THE Financial Regulator took the word of Anglo Irish Bank lawyers that its controversial €300 million share deal last summer was above board.
The regulator only began investigating the deal after a Government-commissioned audit flagged concerns in December. The Director of Corporate Enforcement has launched a separate investigation into the issue.
Meanwhile, Irish Nationwide chairman Michael Walsh resigned last night as the controversies plaguing the sector continued to hit.
Finance Minister Brian Lenihan said Bank of Ireland chief executive Brian Goggin would step down in three weeks’ time, several months earlier than planned. But it was the revelations about the Anglo deal which dominated Dáil business.
“The regulator obtained legal advice from the bank, from Anglo Irish Bank’s advisers, regarding the fact that this was a transaction which was in compliance — and that was accepted at the time,” said Taoiseach Brian Cowen. In a subsequent statement, the regulator said this advice had been provided to Anglo by a “leading Dublin law firm”.
“While various aspects of this were followed up, the advice received was very detailed and clear and was accepted by the Financial Regulator based on the information in possession of the regulator at the time.”
Under the deal, Anglo gave €300m in loans to a “golden circle” of 10 investors so they could buy part of a stake in the bank belonging to businessman Sean Quinn and his family.
Mr Quinn had built the stake through the use of high-risk financial investments known as “contracts for difference” (CFDs).
Mr Cowen said that as Finance Minister in March last year, he had been informed of the large CFD stake.
His successor as Finance Minister, Mr Lenihan, was then informed in July that “a number of individuals” had invested in Anglo, but was not told their names or the nature of the transaction, the Taoiseach said.
It was only when a due diligence of the banks was undertaken in December that concerns came to light, said Mr Cowen.
He insisted he had no knowledge of the identities of the golden circle. A spokesman for Mr Lenihan similarly insisted the minister was “not aware” of the identities of the 10 investors. However, Fine Gael insisted the Government still had many questions to answer.
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