# Seán Fitzpatrick steps down as Chairman of Anglo



## Brendan Burgess (18 Dec 2008)

Apparently he has had €87m in loans from the bank which were never disclosed in the accounts. 

Each year before the audit, he repaid the loans with borrowings from another financial institution, and reborrowed after the audit was finished.

There was nothing illegal in what he did, but it was inappropriate.

Brendan


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## beekeeper (18 Dec 2008)

I would imagine that is the final nail in the Anglo coffin.


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## tosh100 (18 Dec 2008)

Will make re-capitalisation easier I presume


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## beekeeper (18 Dec 2008)

tosh100 said:


> Will make re-capitalisation easier I presume


 
How ?


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## Brendan Burgess (18 Dec 2008)

I would like to know which financial institution lent him €87m every year for 6 years for a few weeks to refinance the loan? 

Did they ask the purpose of it? 

Is the Financial Regulator looking at that one as well? 

Brendan


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## beekeeper (18 Dec 2008)

This is really astonishing and will open up a serious can of worms.  Hopefully its what we needed to clear the decks as if Sean Fitz has come clean or been caught you would have to imagine that alot of executives in all the banks have similiar loans.


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## Brendan Burgess (18 Dec 2008)

There is nothing wrong with directors having loans.

But they are obliged to disclose them in the accounts. That is what was inappropriate about what Seán Fitzpatrick did.

Brendan


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## barryl (18 Dec 2008)

I would love to know how he qualified for 87m and what he used it for?


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## Simeon (18 Dec 2008)

Ethics? This is a devious practice - no two ways about it.


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## askalot (18 Dec 2008)

Simeon said:


> Ethics? This is a devious practice - no two ways about it.



The government should withdraw the taxpayer backed guarantee that they issued to Anglo, forget about any state recapitalisation and let the stock market pass judgment on the management of this pitiful bank.


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## Guest124 (18 Dec 2008)

They Could not withdraw the guarantee - you would have a run on all Banks. Besides it would be inappropriate!!


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## extopia (18 Dec 2008)

So many questions here. Who was the other financial institution? What was the money for? Who else was involved - can't believe that 87m was just for Fitzpatrick.

And the news report says the FR has been aware of this for "months". Why not disclose before now?


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## Guest124 (18 Dec 2008)

The FR should resign or be sacked but sorry I forgot this is Ireland it wont happen.


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## putsch (18 Dec 2008)

Who is the Govt non-executive director on Anglo?


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## mathepac (18 Dec 2008)

putsch said:


> Who is the Govt non-executive director on Anglo?



Anyone here - [broken link removed]


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## Guest124 (18 Dec 2008)

Lar Bradshaw resigned as well. He had a joint loan with Sean Fitzpatrick.


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## extopia (19 Dec 2008)

Were these loans used to buy shares in the bank, I wonder?


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## askalot (19 Dec 2008)

extopia said:


> Were these loans used to buy shares in the bank, I wonder?



If so, they better write it down as a distressed debt!


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## PaddyW (19 Dec 2008)

How the hell did no one notice 87 million euro switching to and fro every year? Or did everyone know but just turn a blind eye?


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## Guest124 (19 Dec 2008)

Who is stepping down from Irish Nationwide? The regulator knew earlier this year about this. Lenihan must answer when did he find out? Did he know about this at time of guarantee? The Irish Public are being treated with total contempt.


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## GSheehy (19 Dec 2008)

Is there any mention of 'fines' for the individuals involved and the companies, or are these actions not considered to be breaches of regulatory requirements?



> The regulator knew earlier this year about this. Lenihan must answer when did he find out? Did he know about this at time of guarantee


 
'The transfer of Mr FitzPatrick's loans was discovered by the regulator during an inspection of Irish Nationwide in *January*.' IT


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## Bronte (19 Dec 2008)

Brendan said:


> I would like to know which financial institution lent him €87m every year for 6 years for a few weeks to refinance the loan?
> 
> Did they ask the purpose of it?
> 
> ...


I agree, and if another bank loaned him the money they must have known or suspected he was doing it to hide it from the auditors and they may have been under an obligation to disclose it to the financial regulator.  Also what use auditors if they cannot see or check what is going on and ditto for the financial regulator.  Wonder what else is going on in the accounts in this bank and others.


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## papervalue (19 Dec 2008)

*Moral Issue Regarding Anglo Loan to Director*

The Chairman resigned over loans of €87 Million to himself. He transferred them over a eight year period to keep off year end books.

What else will come out of the woodwork- Is this common across all banks.

Their is a major moral issue here.

It would be interesting to see what terms he got on these loans, who knew about loans, who was involved in arragement of them.

Them their is issue of other bank who provided temporary loan- What

Looks like a number of people aware and involved.

Wonder is it a case for Director of corporate enforcement.


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## MaryBe (19 Dec 2008)

*Re: ACC Chairman Resigns*

What really annoys me about people like this is that they conveniently resign with a very nice pension and are not help accountable in the aftermath.  
We have put our pension into Anglo Irish because we lost a considerable amount through various schemes, and now I'm wondering if we should consider changing to another bank.  Any suggestions.


