Former Anglo finance director McAteer received non-recourse loan of €8m

BACKGROUND:The purpose of the sum was to mitigate against the sale of 3.5 million Anglo shares on the market

AN €8 MILLION non-recourse loan was given to the former finance director of Anglo Irish Bank in 2008 to prevent him having to sell shares on the market, it has emerged.

Sources have said Willie McAteer had a loan with the Bank of Ireland that was backed by his 3.5 million Anglo shares. The terms of the loan involved the shares having to have a value that was 1.5 times the size of the loan.

As the value of Anglo shares fell during 2008, Mr McAteer was facing having to put up more cash or pay off the loan. It is understood he wanted to sell his shares. That could have seen him clear his loan, but others in the bank did not want him to do so, fearing the effect on the bank’s share price.

Instead, he was given a non- recourse loan. The shares are now worthless. Mr McAteer could not be contacted yesterday.

The Anglo loan is among matters a special investigator for the Chartered Accountants Regulatory Board considers in reports on Mr McAteer, former Anglo chairman Seán FitzPatrick and former chief executive David Drumm.

The reports by the former comptroller and auditor general John Purcell were handed to the board’s complaints committee earlier this month and have now been formally forwarded to its disciplinary committee.

The three former bankers are all members of Chartered Accountants Ireland, whose members are regulated by the board.

In relation to Mr FitzPatrick, Mr Purcell found he had a prima facie case to answer in relation to three matters. These are the temporary transfer of his Anglo loans so they did not appear in the financial statement of Anglo, his role in transactions with Irish Life and Permanent that affected the financial statements of Anglo and his role in relation to the loan to Mr McAteer.

Mr Purcell found Mr FitzPatrick did not have a case to answer in relation to loans of €451 million given to 10 Anglo customers in 2008 to buy the bank’s shares.

In relation to Mr Drumm, the investigator found he had a prima facie case to answer in relation to five matters. These were the three that applied to Mr FitzPatrick, as well as his role in relation to the amendment of the loans advanced to the 10 customers and in relation to the management of loans to four key management personnel.

He found Mr Drumm did not have a case to answer in relation to issuing the loans to the 10 customers of the bank.

Mr Purcell found that Mr McAteer had a case to answer in relation to three matters, being the FitzPatrick loans, the Irish Life transactions and “the appropriate disclosure of a loan made by Anglo Irish Bank to him in September 2008”.

Mr McAteer was not found to have a case to answer in relation to the loans to the 10 customers or in relation to the loan issued to him in September 2008.

Mr Purcell found that the former finance director of Irish Life, Peter Fitzpatrick, had a case to answer on the transactions between Anglo and Irish Life.

Anglo and Irish Life engaged in €7 billion back-to-back transactions in September 2008 that masked deposit outflows at Anglo and made the bank appear healthier than it actually was on the day it produced figures for its annual report.

The disciplinary tribunal will have three members and will sit in public. The four men who are to be the subject of its sittings can attend and be represented.

Mr Purcell is to produce a fifth report early in the new year on the performance of Ernst Young, a member firm of Chartered Accountants Ireland and auditor to Anglo.

WILLIE McATEER

Temporary transfer of loans to avoid disclosure

Role in transfers to ILP

McAteer loan

SEÁN FITZPATRICK

Temporary transfer of loans to avoid disclosure

Role in transfers to ILP

McAteer loan

DAVID DRUMM

Temporary transfer of loans to avoid disclosure

Role in transfers to ILP

McAteer loan

Amendment of loans to 10 key clients

Loans to 10 key management staff

PETER FITZPATRICK

Role in transfers to ILP