Regulator branded a ‘pathetic farce’ amid Anglo saga
Mr FitzPatrick hid the massive loans from shareholders by repeatedly transferring them over an eight-year period to Irish Nationwide Building Society and resigned as chairman of Anglo Irish last month when it became public.
However, the regulator’s office had finally become aware of the transactions by the end of 2007, though no action was taken until December 2008, with the watchdog’s chief’s claiming the office was busy dealing with the banking crisis - even though it only erupted in September.
Fianna Fáil senator Geraldine Feeney accused the regulators of hugely damaging the international reputation of Irish finance.
“You were blindfolded, sitting on your hands, you had your mouth gagged and your ears were covered... It’s pathetic you sit here today and tell us you were busy with other things,” she said.
As the financial watchdog’s top brass appeared before the Oireachtas Committee on Economic Regulatory Affairs, it emerged the FitzPatrick loans had been greater than €87m.
Former chairman of the Revenue Commissioners and member of the board of the Financial Regulator Dermot Quigley, who examined the regulator’s handling of its investigation into the loans, told the committee that there were “variations up and down from that figure” over the period in question. Outgoing Financial Regulator Patrick Neary, who is quitting over the controversy, said he only became aware of the loans last month when it was raised by Finance Minister Brian Lenihan.
Mr Quigley said the matter was not pursued partly due to pressures on the watchdog as a result of financial turmoil. “There was a serious breakdown in our process and internal communications and as a result of that, we did not follow up in the way that might have been expected.”
The regulator chiefs said a missing letter was a major factor in the failure to follow-up on the loans, though it transpired the letter contained little information.
Fine Gael TD Leo Varadkar said a “lie detector” should be used at the regulator’s office to find out what had happened.
Chairman of the regulator’s board, Jim Farrell, promised to tighten the policing of the banking sector following the “unacceptable” loans at Anglo. He said it would also examine its own internal structures.
“Some of the behaviour we have witnessed of late is totally unacceptable... We fully accept that substantial change to regulation is required here,” he said.
A review into directors’ loans at banks covered by the Government guarantee will be complete “within weeks”, he said.
