Amateur probe that made it look like OCDE tried to fit up Sean FitzPatrick
The trial of Sean FitzPatrick has exposed failings in the State agency that investigates white-collar crime, writes Maeve Sheehan
Shelley Horan has a reputation as an expert in her field of white-collar crime. She is an adjunct professor at Trinity College, designed a course run by the King's Inn for lawyers, gardai and professionals, and is respected by her peers.
When the suicide charity Console was engulfed in financial scandal caused by its founder, the charities regulator included her in a list of new trustees he proposed appointing to its board.
Yet when the Office of the Director of Corporate Enforcement (ODCE), which was poised to investigate Console, saw her name on the list of nominees, it discreetly inferred its disapproval.
For reasons best known to the ODCE, the head of enforcement Kevin Prendergast concluded a letter to Console's solicitors with the pointed observation: "It is noted that the Charities Regulatory Authority has appointed a number of new trustees to the board of the company.
"In that context, you might note for information purposes that Ms Shelley Horan BL is currently acting for Mr Sean FitzPatrick in DPP v Sean FitzPatrick, a prosecution in which this office is the associated investigative authority."
According to informed sources, the email caused much head-scratching. Did the ODCE believe that Ms Horan should not be appointed to Console's board because she also acted for Sean FitzPatrick? Was a barrister just doing her job to be tarnished by her association with her client?
"The inference and innuendo is absolutely clear," said an informed source who saw the email. "You can take it they were told to get stuffed."
Console ended up being liquidated, so the need for a new board never arose.
But the ODCE's email took on fresh relevance last week after Judge John Aylmer's findings of the agency's bias in relation to the former chairman of Anglo Irish Bank, coaching of witnesses and contamination of statements, caused Mr FitzPatrick's trial to collapse in spectacular fashion.
Mr FitzPatrick, the 68-year-old former chairman of Anglo Irish Bank, walked away from the Criminal Courts of Justice last Wednesday without a backward glance, leaving in his wake the smouldering remnants of the State's once-lauded anti-white-collar crime agency.
The €3m legal costs of the trial - including bankrupt Mr FitzPatrick's legal aid bill - will add to the €30bn that taxpayers have already paid to bail out the bank he once chaired and which is largely blamed for bringing the country to its knees.
While Mr FitzPatrick basks in the glorious sunshine a free man, the chief executive and senior figures in the ODCE are fighting for the agency's survival amid growing calls that it is no longer fit for purpose.
The burden of the ODCE's failure has mostly fallen on the shoulders of one man: the soft-spoken and deeply repentant solicitor Kevin O'Connell, who suffered a nervous breakdown as the flaws in an investigation he was never equipped to lead were exposed.
He has claimed that he was not the only one to blame for the fundamental and ultimately unlawful errors that caused the case to collapse. The DPP, gardai and, most notably, his retired former boss at the ODCE Paul Appleby may yet have to account for their knowledge of the catastrophic criminal investigation before an Oireachtas committee.
Mr O'Connell was four-and-a -half years qualified when he joined the ODCE in 2002 - the year after it was set up. He had two years under his belt in private practice, two at the chief State solicitor's office and six months on secondment to the Criminal Assets Bureau.
According to one investigator, he was "sheltered" from the daily scrum of the civil or criminal courts. His peers regarded him as smart, something of a "legal brain" and "great at looking up casework".
"He didn't have the practical experience to lead a criminal investigation," said one source.
The collapse of Anglo Irish Bank in 2009 sparked a plethora of criminal investigations that tied up a good chunk of the Garda fraud squad and stretched the resources of the ODCE.
Although he couldn't quite recall how, Mr O'Connell ended up being assigned the investigation into the €87m in directors' loans that Mr FitzPatrick had allegedly borrowed from Anglo Irish Bank but allegedly concealed from the bank's auditors.
Mr O'Connell was on his own. The Garda fraud detectives who were seconded to the ODCE were working on another criminal investigation spawned by Anglo's efforts to keep itself afloat.
By his own admission, Mr O'Connell had no real training for the job, although it took a while for him to realise he was in over his head.
The investigation opened in February and, according to Judge Aylmer's ruling last week, the ODCE set out to build a case against Mr FitzPatrick rather than investigate his guilt or innocence.
He was eventually charged with 27 offences under the Companies Act, mostly for misleading auditors about the €87m in directors' loans he took out for himself and family members over a five-year period. The charge was that his loans were hidden from auditor Ernst & Young, now EY, with the help of short-term loans on to Anglo's books at the end of the financial year.
Mr O'Connell's two key witnesses were Anglo's auditors, - Kieran Kelly, who audited its accounts between 2002 and 2004, and Vincent Bergin, who audited Anglo from 2005 to 2008. Both are senior figures in the Irish branch of one of the world's top firms.
Investigators say it's unusual for witnesses to alleged crimes to "lawyer up" when making statements to investigators, precisely because they are witnesses, not suspects.
When Mr O'Connell went looking for statements from Mr Bergin and Mr Kelly, he found himself instead dealing with Liam Kennedy, head of commercial dispute resolution with A&L Goodbody, who has acted for EY across many of the Anglo-related investigations.
The fatal flaw in his investigation was to accept Mr Kennedy's presence. He later told the court he was used to meeting witnesses in the company of their lawyers. At his first meeting with Mr Bergin, Mr O'Connell did most of the talking with Mr Kennedy, rather than the witness he was there to interview.
Mr O'Connell was still waiting for a statement from Mr Bergin six months later.
When his boss Mr Appleby, wrote to EY to complain about the delay, Mr Kennedy wrote to Mr O'Connell to complain: "Now basically do you want us to continue co-operating because EY wants to assist your enquiries. I just wanted to mark your cards. The letter was inappropriate."