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## Brendan Burgess (19 Dec 2008)

BroadbandKen said:


> Who is stepping down from Irish Nationwide? The regulator knew earlier this year about this. Lenihan must answer when did he find out? Did he know about this at time of guarantee? The Irish Public are being treated with total contempt.



Where does the Irish Nationwide come into this? Have they been publicly identified? If not, please correct your post.

Brendan


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## PaddyW (19 Dec 2008)

Appalling that he should be allowed to resign and walk away with no doubt, a generous pension and payout. He should be sacked, fired, end of.


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## Sunny (19 Dec 2008)

Brendan said:


> Where does the Irish Nationwide come into this? Have they been publicly identified? If not, please correct your post.
> 
> Brendan


 
They have been publically identified.

http://business.timesonline.co.uk/t...ectors/banking_and_finance/article5368897.ece


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## Bank Manager (19 Dec 2008)

Brendan said:


> Apparently he has had €87m in loans from the bank which were never disclosed in the accounts.
> 
> Each year before the audit, he repaid the loans with borrowings from another financial institution, and reborrowed after the audit was finished.
> 
> ...



Brendan,

Good morning - I'm interested in your views above on this one.  I'd have a blacker/whiter view on this issue (and I'm not just saying this because I work with a competitor - if (and I sincerely hope not) that any of our directors have done anything akin to this, then the same view would hold ...

I'm working on the basis that what I heard last night on the radio and again this morning are the facts of the case ...

a) I think this is plain and simple fraud - I'd see it as falsifying year end accounts - which are supposed to give a 'true and accurate' picture of the entity ...

b) How did both their internal audit and external audit not pick this up over an eight year period?  That amazes me ...

c) The Regulator appears to have known about it for some months and thinks it's 'inappropriate' - that statment would amaze me also.


The fact is albeit I work in a different bank, but in the same industry, I''ll now go through days of snides comments, jokes (half joking all in earnest types) and I'm just getting tired of same.

I hope our guys are in the position to come out quickly and reassure customers, staff and the market that we have no such incidence - if they can't do that, then I'd have to say for the first time, I'd be beginning to dispair........


BM


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## VOR (19 Dec 2008)

"One of the loans was a joint loan with Lar Bradshaw and I would like to emphasise that he had no knowledge of the temporary transfer of this loan." 

I find this comment from Fitzpatrick absurd. How do you move a multi euro joint loan from Bank A to Bank B and then back without 3 things happening 

1) All parties sign for loan from Bank B
2) Bank A clear loan and write to the joint parties that loan is cleared.
3) All parties sign for loan to be moved back to Bank A.

Other questions that need to asked:
Were solicitors involved in this? Who paid the legal fees. 
Did Bank A pay its own fees when taking the loan back. 
Did Bank B pay its own legals?
Did Bank B charge a fee each time. (It should have.)
What purpose was given for the loans with Bank B.

Another possible scenario:
With the time required for the solicitors to do searches etc, I find it hard to get my head around the transfer. 
Another way this could happen is if you had a rolling unsecured credit line which meant the money could be moved unilaterally. And if that's the case how did the the auditors and FR not see the massive unsecured exposure (whether drawn or not it should be in the lending reports).


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## z109 (19 Dec 2008)

Lar Bradshaw is also on the Risk and Compliance committee in Anglo, so whatever about not knowing that the loan had been moved out of Anglo, he surely would have seen it come back in?


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## bigbadostric (19 Dec 2008)

There are 2 issues here from my point of view:

1) Fitzpatrick is known to be friendly with Michael Fingleton and given the Nationwide link this is troubling

2) Who has been auditing Anglo for the past few years? I'd imagine one of the big 4, and whoever it is has serious questions to answer.


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## VOR (19 Dec 2008)

I am very interested to see what fees the banks placed on this.
If Bank B didn't charge a fee then I would argue that they are complicit in not disclosing material facts to the regulator. 
If they charged a fee and underwrote the deal as normal they can surely argue that they took the business on as a commercial decision. 

And I am not wholly satisfied that the directors did nothing illegal. It is quite possible that they breached the fiduciary duty to shareholders.


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## ubiquitous (19 Dec 2008)

I wonder would the the late Conor Cruise O'Brien have appreciated the irony of the spirit of CJH re-appearing in the form of the latest Anglo GUBU story, on the night of his own death


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## Bank Manager (19 Dec 2008)

VOR said:


> I am very interested to see what fees the banks placed on this.
> If Bank B didn't charge a fee then I would argue that they are complicit in not disclosing material facts to the regulator.
> If they charged a fee and underwrote the deal as normal they can surely argue that they took the business on as a commercial decision.
> 
> And I am not wholly satisfied that the directors did nothing illegal. It is quite possible that they breached the fiduciary duty to shareholders.



Think i see where you are coming from, but I would differ slightly ...

For me the paying of a 'fee' still wouldn't take away the fact that I'd see this as anything other than fraud.  If it were a one off transaction, i.e. towards the end of one financial year the debt was moved from Bank A to Bank B - then fine I'd accept that - but the fact that this appears to have hopped and trotted between banks at year end each year for eight years leaves me with no option but to conclude that this was fraud.

