Inquiry into former Anglo Irish Bank auditors EY still on hold

Legal action by IBRC must wait until next Drumm trial over

A  lawsuit initiated in 2012 by IBRC, as Anglo Irish was renamed in 2011, is  expected to remain on hold until a separate trial involving David Drumm takes place. Photograph: Frank Millar

A lawsuit initiated in 2012 by IBRC, as Anglo Irish was renamed in 2011, is expected to remain on hold until a separate trial involving David Drumm takes place. Photograph: Frank Millar

 

A professional disciplinary tribunal into the work of Anglo Irish Bank’s former auditor, EY, is set to remain on hold until at least next year, even after the bank’s former chief executive David Drumm was sentenced on Wednesday to six years in prison for his involvement in a €7.2 billion fraud a decade ago.

A separate lawsuit initiated in 2012 by Irish Bank Resolution Corporation (IBRC), as Anglo Irish was renamed in 2011, is also expected to remain on hold until a separate trial involving Drumm takes place, most likely in 2019, according to informed sources.

Chartered Accountants Ireland’s professional standards unit, formerly known as Carb, was asked by the Director of Public Prosecutions (DPP) in 2011 to hold off on disciplinary hearings into EY’s €1 million-a-year audit work at Anglo Irish Bank, pending the outcome of a series of criminal trials involving the now-defunct bank.

The DPP also secured a stay in 2014 on any public hearings of pre-trial matters in relation to IBRC’s action claiming more than €50 million in damages against EY.

Responding to questions from The Irish Times on Tuesday, Chartered Accountants Ireland said the DPP’s request was still in place and that it “remains in contact” with the State prosecutors.

In liquidation

Meanwhile, a hearing for discovery of documents in relation to the lawsuit by IBRC, which has been in liquidation since 2013, is scheduled to take place in October. A spokeswoman for the DPP declined to comment.

Drumm’s sentencing comes weeks after he was found guilty of conspiracy to defraud and false accounting over €7.2 billion of fake deposits from Irish Life & Permanent (IL&P) in September 2008.

Drumm still faces a trial on 16 counts for his role in the offering of unlawful financial assistance to the family of businessman Sean Quinn and 10 developers to buy shares in Anglo Irish Bank a decade ago.

In an earlier trial two years ago, involving other individuals involved in the IL&P deposits fraud, Judge Martin Nolan said it “beggared belief” that EY had signed off on the accounts at the time.

“They should have known what was happening if they did their job properly,” Judge Nolan said. “It seems incomprehensible how these accounts were signed.”

Quality of its work

A spokeswoman for EY declined to comment beyond previous statements made by the firm, where it consistently stood by the quality of its work performed in the Anglo Irish Bank audits.

A trial last year involving former Anglo Irish Bank chairman Sean FitzPatrick, which ultimately collapsed, heard excerpts from a preliminary report by one-time comptroller and auditor general John Purcell for Carb, in which he criticised EY.

“On the basis of the documentary and oral evidence, EY’s actions point to incompetence in the performance of their professional duties, rather than misconduct or inefficiency,” Mr FitzPatrick’s lawyer, Shelley Horan, said in court at the time, quoting the preliminary report from 2009.

Mr Purcell’s finding was on a prima facie basis, which is a low threshold. EY has disputed the finding.