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News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM

Anglo Irish Bank says total level of loans to directors stands at €179m - Where were the auditors Ernst & Young?
By Finfacts Team
Jan 16, 2009 - 3:34:37 PM

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Seán FitzPatrick, a chartered accountant, joined Anglo Irish Bank in 1980 and served as Chief Executive Officer from 1986 to January 2005. He resigned as Chairman of the bank on Dec 18, 2008. FitzPatrick also resigned from the boards of Smurfit Kappa, Aer Lingus, food group Greencore and investor, Gartmore Irish Growth Fund.

Anglo Irish Bank, which is due to be taken over by the Irish State,  disclosed today that the total level of loans to directors stands at €179m. The company's new chairman, Donal O'Connor, made the revelation at an extraordinary general meeting (EGM) of the bank in Dublin today. It begs the question as to what the auditors Ernst & Young were doing when they apparently did not spot the huge loan transfers to Irish Nationwide Building Society, over 8 years when only about €41 million was disclosed in the accounts?

Finance Minister Brian Lenihan said on Thursday that the secret loans to directors had damaged the reputation and weakened funding at the bank.

Former Chairman and Chief Executive Seán FitzPatrick's has loans of €84m, the EGM was told today. Fitzpatrick invested in property funds, wealth management products, Anglo shares, investment property, film finance and pension investments. He hid the loans by moving funds before the end of the financial year from Irish Nationwide.

The new chairman Donal O'Connor said there had been no procedure to handle temporary refinancing of directors' loans. He said directors' loans were not identified as a risk area.

The bank's legal advice was that the concealment of loans did not breach company law. However, that is being reviewed by the Stock Exchange, the Financial Regulator and the Office of the Director of Corporate Enforcement.

FitzPatrick is a chartered accountant and he would have been aware that concealing such significant sums from shareholders meant that publicly stated governance policy at the bank, was a joke.

<We operate to the highest ethical and governance standards as we aspire to be a model corporate citizen. For this reason we invest heavily in the development and training of our staff, as well as maintaining the highest levels of integrity in our relationships with our stakeholders> - - Anglo Irish Bank Annual Report 2007

Since reaching a peak above €17 in mid-2007, shares in Anglo Irish plunged to 22 cent in Dublin yesterday. Government statement last night said that shareholders' rights would be respected, and the legislation will outline plans for compensation.

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