At a time when the banking industry has been dragged through the mire (especially the practices that pertained in the 70' and 80's), and as I've observed real efforts to comply with regulation/compliance and to operate within the spirit of the law (I know some will argue that that hasn't happened, but in my role as a manger since the mid '90's I can say I've seen a concerted effort to rectify the wrongs of the past and to adopt compliant practices) - and it's in this light that I find it inconcieveable to think that a senior person in any financial institution would adopt the practices we are are now reading about.

Regards,

BM


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## VOR (19 Dec 2008)

It is certainly shady and I suspect bordering on a breach of fuciary duty. 
I wonder did it move to the same bank every year or did they spread it around to different banks? Afterall, sharing is caring


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## Bank Manager (19 Dec 2008)

Don't know - but I'd be very disappointed and annoyed if we were involved in any way...

BM


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## TarfHead (19 Dec 2008)

yoganmahew said:


> Lar Bradshaw is also on the Risk and Compliance committee in Anglo, so whatever about not knowing that the loan had been moved out of Anglo, he surely would have seen it come back in?


 
Ah, the Father Ted defence - "_the loan was 'resting' in another Bank_".


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## bigbadostric (19 Dec 2008)

For anyone interested, Ernst and Young are Anglos auditors. Surely their reputation will take a huge hit over this?


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## ubiquitous (19 Dec 2008)

bigbadostric said:


> For anyone interested, Ernst and Young are Anglos auditors. Surely their reputation will take a huge hit over this?



Not if they are treated with the same respect and deference as was given to the auditors of Fas recently


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## GSheehy (19 Dec 2008)

> SBPOST July 2007 : Addressing a recent gathering of businesspeople, FitzPatrick said that the tide of regulation had gone too far. He said the increasing burden of regulation and compliance was threatening the entrepreneurial zeal that had made the Irish economy the envy of the world.
> 
> ‘‘It is time to shout stop,” FitzPatrick told the Experian business lunch.’ ‘In my humble opinion, our wealth-creators should be rewarded and admired, not subjected to the levels of scrutiny which known criminals would rightly find offensive. We should be proud of our success, not suspicious of it.”


 
Full Story [broken link removed]


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## Padraigb (19 Dec 2008)

There seems to be a view that Seán Fitzpatrick did nothing illegal.

As far as I know, it is quite legal for a bank to make a loan to any of its directors. There is, however, a legal requirement that any loan by a company to a director be explicitly disclosed in the Balance Sheet. It seems obvious that shifting the arrangement off to Irish Nationwide was done to avoid the disclosure requirement. 

I think the terms of the deal with Irish Nationwide might be worth investigating. If the loan was guaranteed by Anglo Irish in some way, it might be that Anglo Irish was effectively the lender. What would have happened if Fitzpatrick defaulted on Irish Nationwide?

Inquiring minds (well, at least one) want to know.


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## VOR (19 Dec 2008)

Padraigb said:


> There is, however, a legal requirement that any loan by a company to a director be explicitly disclosed in the Balance Sheet. It seems obvious that shifting the arrangement off to Irish Nationwide was done to avoid the disclosure requirement.
> 
> Inquiring minds (well, at least one) want to know.


 

_Section 31 of the Companies Act 1990 forbids loans by companies to directors (including their family and corporate interests) where the loan is 10% or more of net assets._

Whats Anglo worth today? €110M on the exchange. Does any one know the net asset value on the balance sheet.


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## capall (19 Dec 2008)

Its interesting that the regulator and Anglo Irish have been so adamant that while the issue was a resigning offence nothing illegal had been done.

I wonder will this stand up to further scrutiny. If what was done was legal then the legislation in this area is pretty toothless. My understanding was that all directors transactions had to be dislosed not just a year end balance. 

It certainly is in breach of accounting standards
_*The accounting standard of most relevance to the subject matter of this guidance is Financial Reporting Standard 8 (FRS 8) ‘Related Party Disclosures’. FRS 8 requires the disclosure of information on related party transactions. For the purposes of FRS 8, parties related to a company include, inter alia its directors and the directors of any of its parent undertakings i.e. holding company, its holding company and its subsidiaries, and members of the close family of the directors and directors of any parent undertakings. *_
_*The information required to be disclosed in company financial statements by FRS 8 is as follows: The names of the transacting related parties, a description of the relationship between the parties, a description of the transactions, the amounts involved, any other elements of the transaction necessary for an understanding of the financial statements, the amounts due to or from related parties at the balance sheet date and provisions for doubtful debts due from such parties at that date, and amounts written off in the period in respect of debts due to or from related parties. *_
_*The foregoing is only a summary of the provisions of FRS 8 and company directors should seek professional accountancy advice in order to ensure that company financial statements are fully in compliance with the requirements of the FRS and that its disclosure requirements are fully satisfied. *_

Not that hard to understand I think. Anglo Irish was not a huge bank ,over 8 years the auditors never looked at the directors transactions ?

What Fitzpatrick did was fraudent ,in AMercia he would do jail for that.
Is the bank going to call in that 87 million now,what security has he given for this
Is the whole Board in there rotten,and we are putting taxpayers money into this bank to finance this guys reckless lending including the lending to himself


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## ubiquitous (19 Dec 2008)

VOR said:


> _Section 31 of the Companies Act 1990 forbids loans by companies to directors (including their family and corporate interests) where the loan is 10% or more of net assets._
> 
> Whats Anglo worth today? €110M on the exchange. Does any one know the net asset value on the balance sheet.



