Top bankers face 10-year jail threat Squad over loans
Financial enforcer may call in Fraud
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Saturday February 14 2009
BANKERS could face up to 10 years in jail for their involvement in the Anglo Irish Bank deposits controversy.
The Government's corporate enforcer told the Irish Independent last night that "all options" will be considered when he delivers a preliminary finding by the end of next month.
This includes potentially calling in the Garda Bureau of Fraud Investigation, which has the power to bring criminal charges against those suspected of fraudulent behaviour.
The revelations came on the day that Irish Life and Permanent's (IL&P) chief executive Denis Casey announced his intention to resign following the controversy over his bank's €4bn hidden deposit to Anglo Irish Bank in September. Two other senior officials at IL&P had already quit less than 24 hours earlier after an emergency board meeting.
The Office of the Director of Corporate Enforcement (ODCE) has already sought documentation from Anglo Irish Bank regarding the €87m in secret loans given to its former chairman Sean FitzPatrick and is now also investigating the €4bn lodged in the bank by IL&P.
Its director Paul Appleby said he was taking a "good hard look" at what had gone on in Anglo Irish Bank.
And he confirmed that the options potentially open to the ODCE included:
Making an application to appoint a high court inspector to Anglo Irish Bank.
Making an application to disqualify its directors.
Calling in the Garda Bureau of Fraud Investigation, which has the power to bring criminal charges against those suspected of fraudulent behaviour.
Mr Appleby said that all of these options would be considered in due course.
"We will make an appropriate decision when matters are clearer," he said.
Mr Appleby said that while the investigation into Anglo Irish Bank would not be "done and dusted" by the end of March, he hoped that at that stage it would be possible to decide on the ODCE's next move.
"We'll do a good professional job on those issues to the best of our ability and our hope will be in a few weeks time that we'll be clearer as to what our next steps will be and what the ultimate prospects will be."
His office was established in 2001 to enforce the rules laid down in the Companies Acts against both companies and company officers. Its 45 legal, administrative and accounting staff includes eight gardai, many of whom have previous experience in the garda fraud squad.
Mr Appleby's comments come in the wake of calls from the Opposition for the garda fraud squad to be immediately called in to investigate the Anglo Irish Bank deposits controversy.
But the Government has insisted that Mr Appleby must be allowed to carry out his work, so that he can decide if such a move is required.
In the past, the ODCE's investigations have led to the disqualification of five former senior National Irish Bank officials from being involved in the management of a company, as a result of a tax evasion scandal in the bank in the 1990s.
The office is also seeking the disqualification of property developers Tom and Michael Bailey as directors, on the grounds of alleged serious misconduct and fraud in their company, Bovale Developments. So far, its prosecutions have only resulted in one person getting a jail sentence in the district court (for serving again as a director of a company while disqualified). This case is currently being appealed.
But the ODCE has the power to refer serious cases to the Director of Public Prosecutions or the Garda Bureau of Fraud Investigation.
It also has the power to demand the production of documents if companies refuse to co-operate, although this is a rare occurrence.
Scrutiny
Junior Minister for Trade John McGuinness, whose department oversees the ODCE, said he hoped it could conclude its work as soon as possible so that the garda fraud squad could be called in if necessary.
"If we're going to stand up for scrutiny abroad, then we must do it at home as well -- clear the decks, answer all of the questions and then begin to rebuild our international reputation," he said.
Mr McGuinness said that decisive action was needed to restore public confidence in the banking system. He also called for a maximum salary cap of €500,000 for senior banking executives.
"If we need to sacrifice a sacred cow on the altar of good corporate governance, then that's what needs to be done.
"We need to make a clear statement to the public and to the banking sector that what went on was unacceptable, we're not tolerating any more of it," he said.
Mr McGuinness said he had not known about the "unacceptable" €600,000 golden handshake given to former Financial Regulator Patrick Neary by the Department of Finance.
"I'm further shocked by the amount of money Mr Neary is getting in his total package. The public generally are abhorred by all of that," he added.
- Michael Brennan Political Correspondent
