Bank probe won't examine €7bn Anglo-IL&P transfer
THE Commission of Investigation examining the banking collapse won't probe the €7bn back-to-back deposits that flowed between Anglo Irish Bank and Irish Life & Permanent at the peak of the crisis.
The massive deposits were used to conceal a collapse in Anglo's customer funds, helping the bank to present an artificially healthy set of results for the year to September 2008.
The arrangement has been steeped in controversy since it became public the following spring, with three of Irish Life & Permanent's (IL&P) most senior executives ultimately resigning over the issue.
Revelations about the deposits also shed light on the so-called 'green jersey' agenda that saw banks actively encouraged to help each other out to reinforce the stability of the overall financial system.
A garda investigation into the Anglo/IL&P transaction is ongoing, and it is one of the key matters on which they wish to interview exiled Anglo chief executive David Drumm.
But despite the deposits' controversial role in the crisis, the Irish Independent has learned that the commission will not be looking at the arrangement.
Both Anglo and IL&P are understood to have been informed of the commission's decision in recent weeks, though spokespersons from both banks declined to comment last night.
The commission also failed to respond to questions on the topic.
A spokesman for the Department of Finance, which convened the commission earlier in the year, stressed that the probe was independent.
He also referred to a previous statement issued by the commission which said work would be carried out "confidentially and will not be commented on by the commission at any stage".
Headed by Finnish expert Peter Nyberg, the probe was billed as the definitive investigation into the banking collapse which could end up costing the nation close to €40bn.
Some sources suggested that the commission had ruled out the Anglo/IL&P transaction because it was already under investigation by the garda fraud squad.
Others pointed out that almost all the controversial matters relating to the banking collapse were being investigated by a range of probes spanning agencies from the gardai to the Director of Corporate Enforcement.
If the commission decided only to investigate matters that weren't already being probed, its scope would be very limited, one source pointed out.
Some suggested that the commission was not looking at the Anglo/IL&P deal because it was "peripheral" to the overall question of why Ireland's banking system had come so close to implosion.
The commission's terms of reference are to "examine matters relating to corporate governance and risk management in each of the banks covered by the Government's guarantee up to the date of the Government's decision to nationalise Anglo Irish Bank".
The commission is also empowered to look at "policy lessons" that can be learned from the way the Government managed the economy.
The investigation is due to finish at the end of this month and report to the Dail and Senate by November 4.