According to Morning Ireland today, this law does not apply to banks. I don't know if this is true.


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## Bank Manager (19 Dec 2008)

ubiquitous said:


> According to Morning Ireland today, this law does not apply to banks. I don't know if this is true.



I'd have thought not, but found this ....  there appears to be an 'out' but I'd still contend that it is not designed to cover the type of incidence we are discussing here.  I remain to be convinced it's anything but fraud.

BM

   ODCE Briefing: Directors’ Loans

  Is Your Company Your Personal Bank?

  Introduction
  Company directors occasionally use company assets for personal purposes unrelated to the company’s business, e.g., the purchase of family holidays or contributing to the purchase of a home.  However, some of these transactions are legally prohibited.  

  Why?
  The purpose is to prevent unscrupulous directors from divesting the company of its assets for their personal benefit.  The rules in the Companies Acts are a ‘creditor protection’ mechanism and are designed to ensure that company assets remain within the business to meet its ongoing commitments or are otherwise available for distribution to creditors in the event of its liquidation.  By encouraging compliance with these obligations, the Office of the Director of Corporate Enforcement (ODCE) wishes to reduce creditor losses and overall business risks and thereby improve the commercial environment for sound business development.

*What is permitted?*

  While the general rule is that directors are prohibited from using company assets for personal purposes, there are a number of exemptions:

  -arrangements not exceeding 10% of ‘relevant assets’ (see the *Illustration* below); 
  -arrangements approved by special resolution and accompanied by a statutory declaration describing the circumstances;
  -arrangements between group companies;
  -directors’ expenses properly incurred in developing the business;
  -transactions made in the ordinary course of business, e.g., by banks.

  Any transaction (whether prohibited or not) must be disclosed in the company’s financial statements by way of a note disclosure.

*What are the Consequences of Non-Compliance?*

*The company auditor is required by law to report non-compliance to the ODCE.  No matter how the transaction comes to attention, the Office considers if the circumstances of the offence warrant legal action against the directors and other relevant persons.  In some (but not all) cases, the ODCE will be satisfied by evidence that the directors have voluntarily corrected the default.*



*The principal legal options open to the ODCE include prosecution of the directors and other relevant persons or High Court proceedings to remedy the default.  A decision to pursue legal action is likely to be made where the available evidence suggests, among other things, that the directors knowingly breached the law in undertaking any transaction, the aggregate amount of the transactions was large, there was persistent default and/or satisfactory evidence of rectification has not been forthcoming.  The ODCE has already prosecuted one director who obtained several €100k from his company, and other similar cases are planned. *


*If an insolvent company ceases to trade and a transaction remains outstanding, the directors may also face High Court restriction or disqualification proceedings by the company’s creditors, its liquidator or the ODCE.  *


  The ODCE also reserves the right to inform the Revenue Commissioners of selected cases, particularly where the transactions are of a high value, in order to enable Revenue to assess if a tax liability arises.

*Illustration:  The   10% of ‘Relevant Assets’ Rule and its Effect*


   Arrangements   at or below 10% of ‘relevant assets’ are permitted.  This term is defined as:

   -the company’s net assets (i.e., its total assets less total   liabilities) according to the most recent preceding balance sheet to have   been laid before the company’s annual general meeting (AGM), or
   -where no preceding balance sheet has been laid before the company’s   AGM, the called up share capital.  

   If a   company’s net assets, as defined, are €250,000, this allows arrangements to   be made to directors and connected persons (e.g., family members) up to a   limit of €25,000 (i.e., €250,000 x 10%).    If, however, no relevant balance sheet has been laid before an AGM and   the company has only a nominal called up share capital (e.g., €2), the   maximum permitted arrangement would only be 20 cent (i.e., €2 x 10%).

   The 10%   rule applies to the aggregate amount of all loans, ‘quasi-loans’ and credit   transactions benefiting directors or connected persons. 

*Where can I get more Information?*

  In order to improve compliance by directors with this obligation, the ODCE has produced a booklet on ‘Transactions Involving Directors’ which is available from the ODCE website at www.odce.ie or on request from the Office at info@odce.ie, (01) 8585800 or Lo-call 1890 315 015.  

  Readers wanting advice about their personal situation should consult their professional adviser.


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## capall (19 Dec 2008)

It doesn't apPly to banks because it was a business transaction ie the banks business is lending


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## ubiquitous (19 Dec 2008)

Bank Manager said:


> ODCE Briefing: Directors’ Loans
> 
> Is Your Company Your Personal Bank?



It is better to post selective quotes & links to the actual document rather than lengthy extracts from documents - especially when there is doubt over their relevance to the topic being discussed. Similarly, highlighting entire paragraphs in bold is counterproductive, as they are difficult to read.


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## Bank Manager (19 Dec 2008)

Fair enough - btw I didn't bold anything, that's the way it pasted in - my only amendment was to highlight one line in red (as I felt it directly related to the previous posters point).

