Fitzpatrick’s loans in the news again
12 July, 2010
The Irish Independent today reported that “Many of the loans that will today bring about the bankruptcy of former Anglo Irish chief executive Sean FitzPatrick were given by the bank on an interest-only or interest-roll-up basis”
This adds to the mystery of how the bank reported its “loans to key management personnel” in its annual reports to shareholders. Take, for instance, the 2007 report, which includes the extraordinarily incorrect statement that “Loans to key management personnel are made in the ordinary course of business on normal commercial terms”.
Here we have a bank which gave its former chief executive (a) tens of millions of euros in loans (b) on an interest-only basis, (c) without adequate security, and (d) allowed him the facility to re-draw the loans after temporarily repaying them for concealment purposes at year-end. And the board and the auditors were satisfied that this was “in the ordinary course of business on normal commercial terms”?
Either the board (including Fitzpatrick) and the auditors were guilty of gross default of their duty to shareholders, and perhaps of a statutory offence, in allowing this to be published, or the management were guilty of concealing from non-executive directors what they knew about Fitzpatrick’s loans.
False accounting is a criminal offence under the Criminal Justice (Theft and Fraud Offences) Act, 2001. It arises inter alia where somebody, intending to make a gain, or to cause loss to another, “falsifies any account or any document made or required for any accounting purpose” or “in furnishing information for any purpose produces or makes use of any account, or any such document, which to his or her knowledge is or may be misleading, false or deceptive in a material particular.”
And still we wait for the wheels of justice to turn.