Anglo Irish employee tells of shock at first ODCE letter to bank

The former company secretary of Anglo Irish Bank has said in court that she felt threatened and shocked by a letter from an Office of the Director of Corporate Enforcement (ODCE) investigator demanding documentation from the bank in 2009.

Natasha Mercer was giving evidence in Dublin Circuit Criminal Court in a case in which Seán FitzPatrick (68), Anglo’s former chairman, is accused of failing to disclose to auditors the extent of multimillion-euro loans linked to him.

The State’s case is that loans taken out by the accused, his wife and family members increased from about €10 million in 2002 to about €100 million in 2007.

The prosecution alleges that the amount of these loans was “artificially reduced” for a period of two weeks around the bank’s financial end-of-year statement by short-term loans from other sources, including Irish Nationwide Building Society.

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Mr FitzPatrick, of Whitshed Road, Greystones, has pleaded not guilty to 27 offences under the 1990 Companies Act. These include 22 charges of making a misleading, false or deceptive statement to auditors and five charges of furnishing false information in the years 2002-2007.

Ms Mercer said she became aware of the annual refinancing of Mr FitzPatrick’s loan in about 2001.

She agreed that in January 2009 she received a letter from Kevin O’Connell, an investigator from the ODCE. This letter was the first contact from the ODCE to Anglo and Mr O’Connell stated in it that “if you or any person fails to furnish reasonable assistance to me . . . or fails to produce documents . . . you and they may be guilty of offences”

Ms Mercer told Bernard Condon SC, defending, that she found the language in the letter “quite threatening”.

“Comply or else was my impression,” she said. “I was concerned and shocked to receive the letter and I brought it to the attention of the chairman, Donal O’Connor, immediately.”

In her reply to Mr O’Connell, sent within days, Ms Mercer wrote: “The bank’s auditors had extensive access to the bank’s working files during the course of their audits.”

Mark Redmond, a former lending manager with Anglo, testified that the annual refinancing arrangement was “widely known around the bank”. He said he was involved in compiling a list of loans linked to the accused. He said he would walk around the 15 lending teams and ask them “if they had exposure to Mr FitzPatrick”.

The trial continues.