Regards,

BM


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## NorfBank (19 Dec 2008)

David Drumm has just resigned as CEO of Anglo. Stock suspended.


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## redstar (19 Dec 2008)

Its true (the resignation)...

http://www.rte.ie/business/2008/1219/anglo.html

Shares do not seem to be suspended, though.
"Anglo shares were down three cent at 29 cent in Dublin by mid-morning, having earlier fallen as low as 19 cent."
RTE


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## Brendan Burgess (19 Dec 2008)

What  would have happened if Anglo Irish Bank had succeeded in  the Irish Nationwide? 

Seán Fitzpatrick would have had to find some other bank to warehouse the loan. 

Brendan


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## NorthDrum (19 Dec 2008)

I could go to jail for not paying my TV licence. Does that not seem slightly unbalanced considering the worst that appears to be able to happen to people at the top of their industries is forced early retirement (or simply resigning before any inquest can uncover the truth).

If this is legal, then it only further highlights whats morally wrong in the financial services industry. It seems this guy was allowed to drawdown 87mil among banks at differant stages outside of disclosure guidelines. Cloak and Dagger come to mind. 

What happens if the 87 mil is gone, no doubt the taxpayer will end up footing the bill and these guys will get to resign rich. Oh, but they were entitled to it, all is above board then, just like our friends at Fas . . 

Most important thing for me is that there are obviously no proper regulation on people higher up in the food chain and even more importantly there are no real consequences to their blind disreguard for basic prudential business practises.

Saying that these guys are entitled to take these loans out may or may not true but this being mentioned simply makes a mockery of the supposed regulation of these bigwigs. I wouldnt want to get a complex that in our country , people in powerful positions in banks and people with alot of money are above the laws that us Normal working class guys are ruthlessly forced to adhere to! ! ! .


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## VOR (19 Dec 2008)

Perhaps that played a part. In this climate, it is not as easy to refinance a mortgage for €87K never mind a loan for €87M. 

It just goes to show that the accounting saying is true "If you can't  DO IT, AUDIT"


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## paddyd (19 Dec 2008)

just heard one of the business-editor contributors on george hook say that the Financial Regulator may be imminently stepping down, according to their news wire


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## extopia (19 Dec 2008)

Was in the head office today making a withdrawal. Quiet enough in there, not much going on. Some people were opening new accounts, believe it or not.


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## ubiquitous (19 Dec 2008)

extopia said:


> Were these loans used to buy shares in the bank, I wonder?



Hmmm....

By coincidence the Indo reported this yesterday



> By far the biggest loser amongst Ireland's bank bosses has been Anglo Irish chairman and former chief executive Sean FitzPatrick. At the top of the market in early 2007 his 4.5 million Anglo shares were worth almost €80m. By yesterday these shares were worth just €1.6m.


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## webtax (19 Dec 2008)

ubiquitous said:


> By far the biggest loser amongst Ireland's bank bosses has been Anglo Irish chairman and former chief executive Sean FitzPatrick. At the top of the market in early 2007 his 4.5 million Anglo shares were worth almost €80m. By yesterday these shares were worth just €1.6m.



So that bad debt will be about a third of the banks whole market value! 

(Not to worry, I'm sure as usual Anglo have his property as security...)


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## Duke of Marmalade (19 Dec 2008)

Brendan said:


> What would have happened if Anglo Irish Bank had succeeded in  the Irish Nationwide?
> 
> Seán Fitzpatrick would have had to find some other bank to warehouse the loan.
> 
> Brendan


_Boss_, the two institutions involved are noted for the huge egos at the helm. Maybe naive, but I think the other banks would not have touched this scam with a forty foot pole. In fact it might even be that the banks involved scarcely knew what was happening as it was probably arranged between a small coterie who think they are above all this good governance stuff.


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## jpd (19 Dec 2008)

Would it be better for all of us if we let the Irish banks go to the wall and let the European banks into the country in their place ? 

After all, the regulation couldn't be any worse and they might even bring a bit more common sense into the country ?


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## johnhalpin (19 Dec 2008)

Could somebody here clarify this whole senario in simple terms for one who does not fully understand accounting or banking terms.  I have a number of questions and I'll list them in 'my' order of importance.

1. Am I right in thinking the Fitzpatrick took €87 mil out of Anglo coffers    
    each year for 8 years?
2. Did he lodge this money on deposit with F.Nationwide for 11 odd 
   months each year 'till just before the annual audit?
3. Did he personally gain the interest on this huge deposit?
4. If the above is not the case, how did he or Anglo gain anything from 
    transactions that were at best 'shady'?


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## rmelly (19 Dec 2008)

Now that he has resigned as a director, what are his obligations on repaying this loan - does he have a certain time period to repay or is it treated as a standard loan at this point?

My first thought on this was that he used the loan to buy shares in the company. At least with the Quinn loans issue, the loans were repaid. Am I the only one who sees this amount being written off, particularly if it was used to finance share purchases, and Fitzpatrick walking away scot free?


