Judge criticises Anglo investigation


A High Court judge has extended the Director of Corporate Enforcement and Garda investigation into Anglo Irish Bank to the end of July only after expressing serious concern the progress of the two year probe "is not at all satisfactory".

Mr Justice Peter Kelly also strongly criticised the failure to mount any prosecutions in other Commercial Court cases despite "prima facie evidence" and even admissions of criminal wrongdoing in such cases and where papers to that effect had been sent years ago by him to the authorities.

"This is not a desirable state of affairs," he said. "An apparent failure to investigate thoroughly yet efficiently and expeditiously possible criminal wrongoing in the commercial and corporate sectors does nothing to instill confidence in the criminal justice system as applicable to that sector."

He was "not alone" in his "sense of disquiet", he said. Mr Justice Frank Clarke had recently said it was "very surprising indeed" that little action had been taken about struck-off solicitor Thomas Byrne despite Mr Byrne's admissions in court about practices in which he had engaged.

Mr Justice Kelly was giving judgment on an application by the Director for a six month extension of the Anglo investigation. Refusing that application, the judge said he would extend the probe to July 28th only when he expected "much progress" to have been achieved.

He warned, if a further extension was sought in July, he would have to be given a detailed update on progress, including what had happened to material sent by the investigators to the DPP's office last December and March for his consideration.

The judge said the collapse of Anglo "has had profound and serious consequence for the economic well-being of this State and its citizens", "caused hardship to many small shareholders who invested in it in good faith" and played "no small part in seriously damaging Ireland's business reputation throughout the world".

One could reasonably expect the relevant State authortites to carry out a comprehensive investigation to ascertain whether any breaches of the criminal law might have occurred and those who were responsibe, he said.

The Director was carrying out that investigaton with the assistance of the Garda Bureau of Fraud Investigation and was seeking orders allowing him retain and deal with material seized in February 2009 under an "extended power of seizure".

This was the sixth time the Director sought such orders.

The judge said the Companies Act provides for the court, when considering whether to grant such orders, to "have regard to the progress" of any investigation being carried on by the Director.

The judge accepted the investigation was complex and difficult involving large numbers of documents, that some people were uncooperative or had delayed in making statements and others had refused to co-operate at all. He also accepted matters may arise which can put time estimates out of kilter.

However, the genesis of this application for another extension of time was search warrants issued in February 2009. More than two years later, he had not obtained "anything like a firm estimate" when the investigation would end and the best he could be told was every effort was being made to complete it by the end of 2011.

This case may be unique in its complexity and volume of material but was "certainly not unique in its speed", he said. He had sent papers for consideration by the relevant authorities in other commercial cases involving judgments for millions of Euro where there was prime facie evidence of criminal wrongdoing but no prosecutions issued and "little appears to have been done".

In the Anglo cases, he noted five issues were subject of investigation but investigations into three of those were not yet complete.

A file had been sent to the DPP in March 2010 on one issue - the provision of financial assistance by Anglo to a number of persons in 2008 to enable them to buy Anglo shares in circumstances which may have contravened the Companies Act - but he was now told further evidence on this issue had yet to be submitted to the DPP.

The judge said he was previously told the Director expected the probe into that issue to be substantially complete by the end of 2010.

On a second issue - whether loans by Anglo to its former directors and the regular "warehousing" of certain directors loans in Irish Nationwide Building Society, thereby misleading auditors, breached the Companies Act - the judge said the Director previously expected this to be "substantially complete" by March last.

Now the court was told about 50 persons remained to be interviewed, further analysis of documents was required and "every effort" would be made to complete this issue by the end of 2011. He was "at a loss" how the original time estimate was given.

Files on two other issues were sent to the DPP in December last but the court was given no information about what was happening about those files, he noted. Those issues were whether a loan to a director of Anglo breached common law and the Companies Act and a "back to back" deposit arrangement with Irish Life & Permanent Group for the benefit of Anglo at the end of Anglo's financial year in September 2008.

The probe into the fifth issue - whether communication of false or misleading information in some Anglo public statements in 2008 breached EC Transparency regulations - apparently cannot complete until the investigations into the other issues concludes, he noted.