Anglo auditors working for Nama to be investigated

AUDITORS INVOLVED in Nama who previously worked with failed financial institutions will be investigated by the banking inquiry, the Dáil has heard.

Minister for Finance Brian Lenihan assured Sinn Féin Dáil leader Caoimhghín Ó Caoláin that the role and behaviour of firms such as Ernst Young who audited Anglo Irish Bank and KPMG who audited Irish Nationwide and gave the two institutions “a clean bill of health” had to be investigated and would be part of the banking inquiry.

The Minister, who pointed out that Anglo Irish Bank “no longer retains its original auditors”, said “these matters require full scrutiny because of the dramatic character of the change that took place when the public interest of the taxpayer was secured in Anglo Irish Bank” and other institutions.

Mr Ó Caoláin raised the issue during a Dáil debate on the banking crisis. He demanded an explanation for the current role of some auditing companies with Nama and their previous functions as auditors of failed banking institutions. The Cavan-Monaghan TD asked how Ernst Young “came to be given a role” in the loan evaluation process for Nama.

Ernst Young “was the auditing team for Anglo Irish Bank when accounts were published in February 2009. That report effectively gave Anglo Irish Bank a clean bill of health, yet we now know that the 2008 figures included cash that had been transferred from Permanent TSB.

“We know that directors’ loans were concealed and loans were given to shareholders to buy more shares. Loans were also given to directors, senior executive members of Anglo Irish Bank, to buy more shares yet none of those matters was exposed in the end of year accounts presented by Ernst Young.”

He also referred to KPMG and asked what role it had in the Nama process and how it got it, “given the questionable role they have clearly played in presenting figures allegedly as facts when we now know they were nothing of the kind”? They should be investigated for “their specific roles in what some would suggest was an orchestrated cover up of the facts pertaining to those financial institutions”.

He added that KPMG audited Irish Nationwide and its 2008 results “showed a pretax profit of €300 million after having set aside €500 million for bad debts.

“Yesterday’s announcement confirmed that Irish Nationwide requires €2.6 billion in funds from the exchequer, a mere 11 months after KPMG gave it a clean bill of health.”

Mr Lenihan said he would ask Nama, which he stressed was an independent body, to examine Mr Ó Caoláin’s comments about the “professional advice” of auditors.

“In addition, the banking inquiry should provide a context within which the general matters to which the deputy referred can be dealt with.

“It is the case, for example, that Anglo Irish Bank no longer retains the original auditors to whom Deputy Ó Caoláin referred.

“The matters to which he referred are serious and will require investigation both by the accountancy bodies and the banking inquiry which is under way and which will account to this House.”