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## z109 (19 Dec 2008)

johnhalpin said:


> Could somebody here clarify this whole senario in simple terms for one who does not fully understand accounting or banking terms.  I have a number of questions and I'll list them in 'my' order of importance.
> 
> 1. Am I right in thinking the Fitzpatrick took €87 mil out of Anglo coffers
> each year for 8 years?
> ...


1 - no, the amount increased to 87 mn. Whether it varied or started at that amount is unclear.
2 - no, he took it out of Anglo a week before the audited results and put it back into Anglo a week afterwards.
3 - it wasn't a deposit, it was a loan, so he moved the loan from one to the other (borrowing from Mr. Fingleton's bank to pay his bank and then borrowing from his bank to pay Mr. Fingleton's bank). The terms of the loan are still unclear.
4 - it is considered bad form to use shareholder's money in piggy-bank fashion. The fact that he wasn't man enough to own up to the amount he had borrowed in the company accounts for eight years is testament to the fact that the shareholders would have taken a dim view of it. Unless someone can think of another rational reason for his actions? The shareholders might have asked difficult questions like:
1/ what was the money used for? Was that an opportunity to make money that should have gone to the bank (and hence the shareholders) rather than the bank staff personal pocket?
2/ what were the terms of the loan? Could more money have been made elsewhere?
3/ is he exposing the bank (and hence the shareholders) to damage to its image? Or material damage?


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## z109 (19 Dec 2008)

rmelly said:


> Am I the only one who sees this amount being written off, particularly if it was used to finance share purchases, and Fitzpatrick walking away scot free?


No.

Oh and that would be FitzPatrick, with a capital P, dontcha know.


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## johnhalpin (19 Dec 2008)

Thank you 'Yoganmahew'

That clarifies the story a bit, but I'm still groping for a  reason or excuse as to why such a highly respected and personable man  would do anything to endanger his profile with his peers or shareholders?

You say in reply to Q2........ no, he took it out of Anglo a week before the audited results and put it back into Anglo a week afterwards.

Why, why why? what could he possibly gain from this?
Where was the money for this ONE week?
I presume it was in Ir. Nationwide?
A week's interest on €87mil would amount to a tidy holiday fund?
It's hard to get this out of the equasion as I cant get my head around any other possible reason for sharp practise.

Am I missing something?


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## z109 (19 Dec 2008)

johnhalpin said:


> I'm still groping for a  reason or excuse as to why such a highly respected and personable man  would do anything to endanger his profile with his peers or shareholders?


I can only guess that he got an 'opportunity' to make money that was too good to pass on to his bank, inappropriate for his bank or too good to miss out on. But short of an explanation from the man himself, his motives must remain the subject of speculation.


> You say in reply to Q2........ no, he took it out of Anglo a week before the audited results and put it back into Anglo a week afterwards.
> Why, why why? what could he possibly gain from this?


His name didn't appear on the audited reports as having a loan for €87 mn from the bank that he is supposed to be chief watchdog of. 


> Where was the money for this ONE week?
> I presume it was in Ir. Nationwide?


Yes.


> A week's interest on €87mil would amount to a tidy holiday fund?


You're still thinking backwards - he moved his loan from Anglo to INBS, that is, instead of owing 87 mn to Anglo, he owed 87 mn to INBS. He would have been paying the interest, not getting it. It was worth his while to pay money to INBS so he didn't have to appear in the annual report (which goes to shareholders, the people who own the company). (Assuming he did pay interest to INBS and it wasn't just some gentleman's agreement).

If you want some guesses, either shares in Anglo itself or in some property deal that has been delayed were what he wanted the money for - so he borrowed the money to buy land or shares, hasn't seen a return yet so can't pay it back. If it is shares, particularly if it is shares in Anglo, he is in a bit of trouble as his holding that was worth 80 mn last year is now worth 2 mn. Site values have also fallen dramatically as have commercial property values (of unrented buildings). My guess is it's a bit of everything, but until some more information comes out, it is a guess.

Sorry for all the speculation, but there are some very opaque aspects to this affair that really need to come out into the open, particularly since it looks like this is a debt the Irish taxpayer is going to own at some stage in the future.


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## mathepac (20 Dec 2008)

Yet another cosy coterie of immoral and unethical insiders flout the control procedures and just walk away. The supposed regulators and over-sight committees (statutory, internal and external) just sat on their hands, or were they in some way complicit?

This is an astronomical sum of money (to me at least) and yet again these pompous individuals in positions of trust apparently can walk away to early secure retirements while Sean & Sheila citizen pick up the tab.

I realise there is more heat than light in my post, but I am dumb-founded by the breadth and scale of what is now surfacing and I wonder is this the end of something or just the beginning.


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## mercman (20 Dec 2008)

mathepac said:


> I realise there is more heat than light in my post, but I am dumb-founded by the breadth and scale of what is now surfacing and I wonder is this the end of something or just the beginning.



This is just the beginning. The word on the street is that Anglo will be Nationalised on January 4th, and its good bye to the fat cats who thought they were indispensable.


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## NorthDrum (20 Dec 2008)

mercman said:


> This is just the beginning. The word on the street is that Anglo will be Nationalised on January 4th, and its good bye to the fat cats who thought they were indispensable.


 

Do you really think so ! ! Maybe for now its goodbye to the fatcats, but until there is proper repurcussions for blatant disregard of laws by these "fat Cats" there will always be more fat cats to take their place!

