Anglo boss complied with rules when taking loans
At Anglo Irish Bank's AGM last February 1 were then chairman Sean Fitzpatrick and then chief executive officer David Drumm.
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THE €87m in loans given to former Anglo Irish Bank chairman Sean Fitzpatrick were not illegal because they complied with Companies Act rules.
Under the existing legislation, Section 32 of the Companies Act 2002, companies can give loans to directors at levels of under 10pc of the audited net asset value of the company.
In the case of Anglo that amounted to just over €400m, according to year end September 2007 figures.
Yesterday the Office of the Director of Corporate Enforcement (ODCE), whose remit it is to improve the compliance environment for corporate activity in the Irish economy, said it had no comment on the loans.
Regulator
The Financial Regulator is still investigating the nature of the loans.
Mr Fitzpatrick resigned earlier this week after admitting he had hidden €87m in loans from the bank.
It emerged that Mr Fitzpatrick would move his loans to another bank, Irish Nationwide, before the end of each financial year, so they would not be recorded by the auditors. The loans were then moved back to an Anglo Irish account in a practice which continued for eight years.
Had Mr Fitzpatrick breached the rules, the penalties could have been stringent.
Earlier this year advertising agency chief Stuart Fogarty pleaded guilty to breaching Section 32 of the Act.
He was fined €34,000 and and given a two-year suspended sentence.
The court had heard earlier that Mr Fogarty borrowed up to €430,000 from AFA between 2003 and December 2005.
Those borrowings breached company law because Mr Fogarty's loans were more than 10pc of the company's net assets, the ODCE argued.
In January 2005, Mr Fogarty's loan was more than 109pc of AFA's net assets, although that percentage had already slumped to 61.9pc when the company's auditor contacted the ODCE.
According to new figures, total loans to Anglo directors are currently €150m. Total director loans at Allied Irish Bank and Bank of Ireland were €14.4m and €74m, respectively in 2007.
Commenting on the news of the loans, the Financial Regulator said: "While it does not appear that anything illegal took place in relation to these loans, the Financial Regulator was of the view that the practices surrounding these loans were not appropriate.
"As a result, we continued to monitor and investigate this and as part of the process we advised Anglo Irish Bank to ensure that these loans are reported in the annual accounts for 2008."
- Ailish O'Hora
