Anglo stays silent over who knew of loans

 

ACCOUNTS:ANGLO IRISH Bank would not say yesterday who in the organisation knew about the loans totalling €87 million held by former chairman Seán FitzPatrick over an eight-year period, but not declared in the bank's annual accounts.

A spokesman for the bank's auditors Ernst Young would not comment on the issue, but an informed source said the firm did not know about the controversial loans.

A number of sources in the financial sector said it would be expected that a bank's external auditors would be able to learn about such loans.

One of the issues currently being investigated by the Financial Regular is how the loans could have existed over such a lengthy period and not come to its attention.

Anglo Irish Bank prides itself on its practice of regularly reviewing all its loans. This work is done by a credit committee. A spokeswoman said the bank would not be disclosing the names of those on the credit committee. The committee is not a board committee and its membership is not publicly disclosed.

A senior banking source said loans such as those held by Mr FitzPatrick would normally be known to a bank's chief executive, its finance director, its credit committee, its board audit committee and its internal and external auditors.

Mr FitzPatrick's loans were not declared in the bank's 2007 accounts but are expected to be declared in the 2008 accounts. The bank's 2007 annual report says its audit committee was made up of non-executive directors Gary McGann (chairman), Michael Jacob, and Noël Harwerth.

The bank's Risk and Compliance Committee was made up of non-executive directors Fintan Drury (chairman), Lar Bradshaw, and Ned Sullivan.

Mr Bradshaw resigned on Thursday, because he had loans with Mr FitzPatrick which were not disclosed in the bank's annual accounts.

The bank's finance director Willie McAteer has held the position since 1992.

The Anglo Irish 2007 report says: "The chairman promotes continuing high standards of corporate governance and ensures there is effective communication with shareholders."

Mr FitzPatrick was appointed non-executive chairman of the bank in late 2004, having previously been chief executive. His practice of using Irish Nationwide to temporarily house his loans with Anglo stretches back to his period as chief executive.

The bank's annual report for 2007 states that 13 directors had loans totalling €41 million. The previous year the figure was €31 million.

The 2008 annual report for the Bank of Ireland shows its directors had loans totalling €9.6 million at the end of March, down from €74 million in 2007. The sharp drop may be due to the departure of a particularly wealthy business figure from the board during the year. The 2007 annual report for AIB says its directors had loans totalling €14.4 million.