There has been zero accountability for whats transpired to date, what makes you think that the government will even make a token gesture for these new but not really shocking revelations. And anyways, the things these guys get up to seem to be just somehow above board ! ! 

What has happened is that these people (I include some TDs and some high rolling public servants) have gotten so used to riding on the wave of greed and ignorance, that there is absolutely, without a shadow of a doubt no ethics in modern business whether it be private or public (save for the select few who are probobley outcasts). Public relations replaced ethics a long time ago. Either they were "entitled" to bend the rules like they have or they were "entitled" to do what they did.

Their moral compass is so off scope, they couldnt find their way home if their lives depended on it, or perhaps if there was money to be made on achieving the objective of getting home they might actually "achieve their target"!!!. 

Only thing is that there is a nice Legislatory taxi to take them home to retirement if they get caught with their hands in the cookie jar. There are many reasons why our country is on its knees, but a huge portion of this reason is simply greed that has been subsidised by ignorance and backed up by lack of accountability. If you ever need look at why a society has failed, you generally need look no further then the guys that control the wealth. Worse still if you want to find the solution to the problem, its usually the same parties who have most to lose that block progression, who normally have a major part in the problems in the first place.


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## Towger (20 Dec 2008)

mercman said:


> This is just the beginning. The word on the street is that Anglo will be Nationalised on January 4th, and its good bye to the fat cats who thought they were indispensable.


 
It is now on the Irish Times: [broken link removed]

It also looks as if Fitzpatrick thought Anglo might, umm, run into a spot of bother:



> Separately, _The Irish Times_ understands that Mr FitzPatrick moved personal funds from Anglo to Bank of Ireland in advance of the Government's emergency decision in September to guarantee deposits and debts at the Irish-owned banks.


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## Complainer (20 Dec 2008)

How on earth could Irish Nationwide have got adequete security on €87 million on a short-term basis? Surely the process of getting security for a sum of this size would take months in itself?


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## Bank Manager (20 Dec 2008)

Complainer said:


> How on earth could Irish Nationwide have got adequete security on €87 million on a short-term basis? Surely the process of getting security for a sum of this size would take months in itself?



Would you believe quite the contrary - I don't know what the security was, but it was probably either ...

a) a bank guarantee from Anglo to INBS (with Anglo continuing to rely on whatever security they hold) or

b) a solicitor's undertaking to transfer (hold in trust) whatever security had previously been pledged to Anglo for INBS - on the basis that all parties probably knew these transfers would never take place, as the loan was going to find it's way back quickly to its 'rightful home'!

Regards,

BM


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## z109 (20 Dec 2008)

Bank Manager said:


> Would you believe quite the contrary - I don't know what the security was, but it was probably either ...
> 
> a) a bank guarantee from Anglo to INBS (with Anglo continuing to rely on whatever security they hold) or
> 
> ...


If either of these things are true, in particular, if a) is true, then does that not mean that the loan continued to be Anglo's "property" (for want of a better word) with the result that it should have appeared on the accounts? In short, fraud? Since there was no fraud, there must be some other explanation!


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## Bank Manager (20 Dec 2008)

No it wouldn't have remained Anglo's property - it was SF's loan (primary responsibility), but Anglo would have been the guarantor in the case of default (secondary responsibility) if a) was the case, personally I'd suspect it was option b) that was employed, again it would be SF's loan (not Anglo's).

Either way, you'll see from my earlier posts - I believe this to be fraud - it would appear the loan was moved year after year just before/after balance sheet date for Anglo, in order to hide same from the shareholders, and if that's not fraud, then I don't know what is...

Regards,

BM


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## Duke of Marmalade (20 Dec 2008)

Bank Manager said:


> - I believe this to be fraud -


I suppose we better be careful but Jim Power in today's Indo also expresses amazement that this action is legal. It was designed to mislead - no doubt about that. People who bought Anglo shares over the last few years could argue that they did so on the basis of the accounts and that if they knew about these shenanigans they would never have invested and lost so much money. As Jim Power says, clear case for a class action in some other jurisdictions.


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## picaresque (20 Dec 2008)

I'm not an accountant and don't know much about how these things work but can someone explain to me the position of the auditors in this.

Would it be difficult to have found these loan movements?
Would they have decided for some reason not to look into particular types of transactions e.g. directors and if so why?
Will there be any repercussions for them?
If they did know about the loans should they legally have done something?


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## Mortgagor (20 Dec 2008)

One interesting thought that I had is the possibility of a class action (widespread in US) case in relation to the fact that the balance sheet appears to have been artificially synthesised to create a misleading impression of Anglo's practices. It is fair argument that the balance sheet is used as a basis for shareholder investment decisions and so there may be a basis for a class action ... I presume the government guarantee wouldn't underwrite Anglo's liability in relation to class actions 

INBSMember.


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## Brendan Burgess (20 Dec 2008)

The auditor's role is very clearly laid down in law. They are watchdogs but they are not bloodhounds. 

The accounts must give a true and fair view of the profit for the year and the balance sheet at the year-end. 

