ERNST & YOUNG, auditor to Anglo Irish Bank, wants to be rehired by the nationalised lender in a tender for its audit contract.
The firm’s plan to submit a tender comes in spite of questions raised about its performance after a series of scandals in Anglo and a a big rise in loan impairments, losses that have led to an immediate requirement for €4 billion in capital from the State and possibly another €3.5 billion.
The scandals involved the concealment for eight years of big loans to former chairman Seán FitzPatrick, the lodgement of multibillion-euro deposits at the end of Anglo’s last fiscal year by Irish Life Permanent, and the secretive placing last summer of a 10 per cent stake to 10 clients who funded the transaction with non-recourse loans from the bank.
These affairs, which are under regulatory and Garda investigation, formed the backdrop to the departure of several non-executive directors after Mr FitzPatrick resigned late last year.
Separate inquiries into Anglo are being conducted by Director of Corporate Enforcement Paul Appleby, the Financial Regulator and the Irish Stock Exchange.
The Institute of Chartered Accountants in Ireland, overseen by the Irish Auditing and Accounting Supervisory Authority, is also investigating.
Successive audit reports from Ernst & Young were not qualified and did not indicate anything was amiss. In the past 10 years, the firm’s work for Anglo yielded €9.1 million in fees.
Anglo executive chairman Donal O’Connor said Ernst & Young was not sacked when the bank’s new board decided to proceed with a tender process.
While Mr O’Connor declined to comment on Ernst & Young’s performance, he said the firm would be invited to submit a tender.
Ernst Young’s spokesman said yesterday that the firm would take part. “It is their intention to respond to the invitation.”
Senior Government sources have privately questioned Ernst & Young’s performance, particularly in light of the huge increase in loan losses since the State seized the bank in January.
Under new ownership amid an appreciable economic contraction, Anglo’s loan book has deteriorated rapidly.
Ernst & Young is understood to argue that it always did a good job in respect of its audit work on Anglo. Sources close to the firm say all aspects of its work were “normal” in respect of audit findings, adding that there was not anything “wrong” with the work.
