Refinancing of FitzPatrick loans ‘never queried’ by Anglo auditors

DECLAN BRENNAN

A former financial controller with Anglo Irish Bank has expressed surprise at the fact that external auditors never queried the annual refinancing of the bank's loans to former chairman Seán FitzPatrick.

Cyril Boyd told Mr FitzPatrick's trial at Dublin Circuit Criminal Court that there was never any attempt to hide the refinancing of multimillion euro loans using funds from Irish Nationwide Building Society (INBS).

He said it was an annual practice and was common knowledge. He said the Central Bank never queried the loans to Mr FitzPatrick or the refinancing of them.

“If they had queried it I would not have any issue speaking to them about it,” he said. He testified that the bank sent quarterly reports to the Central Bank disclosing the total value of directors’ loans and they could have seen the figure dropping annually in the final quarter, when the refinancing was carried out.

It’s the State’s case that the amount of Mr FitzPatrick’s loans was “artificially reduced” for a period of two weeks around the bank’s financial end-of-year statement by short-term loans. Mr FitzPatrick (68), of Whitshed Road, Greystones, Co Wicklow, is accused of failing to disclose to auditors the extent of multimillion euro loans linked to him between 2002 and 2007.

Not guilty plea

He has pleaded not guilty at Dublin Circuit Criminal Court to 27 offences under the 1990 Companies Act. These include 22 charges of making a misleading, false or deceptive statement to auditors and five charges of furnishing false information in the years 2002 to 2007.

Mr Boyd said the 1990 law introduced new obligations on a bank to disclose a figure for the total amount of loans by the bank to its directors.

In 1995 some of Mr FitzPatrick’s loans were with a partnership with people who were not directors of the bank and there was a concern the amount of their loans would have to be disclosed too.

A loan from INBS was paid into Anglo for the purposes of refinancing Mr FitzPatrick’s borrowings from Anglo. This was done in September prior to the bank’s financial end of year on September 30th and became an annual practice, Mr Boyd said.

“It was common knowledge. There was no attempt to hide it. I was surprised the auditors did not query it this year or subsequent years,” he told senior counsel Bernard Condon, defending.

He said he knew Kieran Kelly, the bank’s auditor from Ernst & Young, and said he would have told him about the refinancing arrangement if he had asked him.

“I don’t recall him asking,” Mr Boyd said. He added he would have given the auditors anything they asked for.

“They are entitled to whatever they want to get, they are entitled to it, you can’t refuse them information,” he added.

The trial continues before Judge John Aylmer and a jury.