It does seem odd that Ernst & Young did not see this. But it might not be that odd. They would have primarily been looking at the loans outstanding at the balance sheet date. They are also supposed to look at significant transactions after the balance sheet date. However, a loan of €87m might not be seen as significant in the context of a large bank. 

On balance, I would think that they might not pick up on it one year. But it is very odd that it happened 8 times without them picking up on it. The Chartered Accountants Regulatory Board will review their work. So that's fine. It is after all chaired by Dr Liam O'Reilly, the former head of the Financial Regulator. 

The worst outcome for Ernst and Young would be if they did pick it up and did nothing about it. While an auditor is not a bloodhound, they have been found negligent in other cases where they discovered something and failed to act.

It's not clear at this stage what the shareholders have lost, if anything. If the loans are adequately secured, then they will lose nothing. However, if the money was used to buy Anglo shares and property, he might not be in a position to repay the money.

Brendan


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## WILLY NILLY (20 Dec 2008)

If Anglo Irish Bank is *nationalised* as opposed to being recapitalised by the Govt, what happens the employees of anglo...... are they then public servants?


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## Guest124 (20 Dec 2008)

It wont be nationalised by definition but will be given a few Billion - this Country is in meltdown (and no I'm not going to elaborate).


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## Simeon (25 Dec 2008)

Brendan said:


> Apparently he has had €87m in loans from the bank which were never disclosed in the accounts.
> 
> Each year before the audit, he repaid the loans with borrowings from another financial institution, and reborrowed after the audit was finished.
> 
> ...


I would question the "nothing illegal" bit. If Fitzpatrick had declared his borrowings a few years ago ......... it would clearly have stopped the meteoric rise in share price. So, by hiding this, he directly kept the price at an ramped level. This misled the investors ....... full stop. Illegal or not?


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## Brendan Burgess (25 Dec 2008)

Sorry. I was quoting the breaking news from the FR - it was not my opinion. I don't know if it was illegal or not - it probably was. It was definitely wrong. 

Brendan


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## Spondulicks (23 Jan 2009)

This is real test of the regulatory and political regime in this country. After the beef tribunal, some lowly official and a journalist were prosecuted.
After the DIRT investigation, it was business as usual. 

Why do we accept this sort of response while carers are threatened with pay reductions, the elderly are struggling to get care with dignity, the psychiatric services remain under-resourced, our water services are periodically shown up, our export infrastructure for indigeneous business is weak and our telecommunications infrastructure is behind all our competitors. Mind you we have among the most and  best paid and expensed politicians in Europe.


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## Simeon (23 Jan 2009)

Wouldn't it be great if, for once, the people put in to check this out would be plain speaking in their report. No ambiguities or reference made to the zeitgeist. A crimnal act is a crimnal act whether one person is doing it or lots and lots of people. In the early stages of this whole scenario, each individual would have made a conscious decision to disregard the book, do a solo run and coin it. If they were under pressure from their immediate boss it does not make it legal. The fact that they were doing it for years should be no mitigation. Then, if all the bent bankers are sued and brought to justice, a total clear out of the old guard and a new dynamic installed we will win back the approval of investors. But it's got to be swift and ruthless. We are inquiry weary. The fact that bankers and not legal eagles are heading the inquiry might make this possible.


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## Afuera (25 Jan 2009)

Looks like questionable off balance sheet loans to the CEO were not the only funny business Anglo were up to.

http://www.timesonline.co.uk/tol/news/world/ireland/article5581673.ece

Hard to see how rounding up investors and funding a revenge fund on your own stock could be seen as "part of the ordinary business of the company".


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## Bronte (26 Jan 2009)

A chairman getting a loan from his own bank is not illegal.  Why did Sean Fitzpatrick hide the loan if it is perfectly legitimate to have a loan?


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## Simeon (26 Jan 2009)

Bronte said:


> A chairman getting a loan from his own bank is not illegal.  Why did Sean Fitzpatrick hide the loan if it is perfectly legitimate to have a loan?


No cigars for this answer!


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## skatter (31 Jan 2009)

Does Fitzpatrick not own a casino or two in vegas?

I think that all assets of these banking BIG WiGS should be frozen by CAB until such time that the true extent of the situation is known. He didnt earn that money...banking is all about the gamble (Im from 3 generations of stock brokers so I know!)...Maybe Ill ask the bank for a million or two to speculate on the Grand National.....


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## mercman (31 Jan 2009)

skatter said:


> I think that all assets of these banking BIG WiGS should be frozen by CAB until such time that the true extent of the situation is known.



Probably the best suggestion that has been mentioned yet. Even for the sake of the Public attitude, these blokes should have been handcuffed and marched out of the building and loaded into a Paddy wagon. A real therapy for the Greed disease.


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## Spondulicks (31 Jan 2009)

There is no chance of that occurring.

If you read Billy Bunter you would know that chums look after chums ! 

What chance is there of approriately deep and wide disclosure when the new Chairman of Anglo is a former managing partner in the largest audit firm in the state. 

Pillars of the establishment  are unlikely to secure what the citizenry require and should justifiably expect at this level in society and the economy. They have a fair degree of interest in not disturbing many of the current assumptions regarding the conduct of business  and is distributing the fruits of our endeavours.


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