ANALYSIS:Inquiry is the first big test of the Office of the Director of Corporate Enforcement, writes SIMON CARSWELL.
THE SEARCHES of Anglo Irish Bank in Dublin city centre, including its head office on St Stephen’s Green, forms part of the early stages of the investigation by the Office of the Director of Corporate Enforcement (ODCE) into the various controversies plaguing the State’s third-largest bank.
The ODCE’s investigation is drawing on the resources of the Garda Bureau of Fraud Investigation, marking the fraud squad’s first involvement in the investigation into the beleaguered bank.
About 22 gardaí and ODCE staff arrived at Anglo Irish’s offices yesterday morning for the raid, which continued through the day behind shuttered blinds at the bank.
The inquiry, led by the ODCE with assistance from fraud bureau officers, including IT forensic staff, is examining the three controversies that have engulfed the bank since late last year:
- the €451 million loans from the bank to investors last year used to take a 10 per cent stake in the bank to support its share price;
- the movement of €7.45 billion in deposits between Anglo Irish and Irish & Life Permanent to bolster Anglo Irish’s books at its year-end last September;
- the transfer of tens of millions of euro in loans to former Anglo Irish chairman Seán FitzPatrick over an eight-year period using borrowings from Irish Nationwide to conceal the loans.
The ODCE, which is led by Paul Appleby, has been investigating Anglo Irish since shortly after Mr FitzPatrick’s loans transfers emerged on December 18th.
His inquiry has since widened to encompass the deposit movements last September and the loans to investors to buy shares.
The inquiry is focusing on whether any company laws were broken at the nationalised bank.
Mr Appleby’s investigation has some way to go, although he has said that the loan transfers out of the bank may have been illegal.
In a private letter to an Oireachtas committee on February 2nd, he said he must under company law form an opinion that “circumstances suggesting prejudice, misconduct and/or illegality are present with respect to the company’s affairs” before he can proceed with a formal investigation.
“I have formed that opinion in the Anglo case,” he said.
His inquiry depended on “the timeliness of the production of the requested material”, he said, and that he will have a clearer view of the progress of his initial inquiry by late March-early April.
Yesterday’s trawl of paper and electronic documents at Anglo Irish comes in the early stages of the investigation.
The inquiry is the first big test of the ODCE since the office was established in 2001.
The ODCE has taken on high-profile investigations, notably the series of restriction and disqualification actions against certain former National Irish Bank directors and the successful application to appoint a High Court inspector to industrial group DCC over the unlawful insider trading by the company’s former chief executive Jim Flavin in the €106 million sale of DCC’s stake in Fyffes in 2000.
However, many ODCE actions involve relatively minor corporate offences.
The office secured 32 convictions last year; most related to restriction and disqualification cases and actions against persons unqualified to act as auditors.
The ODCE’s biggest prosecution came last year when the director of an advertising agency received a two-year suspended sentence and was fined €34,000 for breaching loans-to-directors rules.
In all ODCE investigations, Mr Appleby can take a case in the District Court to secure a prosecution for a breach of company law.
He can also refer a case to the Director of Public Prosecutions if proceedings must be taken in a higher court.
Alternatively, he can seek the restriction or disqualification of a company director, or apply for a more wide-ranging inquiry by seeking the appointment of a High Court inspector to a company.
