Wednesday 13 December 2017

FitzPatrick 'misled auditors on loans up to €100m', court told

Former Anglo Irish Bank chairman Sean FitzPatrick has pleaded not guilty. Photo: Courtpix
Former Anglo Irish Bank chairman Sean FitzPatrick has pleaded not guilty. Photo: Courtpix
Shane Phelan

Shane Phelan

Former Anglo Irish Bank chairman Sean FitzPatrick failed to disclose multi-million euro directors' loans used for property investments, a court has heard.

Sums ranging between €10m and €100m were borrowed by Mr FitzPatrick and people linked to him to invest in hotels, shopping centres and building developments.

The disclosure was made on the opening day of Mr FitzPatrick's trial at Dublin Circuit Criminal Court on charges of making misleading, false or deceptive statements and furnishing false information to Anglo's auditors on various dates between 2002 and 2007.

The prosecution told jurors the case was not about the loans or what they were used for, but the failure of Mr FitzPatrick to disclose them as he was obliged to do under the Companies Act.

Mr FitzPatrick (68), of Whitshed Road, Greystones, Co Wicklow, has pleaded not guilty to 27 charges he is facing.

The prosecution told a jury of five men and eight women there was a legal obligation on Anglo's directors to make an annual statement about loans they had from the bank.

He said the prosecution's case was that Mr FitzPatrick made "temporary arrangements" around the end of each financial year whereby the loans were refinanced using borrowings from Irish Nationwide Building Society. The prosecution said Mr FitzPatrick also used money from savings accounts to temporarily lower his borrowings from Anglo.

Usually these arrangements were put in place for a period of two weeks, at which point Irish Nationwide would be paid back and the full size of the loans would be reinstated on Anglo's books. But because of the temporary arrangements, the bank's financial statements did not take account of the money which had been transferred out.

The prosecution said the sums involved included borrowings by Mr FitzPatrick, as well as loans to him and his wife, family members, and partnerships he was involved in. The sums borrowed rose from around €10m in 2002 to in the region of €100m in 2007, the prosecution said.

"The purpose of the borrowings was for investment in hotels, shopping centres and building developments," the prosecution said. "But this case is not about the purpose of the loans. What we are dealing with here is an alleged failure by Mr FitzPatrick to disclose them."

He said the bank was required to supply its auditors Ernst & Young with a letter or representation, which was supposed to set out the amount of loans directors had.

The letter was also supposed to certify that what the auditors had been told was correct and that there was nothing of any significance which needed to be drawn to their attention.

Between 2002 and 2004 Mr FitzPatrick was one of two directors who were responsible for signing these letters.

The prosecution counsel said the main area of dispute in the case was likely to be whether it was sufficient for the letters of representation to be accurate on the date they were submitted.

"The prosecution contends it was not good enough to comply with the legislation," he said.

"If there was an artificial process where the amount of the loans were reduced and then reinstated again after the year end, then the letters of representation were false."

The prosecution told jurors they would hear evidence from two auditors at Ernst & Young, Kieran Kelly and Vincent Bergin, about what was disclosed to them when they audited the bank. The first witness is due to give evidence today.

Irish Independent

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