Sunday 25 September 2016

In Profile: Peter Fitzpatrick

Declan Brennan

Published 03/06/2016 | 15:14

Former Director of Finance at Irish Life and Permanent, Peter Fitzpatrick (63). Photo: Collins Courts
Former Director of Finance at Irish Life and Permanent, Peter Fitzpatrick (63). Photo: Collins Courts

Peter Fitzpatrick qualified as a Chartered Accountant in 1979 in Manchester, England, whilst working with Coopers & Lybrand (C&L, now part of PricewaterhouseCoopers).

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In 1980 he started employment with C&L in Dublin and was appointed a partner in the firm in 1986.

In 1992 he joined the Irish Permanent Building Society as Finance Director. In this role he was responsible for the financial aspects of the Society’s conversion from a mutual body to a corporate Bank and the subsequent flotation and listing on the Dublin and London Stock Exchanges in 1994.

In the years to 1999 Irish Permanent PLC developed into a more broadly based retail financial services institution than a pure Building Society, offering a wider range of services and products to customers. In 1999 it merged with Irish Life plc in order to extending the range of financial products and access to a wider customer base for both banking and life/pension products.

Following the merger he was confirmed as the Group Finance Director of ILP. In March and June of 2008 and throughout the summer he was aware of funding support from Anglo, including borrowing from Anglo secured against mortgage assets from ILP. For example, as at 2 July 2008, Anglo had provided ILP with a deposit in the amount of €1.5billion which was secured on ILP mortgage assets. By way of reciprocation ILP group treasury placed deposits with Anglo.

In mid-September (150908) David Gantly, a dealer with ILP, contacted Denis Casey and Mr Fitzpatrick to tell them about the request from Anglo “to place €5bn with us”, suggesting “we do ten times 500 where they place cash with us”. Mr Gantly told the executives that “we would route this back through ILIM (Irish Life Investment Managers) to bolster their customer deposits”.

In a conversation later that month Mr Fitzpatrick asks Paul Kane, head of the money desk in ILP: “Are we going to be absolutely satisfied that if something goes pop we don't have to sort of give Anglo their loans and anything else back without getting our money?”

He then asked about offsetting or netting off the loans against each other, which would allow the deposits to cancel one another out and eliminate any risk to either bank.

Mr Fitzpatrick told Mr Kane: “I'm thinking of offset now. So if Anglo goes bust next week and the liquidator walks in and he says 'give me deposits back' and we say 'ah but like we had an agreement', 'prove it'”.

He tells Mr Kane “this has to be documented” adding “so there is absolutely no f**king confusion in anyone’s mind that we can stand over it as a binding agreement”.

Mr Fitzpatrick told investigators that his motivation for the transaction was to provide funding support for Anglo at a time of extreme need for Anglo. He said the recorded conversations showed that he had sought a deal which couldn't be accounted for as a customer deposit because it was secured against cash from Anglo and so risk free.

He said he had no idea that Anglo were going to use the deposits to mislead the public. The prosecution argued that it was inconceivable that high level banking professionals, who were trained accountants and who were in the business of supervising the financial industry and doing deals, wouldn't have known “full well what Anglo were doing”.

“These are not stupid or inexperienced people. These are experienced bankers,” Úna Ní Raifeartaigh SC told the jury.

Fitzpatrick told gardaí it came as a shock to him when he learnt that Anglo was denying “the most fundamental principle which had been agreed”, which he said was that the deposits from ILP were collateralised against assets or cash from Anglo.

He said that prior to January 2009 ILP never received any request for clarification from Anglo or their auditors, the Financial Regulator Patrick Neary or the Central Bank Governor John Hurley.

“I feel that the matter was dealt with as a matter of political expediency with no reference to the substance of the transaction.

“I believe that the actions of the (Financial) Regulator post 30 September 2008 effectively shows that he tacitly if not explicitly approved such actions. Without this understanding the transaction would have in all certainty not have taken place,” he told gardaí.

Brendan Grehan SC, defending, told the jury that the State's case boiled down to a suggestion that ILP should have been some kind of a policeman on Anglo's watch.

He said that bolstering customer deposits and balance sheet management were industry norms and not necessarily illegal and that ILP had no control over how Anglo dealt with the deposits in their final year accounts.

He pointed to evidence of an conversation in which Ciaran Cunningham, one of Anglo's accounting executives, told his colleagues on the trading floor that it would be better the treat the transactions as gross, rather than netting them off, as Mr Fitzpatrick had sought.

Mr Cunningham said: “If you settle them net, we could be forced to net the two...so you won't get the benefit. That'd be a bit of a disaster”.

Like his former chief executive, Mr Fitzpatrick's case was he did not foresee or intend that Anglo would treat the deals that way it did and so mislead the public.

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