Business Irish

Wednesday 16 October 2019

Disbelief as Central Bank sees no wrong in the Anglo Tapes

Honohan faces grilling over decision to drop probe

Liquidated: Former Anglo Irish
Liquidated: Former Anglo Irish
David Drumm

THE governor of the Central Bank faces a public grilling today after his controversial decision to drop the investigation into the contents of the Anglo Tapes.

Senior politicians expressed astonishment as the Central Bank announced it would not be making criminal complaints either to the gardai or the Office of the Director of Corporate Enforcement over the tapes.

The notorious recordings were made inside Anglo Irish Bank in the weeks and months before and after it was bailed out.

It is three months since the Irish Independent first published the tapes, showing how senior bankers pursued a strategy of deception and scare tactics before being bailed out by the taxpayer.

The tapes caused widespread shock here and around the world as the public learned how Anglo's head of capital markets John Bowe looked for a €7bn rescue loan in 2008 after picking the figure "out of my arse".

The tapes revealed how Anglo's strategy was to lure the State in bit by bit, until taxpayers would have no choice but to fund a massive bank rescue.

"The strategy here is you pull them in, you get them to write a big cheque . . . they have to support their money, you know," said Mr Bowe.

The ensuing scandal prompted an immediate investigation by the Central Bank, which doubles as the financial regulator.

But yesterday it said it had not found any new issues relating to suspected criminal offences, following its examination of the contents of the Anglo Tapes.

Last night, politicians from across the political divide were united in their stunned reaction to the news.

Environment Minister Phil Hogan said he was "surprised" by the governor's decision, but said there may be legal reasons behind it.

Independent TD Stephen Donnelly said he was "astonished" by the Central Bank's

conclusion that "no new issues relating to suspected criminal offences" emerged following publication of the explosive recordings by the Irish Independent and 'Sunday Independent'.

He vowed to raise the matter directly with the head of the Central Bank today, when Governor Patrick Honohan is due to be questioned by members of the Oireachtas Finance Committee.

"I will be very interested to hear his explanation for this conclusion," he said.

Finance Committee chairman Ciaran Lynch indicated that a path will be cleared for questions about Anglo at today's committee meeting.

Mr Honohan is due to answer questions about the mortgage crisis, but Mr Lynch said there would be scope for supplemental questions, including about the Anglo Tapes.

Mr Donnelly added: "The Anglo Tapes to me presented clear evidence of a policy of deception and entrapment by senior executives at Anglo Irish Bank. Senior executives said they were going to under-represent the exposure of the bank so the Government would bail them out."

The decision by the Central Bank is a huge turnaround from June, when Mr Honohan made outspoken remarks to a German newspaper as the story gained headlines worldwide.

He said the shocking recordings made inside Anglo Irish Bank indicated that "management of Anglo were deliberately misrepresenting the position of the bank with a view to accessing financial support" from taxpayers in 2008.

Yesterday's statement from the Central Bank, however, has effectively cleared executives of any wrongdoing.

They include Mr Bowe, Anglo's former head of capital markets, who is heard in the tapes admitting the figure behind a request Anglo made for a €7bn rescue loan was "picked out of my arse".

He has apologised for the tone of his comments in the tapes, but has always denied any wrongdoing.

A number of political figures who were previously outspoken in relation to the tapes said they would not make any comment on the latest development last night.

They said that any statements might be used in future to block them taking a role in the planned banking inquiry.

And others including the Environment Minister cautioned about impending legal cases involving a number of Anglo executives.

Mr Hogan said: "There are legal reasons perhaps that the Central Bank wants to make that decision, because spreading all of that information in advance of legal cases that are before the courts in the new year could jeopardise the cases.

"Certainly the people of Ireland don't want to see anything done or said that would anyway jeopardise potential prosecutions."

But Sinn Fein's Pearse Doherty said the decision not to refer the tapes to the gardai "goes against the public interest".

"It seems the Central Bank have decided to let the storm blow over. That is an unacceptable approach and is clearly not in the public interest," the Sinn Fein finance spokesman said.


Fianna Fail's finance spokesman Michael McGrath said he expected the issue to be raised at the Committee today, but that it would not mean the issue of banks and mortgage arrears is neglected.

The full Central Bank statement said: "No new issues have been identified that relate to suspected criminal offences having occurred and, as a result, the Central Bank does not intend, and is not required, to make any further statutory reports of suspected criminal offences to An Garda Siochana or the Office of the Director of Corporate Enforcement in relation to this matter."

Criminal charges against a number of former Anglo executives are due to go to court next year, but they do not relate to the question of whether the bank lied to regulators about its financial health before the bailout.

By Donal O'Donovan and Lise Hand

Irish Independent

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