Key 'golden circle' files seized in Anglo swoop
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FRAUD squad detectives have seized key documents linked to the €451m 'golden circle' loans from the headquarters of Anglo Irish Bank, the Irish Independent has learned.
The loans were the primary focus of initial searches on Tuesday of Anglo's headquarters by officers acting under the direction of corporate enforcer Paul Appleby.
The revelation came as the Financial Regulator, which has been conducting a separate investigation into matters at the bank, last night confirmed it uncovered matters "of such a serious nature" that they had now been referred to the gardai.
The Irish Independent understands the material passed to detectives also relates to the 'golden circle' transactions , and to the movement of €7.45bn in deposits between Anglo Irish from Irish Life & Permanent to bolster Anglo's books.
The disclosures gave an indication of the gathering momentum behind separate investigations by the Director of Corporate Enforcement and the Financial Regulator.
Documents seized at the bank's headquarters, on St Stephen's Green in Dublin, in the two days since it was raided by fraud squad detectives were being examined last night at Mr Appleby's office, where tight security has been put in place to safeguard the material.
The Government recently sanctioned a €500,000 contract to beef up security at the office on Parnell Square in Dublin in recognition of Mr Appleby's growing role in investigating alleged white-collar crime.
Investigators from his office, backed up by 16 gardai from the Garda Bureau of Fraud Investigation, are expected to resume searches at Anglo Irish's headquarters this morning.
Informed sources last night revealed the main focus of the initial searches was documentation about the so-called 'golden circle' loans in the context of possible breaches of Section 60 of the Companies Act.
That section of the act bars firms from providing loans to buy their own shares, except where the money lent is "part of the ordinary business of the company".
Anglo Irish loaned €451m to a group of 10 customers so they could buy a 10pc stake in the ailing bank to support its share price. The director is investigating whether that amounted to market manipulation.
Under tough new EU rules, insider dealing and market manipulation are punishable by fines of up to €10m and a maximum 10-year prison term if a person is convicted.
Legal and accounting sources last night said that for the loans to be put in the clear, the Director of Corporate Enforcement and Financial Regulator would need to conclude that they were made under normal commercial terms.
Anglo has always insisted that before making a loan, it firstly looked at a borrower's ability to repay.
It also placed a huge emphasis in the normal course of lending on getting hold of other assets belonging to a borrower as security, as well as personal guarantees that the loans would be paid back.
However, this does not appear to have been the case with the 'golden circle' loans.
Anglo Irish confirmed last week that 75pc of what was borrowed by the 'golden circle' was only backed by the shares themselves, which are now virtually worthless.
Just 25pc of the total loan was backed by other collateral from the investors -- meaning that they can really only be chased for €112.75m.
They have already paid back €83m of the total loan, believed to have come from the sale of some Anglo shares before it was nationalised.
Mr Appleby is also seeking to establish whether the loans were made in line with normal lending practice. His office will be looking to see if the bank pre-packaged the loans for the 'golden circle' or if the investors actually asked the bank to provide funding for the deal.
Sources emphasised that although these loans were the initial focus of the inquiry, Mr Appleby's team will also be getting to grips with other areas, including loans to directors.
Attack
Meanwhile, the Opposition went on the attack last night over the Government's failure to sanction 20 additional staff for the Director of Corporate Enforcement when he sought them in 2005.
Tanaiste and Enterprise Minister Mary Coughlan admitted that it took two years for the request to be reviewed.
At that stage only eight additional staff and one additional garda detective were assigned to the director.
Fine Gael Enterprise spokesman Leo Varadkar claimed the revelation showed Fianna Fail had a soft stance on corporate crime.
"Fianna Fail ministers have repeatedly refused requests from the Office of the Director of Corporate Enforcement for extra staff and more resources in its fight against white-collar crime," said Mr Varadkar.
The Tanaiste said she would be "sympathetic to any reasonable request for additional resources" which Mr Appleby may need to complete the Anglo Irish investigation.
- Shane Phelan, Joe Brennan and Dearbhail McDonald
