E&Y challenges Anglo inquiry

Accountancy firm Ernst and Young has brought a High Court challenge to an investigation into its conduct as auditors when dealing with loans to directors of Anglo Irish Bank.

The firm is seeking orders halting the inquiry by special investigator John Purcell who was appointed by the Chartered Accountants Regulatory Board (CARB) of the Institute of Chartered Accountants of Ireland.

The President of the High Court, Mr Justice Nicholas Kearns, today granted permission to the firm to bring proceedings to quash the appointment of Mr Purcell.

The judge directed Mr Purcell and the Institute should be notified of the application and the case will come back before the court on Monday.

Mr Purcell was appointed following meetings of the CARB complaints committee in 2009 which considered the issue of alleged inappropriate directors' loans in Anglo and the role of Ernst and Young as auditors to the bank.

The committee formed the opinion the matter was "one which gave rise to questions of public concern and was also one of complexity and importance".

Paul Sreenan SC, for Ernst and Young, told the court his client had been co-operating with the investigation but at the end of last month discovered no actual complaint had been made against it as was required under by-laws governing the CARB process.

When Ernst and Young sought clarification about the exact nature of the complaint of misconduct being investigated, they discovered no clear issue had been identified, counsel said

Instead, the investigator's initial findings merely referred to media reports, he said.

In order to respond to the investigator's initial findings, the company must be allowed know what rule or regulation they were supposed to have broken, Mr Sreenan said.

The firm is seeking an order quashing the decision to appoint the special investigator or alternatively orders which would allow the firm access to the findings of the investigator and the right to make submissions before the findings are finalised.