Shredding played key role in downfall of FitzPatrick inquiry

The spectacular ending of the trial of the former chairman of Anglo Irish Bank, Seán FitzPatrick, has come about in part because documents relevant to the case were shredded by a solicitor investigating the alleged offences.

The extraordinary shredding of documents led to a collapse of an earlier trial and contributed to the decision by the judge on Tuesday that he would direct the jury to acquit in this trial.

Kevin O’Connell, a legal adviser with the Office of the Director of Corporate Enforcement, took on a lead role in the investigation but, according to evidence he gave in the absence of the jury, shredded documents during a “panic attack” in his office in May 2015.

He informed the Director of Public Prosecutions as to what he had done, then sought psychiatric help. The first trial of FitzPatrick, then ongoing, collapsed as a result.

The collapse of one of the most significant white-collar crime cases to come before the courts in the wake of the Irish banking crisis is a huge blow to the reputation of the Office of the Director of Corporate Enforcement (ODCE), the agency established to investigate corporate crime. It led the inquiry. It is also a blow to the reputation of An Garda Síochána and the Office of the Director of Public Prosecutions.

FitzPatrick (68), of Whitshed Road, Greystones, Co Wicklow, had pleaded not guilty to 27 charges under the Companies Acts relating to giving false or misleading information to Anglo's auditors Ernst & Young (now EY).

In announcing his decision on Tuesday, Judge John Aylmer referred to O'Connell's evidence that the documents he shredded were notes of phone conversations similar to other such notes he had discovered to the DPP.

However, the judge said the fact was we didn’t know what was in them and there must be a doubt about why they were singled out.

O’Connell had given evidence to the first trial of FitzPatrick, over six days, in the absence of the jury, as it was becoming evident that the investigation had been mishandled in relation to the taking of statements from two key witnesses.

In evidence heard by the court in the absence of the jury it emerged that O’Connell feared last year, at the time of the shredding, that he was going to be “hung out to dry” if the case collapsed.

Garda correspondence

More recently, internal Garda correspondence, released to the trial by Garda Commissioner Nóirín O’Sullivan, showed senior Garda officers being advised in the wake of the shredding that no members of the force were connected with the destruction of documents or with the taking of witness statements from two key witnesses.

O’Connell, in the witness box in the absence of the jury, said he was “taken aback” by the latter claim, given that Garda colleagues in the ODCE had been involved in the inquiry alongside him and had been copied in email correspondence and had attended meetings concerned with the taking of statements from the two witnesses.

Defence counsel Bernard Condon SC commented to the court that the Garda were “attempting to find a bus to put him [O’Connell] under.” An assistant Garda commissioner, the correspondence revealed, had been warned that the case might produce “adverse publicity” for the force.

Extended legal argument heard in the absence of the jury outlined how the inquiry was handled as if it was a civil case before the High Court rather than a criminal case. The process of taking witness statements from two key witnesses, the court heard, was "lawyer led".

The two key witnesses, EY partners Kieran Kelly and Vincent Bergin, were "coached" and their witness statements contaminated, with some of the wording in both statements having been actually written by the former Director of Corporate Enforcement, Paul Appleby, the court was told. The interference included the suggested changing of key phrases in the statements. The taking of statements occurred as if they were affidavits being prepared for a civil case.

The two key witnesses, both former auditors of Anglo’s books, signed witness statements that were the product of a long engagement involving a number of individuals in the ODCE, as well as lawyers in EY and in the law firm that acts for EY, A&L Goodbody.

It was “statement by committee”, Condon told the judge, during the extended legal argument.

Potential conflict

There was also an issue of potential conflict. Some of the lawyers acting for EY in the drafting of the statements were also acting for EY in a €50 million damages claim from the Irish Bank Resolution Corporation(IBRC). The State-owned body’s case includes matters relevant to the FitzPatrick trial.

The lawyers were also acting for EY in relation to an inquiry by the firm’s regulatory body, the Chartered Accountants Regulatory Board (Carb), which is investigating the adequacy of the audit work done by EY on Anglo’s books. Condon said the Carb inquiry could potentially lead to EY losing its licence.

One of the complaints from FitzPatrick’s defence team was that the ODCE did not seek out information that went to their client’s potential innocence as well as his potential guilt, a point that has now been accepted by the judge. The ODCE had been trying to “build” a case, the judge said.

FitzPatrick walks away an innocent man. It is the second time he has faced charges that came to trial and from which he has emerged with his innocence intact. In 2014 a jury found him innocent of charges of providing unlawful financial assistance to 10 individuals known as the Maple 10, in July 2008, so that they could buy shares in Anglo Irish Bank.

During that trial, Judge Martin Nolan directed that FitzPatrick be found not guilty of other charges relating to loans issued to members of the family of the businessman Seán Quinn.

The charges on which FitzPatrick is now to be acquitted related to the treatment of loans from the bank which were transferred each year end to the Irish Nationwide Building Society, before being transferred back to the bank. This meant they did not have to be disclosed in Anglo's end of year accounts.

The so-called “warehousing” of the loans led to FitzPatrick’s resignation when it emerged in December 2008, and contributed to the loss in confidence in the bank that in turn led to it being nationalised in January 2009. The ODCE began investigating the matter in December 2008.

O’Connell said the documents he shredded had been overlooked when disclosure was being made to the FitzPatrick defence, and when he discovered them on a tray on the floor of his office, he realised he was going to have to go back to the witness box and give more evidence. After he informed the State legal team of what he had done, he sought psychiatric help.

Dramatic development

The bizarre and dramatic development turned a crisis caused by how the investigation had been conducted, into a full-blown catastrophe. Although O’Connell said he wasn’t sure what the documents he shredded were, he said he believed they were notes taken in meetings or during phone calls associated with the case. Complaints about disclosure had featured during his giving of evidence in 2015, and when he returned to the office and found more documents that had not been disclosed, he panicked, he said.

In 2015 he referred to eight or nine pages of notes, while this year he said he thought about three or four pages may have been involved. He refused to let the court have access to reports concerning his mental health.

O’Connell had played a key role in gathering evidence against FitzPatrick even though he had never played a role in investigating an indictable offence before.

The court heard that, as problems with the investigation emerged during the trial, the new Director of Corporate Enforcement, Ian Drennan, who had taken over from Appleby in August 2012, informed his staff that only Garda officers were to henceforth take witness statements.

He also said that when the details of what had happened in the FitzPatrick case emerged, it was likely that the agency would suffer “very severe reputational damage” as well as “parliamentary scrutiny”.

All of the interviews with the EY partners occurred in the presence of the solicitors from A&L Goodbody, including partner Liam Kennedy, with whom O'Connell was in regular contact.

There were up to 40 versions of the Kelly and Bergin statements in the huge discovery of documents released to the defence last year. It was after the multiple drafts were received that the defence learned of the flaws it argued existed in relation to how the investigation had been conducted.

Some of the drafts had been going “back and forth” between the ODCE and A&L Goodbody, some within the ODCE, and some within A&L Goodbody. It was “statement by committee”, Condon said. “Conspicuous by their absence were the guards.” He said standards in investigating a suspected crime could not be lowered just because it was an alleged white-collar crime. “Everyone goes to the same prison.”