1.9million loan, but there was a delay in that process.

Kavanagh told Algiers the bank was “happy to have the €1.9 million rollover, happy to let it go 18 months or two years without being repaid.”

Alger replied that if it was a condition of the loan that the money be repaid, then he would expect it to be met.

When asked if this was something the bank would “turn a blind eye to”, Alger replied, “No, we wouldn’t turn a blind eye to something like that.”

He agreed that such a delay would normally raise a red flag for the bank, but that he was “not close enough to the details” of the case.

He said it was possible there was an error or oversight on the part of the bank, but repeated that he was unaware of such an error.

“There was no culture in the bank of people ignoring the conditions,” he said. “Errors can happen in any organization. I’m not saying an error happened, but they can happen.

Kavanagh told Alger that the bank had granted Lynn an additional loan of 4.9 million euros “to straighten him out” and to “repair the unfulfilled condition”.

“I can’t answer that,” Alger replied.

Kavanagh also explained to Algiers that “all senior officials (of the bank) were reluctant to appear in court”, leading the prosecution to object that it was “totally inappropriate” and a “baseless allegation. “.

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Judge Martin Nolan reminded Kavanagh that this is an adversarial court. “If you want to bring someone to justice, you can,” the judge said.

When asked by Judge Nolan if he disputed that the loan was authorized by the bank, Kavanagh replied that he was not. “I dispute the circumstances under which the loan was granted,” he said.

On re-examination of Karl Finnegan BL, prosecuting, Alger stated that the primary responsibility for meeting the terms of a loan rests with the borrower. “The borrower must first meet the conditions,” Alger said.

He said the bank was then responsible for ensuring that the conditions were met. “There was no culture in the bank where anyone turned a blind eye to the conditions,” he said.

Finnegan brought Alger through an email between bank officials that the court has already seen. In it, Ciaran Farrell, then Blanchardstown branch manager, told a commercial loans officer that Lynn told him the delay in repaying the $1.9 million loan was due to “confusion in her office and that Lynn was “embarrassed and annoyed” about it.

Alger said the email showed the bank was “absolutely not turning a blind eye” to the repayment of the loan.

“It has been explained and the bank is happy to accept the borrower’s explanation as to why he failed to comply with the conditions,” he said.

The trial continues next week before Judge Nolan and a jury.

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