Legal move on PMS chiefs 'could take years'

THE details of any potential legal contest between Presbyterian Mutual Society directors and the department of enterprise, trade and investment (DETI) could remain under wraps for years, it has emerged.

The 300 million mutual suffered a run in late 2008 and went into administration, leaving some 9,500 savers without access to their money.

Last month the chancellor accepted there had been a "terrible" regulatory failure.

On Wednesday, DETI said it was seeking to disqualify six out of 20 PMS directors due to their alleged part in the crisis.

But yesterday an informed source told the News Letter that the details of any legal proceedings could remain private for years.

"If none of the six contest the DETI action it could all be completed within 12 weeks and the outcome made public then," he said.

"But if any of them decide to contest the charges it could take a year or even more than two.

"In that case, DETI has the power to proceed within a private investigation which is all behind closed doors. This is quite possible. The names of those being investigated would then not even be made public until the end. If that happens then you would expect all the details – a full report with minutes and evidence – to be published after a year or two, reaching several hundred words.

"If only some of the directors plead guilty it could be that DETI decides not to conclude their cases until those contesting have been dealt with also. So it is possible that none of the names of the six accused, the cases against them and the outcome of the proceedings may be published for several years."

Although all six accused directors have a presumption of innocence, in such cases it is theoretically possible that criminal charges can follow after disqualifcation proceedings end, he added.

A DETI letter to one director seen by the News Letter alleges the PMS was party to making speculative investments in commercial property as well as advancing loans "to property developers and investors, including non-members of the PMS", with the aim of making profit.

It also alleges the PMS had insuffcient controls in place in relation to loans and securities for loans and that it allowed its liquid funds to go below a prudent level. The DETI letter says other misconduct includes causing or allowing the PMS to carry on the business of banking, accepting deposits and offering mortgages, all without authorisation.

It also alleges directors failed to meet frequently enough to maintain control, pursued investment/lending policies not consistent with PMS rules, had a director who was not a PMS member and allowed non-Presbyterians to invest.

A DETI spokesperson had not commented on how the legal process would proceed at the time of going to press yesterday.