THE DIRECTOR of Corporate Enforcement has said that the cover-up by Anglo Irish Bank of former chief executive Sean FitzPatrick’s loans may have been illegal.
In private correspondence to an Oireachtas committee last week, Paul Appleby said he must under company law form an opinion that “circumstances suggesting prejudice, misconduct and/or illegality are present with respect to the company’s affairs” before he can formally investigate the company. “I have formed that opinion in the Anglo case,” he said.
Mr Appleby can now require the production of the bank’s books and documents for examination and will then decide whether to seek a High Court inquiry into the bank. He expects to conclude this work by early April.
The escalation of Mr Appleby’s investigation comes as fresh revelations about transactions between Anglo Irish Bank and Irish Life Permanent (ILP) spilled over into a public dispute between the two.
ILP said the transactions – which have cost its chief executive Denis Casey and two other senior executives their jobs – were in effect loans from ILP backed by “collateral” deposits from Anglo Irish.
However, Anglo said in a statement that its multibillion euro “inter-bank placements” with ILP over a week in September were “not cash collateral for deposits” from ILP.
The difference of opinion between Anglo and ILP is significant because if either bank is found to have misrepresented the transactions in their accounts then they may be open to legal action.
The Financial Regulator is already investigating whether Anglo undertook the transactions in an effort to artificially prop up its deposit levels and give a false picture of financial strength at its financial year-end on September 30th.
The regulator said the transactions were “completely unacceptable” and that its investigators have been asked “to complete their work as a matter of extreme urgency”.
ILP chief executive Denis Casey bowed to growing pressure and resigned yesterday, following the departures of finance director Peter Fitzpatrick and head of treasury David Gantly over the €7 billion transaction. Mr Casey stepped down hours after the ILP board, including two Government-appointed directors, declined to accept his offer to resign.
ILP said the board “expressed its strong disapproval of and disappointment with some of the specific measures used to support Anglo Irish”.
ILP chairwoman Gillian Bowler admitted that “mistakes were made - for which I and the board apologise unreservedly.”
Minister for Finance Brian Lenihan said that Mr Casey’s resignation was “an essential first step in repairing the reputational damage done to the Irish financial system by this transaction”.