Trial of ex Anglo Irish Bank chairman Sean FitzPatrick has opened

Sean Fitzpatrick
Sean Fitzpatrick

The trial of former Anglo Irish Bank chairman Sean FitzPatrick for allegedly misleading the bank's auditors about millions of euro in loans between 2002 and 2007 has begun.

The trial of former Anglo Irish Bank chairman Sean FitzPatrick for allegedly misleading the bank's auditors about multi-million euro loans between 2002 and 2007 has begun.

A jury at Dublin Circuit Criminal Court heard that loans taken out by Mr FitzPatrick, his wife and family members increased from in the region of €10 million in 2002 to around €100 million in 2007.

The loans were used to finance development of shopping centres, hotels and offices at a time when a lot of money could be made in property development, prosecutor Dominic McGinn SC said.

He said that the amount of these loans was “artificially reduced” for a period of two weeks around the bank's financial end of year statement by short term loans from other sources, including Irish Nationwide Building Society.

He said this trial was about the alleged failure by the former director to disclose the extent of his loans to the bank's auditors Ernst & Young, now EY.

Mr FitzPatrick (68) of Whitshed Road, Greystones, Co Wicklow has pleaded not guilty to 27 offences under the 1990 Companies Act. These include 22 charges of making a misleading, false or deceptive statement to auditors and five charges of furnishing false information in the years 2002 to 2007.

Opening the case for the prosecution, Mr McGinn told the jury that Mr FitzPatrick is a qualified chartered accountant and was a director of the bank. He said there was a requirement in law under company law to make declarations about the level of loans made to directors.

These declarations had to be made generally in end of financial year statements and also to the bank's auditors. He said the financial statements were relied on by depositors, investors and borrowers to give a true and accurate picture of the performance of the bank.

Mr McGinn told the jury that as well as getting short term bank loans, the accused would also transfer funds from deposits and saving accounts to temporarily reduce the size of his loans on the Anglo books around their year end date every September.

“The amount of loans were artificially reduced,” he said. Counsel said that the trial was not about loans or about what they were for, but about the statements made about the loans to the auditors.

He told the jury that Mr FitzPatrick was entitled to a presumption of innocence, which was a fundamental cornerstone. He said that it was not enough for the jurors to think that “he is probably guilty”.

The jury of five men and eight women will begin hearing evidence tomorrow before Judge John Aylmer.

The prosecution intends to call 75 witnesses including Matt Moran and Tiarnan O’Mahoney who worked at the now-defunct bank. Alan Dukes, the former chairman of Anglo’s successor bank, IBRC, will also be called.

The case was listed to run for 12 weeks. An enlarged jury panel with 15 members was sworn in to hear the lengthy case in late September.

Since then the case has spent weeks in legal argument and two jurors have already been excused from the case for work and personal reasons.

Additional details of charges

Mr McGinn said EY required, as part of the auditing process, certain formal representations from the bank's management called letters of representation.

These were representations made by and on behalf of the board of Anglo, essentially saying what they had told the auditors was correct and there was nothing else significant the auditors needed to know.

Mr McGinn said the prosecution contention was that it was not enough for those letters of representation to be a "snapshot" of the position at year end. He said it was the bank's duty to furnish full information about the real picture of the bank's state.

If there was an artificial procedure where amounts of money were removed from the loan portfolio and replaced after year end, then the declarations were false and did not give a real, true and honest picture of the actual loan situation.

Mr McGinn said that the first 21 charges were contrary to section 197 of the Companies Act which made it an offence to knowingly or recklessly make a statement that was misleading, false or deceptive to auditors.

He said the first five counts alleged that Mr FitzPatrick made statements to auditors from 2002 to 2007 that excluded the full extent of the loans he or persons connected to him had taken from Anglo.

The next six counts alleged that he made a statement to auditors that failed to tell them that the temporary arrangements to reduce the loans had been reversed.

Counts 12 to 15 alleged a failure to inform auditors that other banks loans, apart from those temporarily refinanced each September, had also not been disclosed.

Counts 16 to 21 alleged that Mr FitzPatrick made a statement to auditors that failed to refer to the temporary arrangement of loans from Irish Nationwide Building Society to him every September between 2002 to 2007.

The final six charges were contrary to Section 242 of the Companies Act 1990 and alleged that Mr FitzPatrick furnished false information as to the aggregate loans of directors at the bank's year end for the same period.

Mr McGinn told the jury that it was the State's case that because the aggregate loan figure was arrived at as a result of the temporary refinancing arrangement the figure was inaccurate as to the actual true position at year end and was false or misleading.