Seán Fitzpatrick steps down as Chairman of Anglo

[rmelly]

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?

 

[z109]

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'?

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?

 

[z109]

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.

 

[johnhalpin]

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?

 

[z109]

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.

 

[mathepac]

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.

 

[mercman]

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.

 

[NorthDrum]

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.

 

[Towger]

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.

 

[Complainer]

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?

 

[Bank Manager]

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

 

[z109]

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

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!

 

[Bank Manager]

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

 

[Duke of Marmalade]

- 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.

 

[picaresque]

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?

 

[Mortgagor]

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.

 

[Brendan Burgess]

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

 

[WILLY NILLY]

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?

 

[Guest124]

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).

 

[Simeon]

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

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?