Jury told FitzPatrick failed to disclose multi-million euro directors loans
Published 03/11/2016 | 12:34
A jury has been told Sean FitzPatrick failed to disclose multi-million euro directors’ loans used for property investments while he was chief executive and later chairman of Anglo Irish Bank.
Sums ranging between €10m and €100m were borrowed by Mr FitzPatrick and people linked to him to invest in hotels, shopping centres and building developments between 2002 and 2007.
The allegation was made by prosecution counsel Dominic McGinn SC on the opening day of Mr FitzPatrick’s trial on charges of making misleading, false or deceptive statements and furnishing false information to Anglo’s auditors on various dates between 2002 and 2007.
Mr McGinn said the case was not about the loans or what they were for, but the failure of Mr FitzPatrick to disclose them.
Mr FitzPatrick, of Whitshed Road, Greystones, Co Wicklow, is facing 27 separate charges, all of which he denies.
The case against him was outlined in an opening statement by the prosecution at Dublin Circuit Criminal Court today.
Mr McGinn told a jury of five men and eight women there was a legal obligation on Anglo’s directors to make an annual statement about any loans they had from the bank.
He said the prosecution’s case was that Mr FitzPatrick made “temporary arrangements” around the end of each financial year whereby the loans were refinanced using borrowings from Irish Nationwide Building Society or taken out of Anglo.
Mr McGinn said Mr FitzPatrick also used money from savings accounts to temporarily lower his borrowings from Anglo.
Usually these arrangements were put in place for a period of two weeks.
At this point Irish Nationwide would be paid back and the full size of the loans would be reinstated on Anglo’s books.
But because of the temporary arrangements, Anglo’s financial statements did not take account of the money which had been transferred out.
Mr McGinn said the sums involved included borrowings by Mr FitzPatrick, as well as loans to him and his wife, family members and partnerships he was involved in.
The sums rose from around €10m in 2002 to €100m in 2007.
“The purpose of the borrowings was for investment in hotels, shopping centres and building developments,” said Mr McGinn.
The barrister said these were the sort of investments being made in the climate at the time.
“But this case is not about the purpose of the loans. What we are dealing with here is an alleged failure by Mr FitzPatrick to disclose them.”
He said bank was required to supply its auditors Ernst & Young with a letter or representation, which among other things, was supposed to set out the amount of loans each director had.
The letter was supposed to certify that what the auditors had been told about the size of the loans was correct and that there was nothing of any significance which needed to be drawn to their attention.
Between 2002 and 2004 Mr FitzPatrick was one of two directors who were responsible for signing these letters.
“It was his responsibility to ensure they were accurate and true,” said Mr McGinn.
He told jurors they would hear evidence from two auditors at Ernst & Young, Kieran Kelly and Vincent Bergin, about what was disclosed to them when they audited the bank.
The first witness in the case is due to give evidence tomorrow.
Mr McGinn told the jury they would have to decide whether Mr FitzPatrick was guilty or innocent of each count against him.
He said Mr FitzPatrick had the presumption of innocence and did not have to prove his innocence. Instead it was up to the prosecution to prove his guilt.
Mr McGinn told jurors they would have to make their decision based on the evidence put before them and were not to take into account anything they had seen or read elsewhere.
The charges against Mr FitzPatrick include 21 counts of making misleading, false or deceptive statements to the auditors of Anglo Irish Bank, contrary to section 197 of the Companies Act 1990.
The offences allegedly occurred on dates between 2002 and 2007 and carry a maximum five year jail term.
Five counts allege Mr FitzPatrick did not disclose to auditors Ernst & Young arrangements temporarily reducing the balance of loans to him or persons connected to him at the end of the financial year. The reductions cited ranged in size from €4.3m to €88.9m.
Six counts allege Mr FitzPatrick failed to advise auditors of the need to revise financial statements after each temporary arrangement concluded. The sums involved in the arrangements cited ranged from €700,000 and €119.8m.
Four counts allege Mr FitzPatrick failed to disclose the full extent of loans received by him or persons connected to him from Anglo, ranging in value between €5.5m and €23.8m.
Six counts allege Mr FitzPatrick failed to inform auditors of an arrangement between Anglo and Irish Nationwide regarding loans he received from Irish Nationwide.
He also faces six charges of giving false information contrary to section 242 of the Companies Act 1990 on dates between 2002 and 2008.
The offences carry a maximum jail term of three years. All counts relate to Mr FitzPatrick allegedly producing financial statements giving a false figure for the aggregate value of loans to directors of Anglo.
It is alleged the amounts given left out the value of his own loans.
The trial resumes tomorrow.