First probe into claims of forgery at lenders complete
THE garda fraud squad has completed its first criminal investigation into allegations that banks forged loan documents during the height of the property boom.
The investigation centres on ACC Bank which allegedly forged some of the paperwork relating to a €3.2m loan it arranged for two businessmen and their wives.
The paperwork included false signatures on loan documents and a "fictitious" P60 which boosted the businessman's income to satisfy the bank's lending criteria.
Detectives have interviewed several senior officials at ACC Bank, including executives at its head office in Dublin, over the alleged forgery. They have now finished their investigation and are now preparing a file for the Director of Public Prosecutions.
The fraud squad has also received numerous complaints against several other financial institutions relating to dubious paperwork and bogus signatures.
The case against ACC was the first of its kind to be investigated by the unit since the financial collapse, in an inquiry that has taken more than two years.
Along with other fraud cases, the unit's work was largely preoccupied with the investigation into the former Anglo Irish Bank. As a result of the lengthy investigation, three former executives have been charged with unlawfully giving financial assistance to investors to buy shares in the bank, including to the wife and children of Sean Quinn. Reports on the lending practices and corporate governance at Irish Nationwide, the building society that was run by Michael Fingleton, have also been passed to gardai.
The case against ACC centres on its regional offices in Galway where two officials have already left the bank in the fallout from the claims of forgery. The claims first emerged in the High Court in 2010, when ACC Bank sued the couples for the €3.2m loan plus €700,000 in interest.
George McGrath, a retired garda, and his business partner, George Fahey, were involved in property development in Galway. They needed a loan to develop derelict buildings in Loughrea, and were later approved for a loan of €3.2m.
The irregularities in the loan paperwork only came to light much later, when a dispute arose between ACC and the developers over the repayment of interest due. ACC started legal action against the couples in 2008.
The developers sought their loan records from the bank under the Data Protection Act. Included in the papers was a fictitious P60, which falsely boosted Mr McGrath's income from €24,000 -- his pension as a retired garda -- to €89,000. Mr McGrath swore he knew nothing about the forged P60.
It also emerged that a letter sanctioning the loan appeared to be signed by Mr McGrath and Mr Fahey and their wives. But a handwriting expert retained by ACC later confirmed that the couples' signatures were false.
Mr Justice Peter Kelly found the evidence in the case so "disturbing" that he referred the case to the DPP, who in turn referred it to the fraud squad. He also ordered the bank to preserve all documents relating to the case.
As a result of the allegations of fraud, ACC dropped its demand for the €700,000 in interest and was granted judgement of €3.2m. The judge, who criticised ACC's conduct in the case, also awarded the two couples one-third of their legal costs.
A spokesperson for ACC Bank said: "Following a High Court decision in February 2010 to refer a case relating to an alleged forgery to the Director of Public Prosecutions, ACC Bank completed a thorough investigation of its files with the support of external forensic accounting experts.
"Files were then handed over to the Garda Bureau of Fraud Investigation. ACC Bank endeavours at all times to operate to the best banking practice and following the alleged forgery incident, the bank initiated extensive internal audits and engaged a fraud officer to strengthen measures in this regard."