When Mr Bergin's witness statement was emailed to Mr O'Connell soon afterwards, it was circulated between ODCE, EY and A&L Goodbody, gathering a "hokey cokey" of suggested chops, insertions and alterations along the way.
The court heard that on one occasion Mr Kennedy made changes to Mr Bergin's draft witness statement when Mr Bergin wasn't present. Later on, Mr Appleby was said to have written sections of both statements.
It seems mind-boggling now that senior solicitors and the Director of Corporate Enforcement seemed unaware that changing a witness statement in a criminal investigation to suit the prosecution's case was entirely unlawful.
There was nothing secret about what Mr O'Connell was doing.
In court, it was suggested that the Office of the Director of Public Prosecutions had some awareness of how Mr O'Connell was taking statements. Mr O'Connell's methods were "touched on" in a preliminary report he sent to the DPP in 2010, and in a second "crucial" email he sent to the DPP in 2012.
Mr O'Connell later said his great regret was that no one raised any "amber flags" about his work, that no one kicked him under the table at meetings where the witness statements were discussed.
But one ODCE official had misgivings about Mr O'Connell's interactive approach to taking witness statements - and at an early stage.
In May 2010, Adrian Brennan, also a legal adviser in the ODCE, raised concerns that Mr O'Connell's approach might encourage witnesses to "shoehorn the facts" to fit.
It is not clear either if Mr Brennan's concerns were followed up. If they had been, Mr O'Connell later conceded, "things might have evolved in a very different manner".
Taoiseach Enda Kenny said last week that offers of more resources to the ODCE to speed up its investigations were declined.
According to Mr O'Connell, the official position of the director, Mr Appleby, was that they were not needed. Mr O'Connell appears to have wanted Garda assistance. He wrote to Mr Appleby in July 2011, pointing out that gardai on secondment to the ODCE were concentrating on another Anglo probe and none had been allocated to his.
Mr FiztPatrick was charged in connection with the concealment of loans in 2012. His trial opened in 2015. On the very first day, Mr FitzPatrick's legal team raised concerns about Mr O'Connell's investigation and seven weeks of legal argument followed.
Mr O'Connell was in the witness box for six days, four of them being cross-examined about how he conducted his investigation and whether key witnesses were coached.
It was his third experience of being in a witness box and Mr O'Connell found the ordeal "difficult".
He finished up on Friday, May 1, 2015. He returned to his office feeling "elation". His elation dissipated when he noticed a blue tray. In it he found documents that should have been disclosed to Mr FitzPatrick's defence team, mostly notes he had jotted down of conversations with EY or their solicitors. Yet there they were, sitting in his blue tray.
Mr O'Connell faced up to the discovery. He went to his boss, Ian Drennan, who in turned phoned the DPP's office. Henry Matthews, the solicitor in the DPP's office, told him it was "most unfortunate". Mr O'Connell would have to go back into the witness box after the weekend to account for the undisclosed documents.
Mr O'Connell was terrified at the prospect. He returned to his office, checked through the tray again and, to his dismay, discovered more documents that were relevant to the case. He "panicked on top of panic" and decided there and then to destroy them.
Half an hour later, CCTV footage captured Mr O'Connell walking down a corridor towards the shredding room carrying the tray of paperwork. He stopped to chat to his colleague, Garda Gary Callinan, unaware that a camera was recording his free hand turning over the documents in the tray, as though to conceal them.
Over the weekend, Mr O'Connell took calls from Mr Drennan and the DPP's office. Another round in the witness box loomed. On Monday, he emailed Mr Drennan to tell him what he had done. Mr O'Connell booked himself in for psychiatric treatment while the ODCE's legal team explained the extraordinary development to Judge Mary Ellen Ring.
When the second attempt to try Mr FitzPatrick collapsed last Tuesday, Judge Aylmer cited the "extraordinary" shredding of documents. The most fundamental error, however, was the unlawful manner in which statements were taken: the ODCE had failed to look for evidence of innocence as well as guilt, the coaching of witness, statements were contaminated, all of which denied Mr FitzPatrick the impartial, balanced investigation to which he was entitled.
The authorities have agreed that Mr O'Connell should not face disciplinary or criminal action for shredding evidence.
In a statement, the ODCE said it occurred against a backdrop of "enormous stress" and "significant mental health issues" for which he was hospitalised for two months. But if an investigation into Mr O'Connell were to proceed, where would the trail lead? To the Office of the Director of Public Prosecutions, which insisted on continuing the case despite evidence given in court that key witnesses were being coached?
To Paul Appleby and others in the ODCE whom, the court heard, pitched in with their own additions and deletions to witness statements in a process that two judges found to be unlawful?
And what of gardai who have said they had no involvement in taking the witness statements?
Since Mr Drennan succeeded Mr Appleby as director in 2012, the gardai now take the lead on all criminal investigations. But the office is still facing calls for disbandment.
As for the solicitors, the Law Society says it cannot investigate against practitioners without a complaint from the client. As for the auditors, EY is due to go before a disciplinary hearing of the accountancy body CARB over its work once all of the Anglo trials end. It is being sued for €50m by IBRC, which subsumed Anglo.
During the trial, Mr FitzPatrick's defence team argued that, given the circumstances, it was in EY's interest to work with the ODCE to secure a prosecution of Anglo's former chairman.
Distressed mortgage holders and those struggling to keep vulture funds at bay are no doubt among a struggling cohort who have good reason to be aghast at Mr FitzPatrick's acquittal because of the failures of the State agency that promised justice for white-collar crime.
That it was Mr FitzPatrick who helped expose those failings is cold comfort indeed.