The regulatory board overseeing auditors has signalled it will not reopen its investigation into the quality of audits of banks just before the crash, despite damning criticism from the judge who yesterday jailed three banking executives.
The Chartered Accountants Regulatory Board last September completed an independent five-year investigation — at a cost of €1.33m — into the auditors, and concluded that the standard applied by external auditors was “found wanting”, but that the external audits themselves were generally of a high standard.
Judge Martin Nolan said it beggared belief that Anglo’s auditors Ernst&Young (now EY) had signed off on Anglo’s end-of-year accounts.
“They should have known what was occurring if they were doing their job properly,” he said, and commented as to whether it was a case of “blindness or wilful blindness”.
A spokeswoman for EY said it was not a party to the latest proceedings and would not be commenting further.
Judge Nolan also had stinging criticism for State authorities who turned a blind eye to “optically driven balance sheet management” which he said was a euphemism for banks entering into transactions which have little or no effect.
He jailed former Anglo Irish Bank executives John Bowe for two years and Willie McAteer for three and a half years, and the former group chief executive of Irish Life and Permanent, Denis Casey for two years and nine months for their part in a €7bn market corruption scheme that was “deceitful, dishonest and corrupt”.
Judge Nolan said their actions had “potentially affected thousands of people” and they had failed to act with honesty and integrity by manufacturing €7.2bn in deposits in what were obviously “sham transactions”.
The deals were done in September 2008 to make Anglo’s books look healthier that they actually were.
Judge Nolan said that Anglo’s former CEO, David Drumm, was the driving force behind the scheme.
The evidence during the trial was that Bowe believed the attitude of the Financial Regulator was one of “I’m not looking” and that Casey became involved with the transactions after being told by the Regulator that Irish banks needed to “don the green jersey” and help each other out during the unprecedented global credit crunch.
As he jailed Willie McAteer, 65, of Greenrath, Tipperary Town, Co Tipperary, for three and a half years, Judge Martin Nolan said he had authorised the transactions when he knew what he was doing was underhand, deceitful, and corrupt. He said he was a respected leader of huge experience whose actions in 2008 were reprehensible.
He told John Bowe, 52, from Glasnevin, Dublin, that he had been the chief man in Anglo’s Treasury room and he had failed to act with honesty. He told him that, in law, following orders was no defence. He imposed a two-year sentence on Bowe, telling him the lower sentence was because he was “a lesser functionary” and not a board member.
He told Denis Casey, 56, from Raheny, Dublin, that he had made a grave error of judgement in authorising the transaction with Anglo. He said he was a man who should have known better. He jailed him for two years and nine months after telling him that Anglo were the authors of the scheme but that he had behaved disgracefully and reprehensibly in co-operating with it.
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