State pouring significant resources into Anglo inquiries

The Director of Corporate Enforcement, Garda and Financial Regulator are all investigating the bank, writes COLM KEENA

THE STATE is pouring significant resources into the inquiries into former practices at Anglo Irish Bank.

The Office of the Director of Corporate Enforcement (ODCE) has assigned one-third of its staff to its inquiry, and is in the process of employing some “banking and related expertise”.

The inquiry has reached a “critical stage”, a spokesman for the office said.

The office wants to get assistance from someone who has worked in banking, as against the regulatory field, to allow it to have a comprehensive understanding of the material it has gathered to date. It is considering the appropriate method for recruiting the banking expertise it needs.

Director of Corporate Enforcement Paul Appleby’s office has four qualified accountants and six solicitors, three of whom act as legal advisers to him. While the majority of these staff have worked outside the public service and have been qualified for several years, none has experience in banking.

Although the office is subject to the civil and public service recruitment embargo, additional staff, including five additional gardaí, have been assigned to the office to assist with the inquiry.

ODCE staff are subject to general civil and public service pay norms.

The restraints on the ODCE contrast with, for example, the National Treasury Management Agency, which in turn houses the National Asset Management Agency. These organisations can hire mid-career professionals and negotiate commercial contracts with them.

The ODCE has an annual budget of €6.08 million, a 9 per cent increase on last year. Any decision to buy in additional advice or expertise has to be accommodated within this budget.

“The director is generally satisfied with the resources at his disposal for the purposes of the investigation and with the progress being made,” the spokesman said.

He would not discuss what precisely is the focus of the inquiry, or who has or has not yet been interviewed. He did say more than 100 people had been interviewed, and that the office was working its way through more than two million documents.

Appleby’s office is looking at possible offences, including criminal offences, under the Companies Acts, while the Garda Bureau of Fraud Investigation is looking at other possible criminal offences.

In March, the bureau detained former Anglo chairman Seán FitzPatrick and former Anglo chief financial officer Willie McAteer as part of its inquiries.

The Garda is investigating three major issues at Anglo: the concealment of FitzPatrick’s director loans using transactions with Irish Nationwide; the lodging of €7.45 billion in deposits by Irish Life Permanent over Anglo’s 2008 year-end; and the “golden circle” transaction in which 10 customers bought Anglo shares using Anglo money to prop up the bank’s share price. The shares that were being bought had been held indirectly by Seán Quinn.

The Garda Press Office had little to say in response to a series of questions concerning the expertise that exists among the fraud bureau’s staff.

“For the purpose of the ongoing financial investigations, the resources of the Garda Bureau of Fraud Investigation were increased,” the office said.

“Garda resources are also seconded to the Office of the Director of Corporate Enforcement.

“Legal advice is available through the State legal offices, and ultimately files will be submitted to the Director of Public Prosecutions for directions as appropriate.”

No further comment would be made, a spokesman said.

Financial Regulator Matthew Elderfield has been looking at historical matters in Anglo, but earlier this year he told The Irish Times that he would leave potentially criminal matters regarding Anglo to the Garda and the ODCE.

“The sanctions are stronger, the offences are graver. It makes sense to let the guards and the ODCE have the first shot,” he said.

The Central Bank, which includes the regulator’s office, has 85 qualified accountants and a further 26 who are studying the subject, as well as approximately 20 barristers and solicitors.

The bank is not subject to the recruitment embargo.

“The increase in staffing for 2010 will be sourced mainly from the banking, insurance and funds industry, while the use of secondments from the professional services firms will supplement this recruitment both within Ireland and abroad,” a spokeswoman said.

Recruited staff are paid at a level that is commensurate with their experience and expertise, she added.

The spokesman for the ODCE said it had a supportive and positive relationship with the Garda fraud bureau in relation to their parallel inquiries. The two bodies “work hand in hand”, he said.

Information collected by the regulator’s office is in general available to the bureau and the ODCE, but both bodies must originate their own evidence for any cases they might eventually take.