Six directors are facing disqualification over their alleged role in the collapse of the Presbyterian Mutual Society,the Newsletter reports, 18 Nov.
17th November marked the two-year deadline by which the Department of Enterprise Trade and Investment (DETI) had to decide whether or not to pursue those involved.
A DETI spokeswoman told the News Letter "After taking legal advice the department has decided that it is in the public interest to seek disqualification orders against six directors of the company and each of these directors has been informed.
"The respondents have an opportunity to make representations to the department."
The £300 million mutual suffered a run in late 2008 and went into administration on November 17 that year, leaving some 9,500 people without access to their savings.
Twenty people were named as directors of the PMS when it went into administration, although the names of the six DETI is pursuing have not yet been confirmed.
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 insufficient 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 said the intention to disqualify the accused was based on conduct which "makes you unfit to be concerned in the management of a limited company".
As well as the unwanted attention of being publicly disqualified, the process can also impact on an individual's legal ability to manage a business and could also invite action from a director's professional body, if one exists.
The letter says that if the accused director agrees to disqualification without a public trial, they will normally get a shorter period of disqualification and would not normally pay legal costs.
Last night former Presbyterian moderator Stafford Carson called for clarification on the criteria DETI was using to select the six directors for disqualification.
"The focus of our attention has been to seek a resolution of the crisis so that PMS savers get access to their money," he said.
"We have not been involved in a speculative 'blame game'. If anyone involved in the administration of the PMS has acted illegally, then their culpability needs to be established through a proper and transparent legal process.
"What is unclear is the criteria by which only some PMS directors have been identified."
An informed Presbyterian source claimed DETI may be making legal history if there are successful proceedings against some PMS directors.
"There appears to have been no case in the past of prosecution of directors who were acting completely in a voluntary capacity," he said.
"Furthermore, no highly-paid banker in London or elsewhere has been disqualified as a result of the financial crisis in 2008 - both Bradford and Bingley and Northern Rock went into administration and were rescued by the Government with no disqualifications."
He said that there was concern in some political circles about what message PMS disqualification proceedings would send out to volunteer directors of bodies such as credit unions, co-operative societies and community companies.
An annex of the DETI letter accuses the director of a number of misdemeanours, including causing or allowing the PMS to:
* Carry on the business of banking contrary to the Industrial and Provident Societies Act.
* Accept deposits as a deposit-taking business in breach of the Banking Act 1987 and I&PS Act 1969.
* Carry on a regulated activity, namely accepting deposits, without authorisation under Financial Services and Markets Act 2000.
* Making loans to non-PMS-members in breach of PMS rules.
* Failing to ensure the directors met sufficiently often to control PMS affairs.
* Pursuing investment/lending policies not consistent with PMS rules.
* Having a director who was not a member of the PMS.
* Allowing non-members to borrow money.
* Allowing non-Presbyterians to invest.
(* Although not mentioned by DETI, two PMS directors were already under investigation by their professional accountancy body).
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