Political opinion hardens on Anglo transactions
Speaking in the Dáil, Environment Minister and Green Party leader John Gormley predicted that there would be resignations at both banks because of the controversial transaction.
Fine Gael leader Enda Kenny said the two banks had colluded to “deceive shareholders”, while his Labour counterpart Eamon Gilmore labelled the transaction as “fraudulent”.
Finance Minister Brian Lenihan, although stressing that investigations into the issue had to be allowed take their course, was already on record as saying that the transaction represented an “unacceptable practice”.
Under the transaction, Anglo placed billions of euro with IL&P. The latter then appears to have used a non-banking subsidiary, Irish Life Investment Managers, to lodge the money back in Anglo as a “customer deposit”. This deposit would have had the effect of boosting Anglo’s end-of -year deposit-to-loan ratio, making the bank look healthier than it actually was.
In a short statement when details of the arrangement emerged, IL&P said it was an innocuous transaction aimed at helping Anglo.
“During a period of unprecedented turmoil in global financial markets there was an acceptance that financial institutions would seek to provide each other with appropriate support where possible,” it said.
But in the space of 48 hours, politicians moved from being deeply suspicious about the nature of the transaction to openly labelling it as fraud.
At the same time as Mr Lenihan was meeting with senior executives of IL&P, Mr Gormley was flatly rejecting the bank’s explanation for the transaction with Anglo.
“Before Christmas, I criticised the [financial] regulator and I predicted that there would be resignations from the Irish bank system. This has happened,” Mr Gormley said.
“Let me tell you that the latest revelations from IL&P and Anglo Irish Bank will result in further resignations. This did not involve ‘appropriate support’.”
Mr Gormley said there had to be “root and branch reform” in the banking system, with a crackdown on corporate crime. “In the United States, white-collar criminals are led out in handcuffs. I want to see a similar regime here.”
His party colleague, Senator Dan Boyle, told the Seanad that the transaction — an effort to “fundamentally cook the books of an organisation in order to create an impression of stability and profitability” — went beyond the realms of fraud. Instead, it was an action that represented “nothing less than economic treason”, he declared.
The tough language from the Green Party was seen as a giveaway that their coalition partners, Fianna Fáil, were demanding heads. Government sources last night confirmed they were expecting “heads to roll” as the IL&P meeting progressed.
Senior management at Anglo had already resigned over a controversy involving the concealment by chairman Sean FitzPatrick of loans totalling e87m which he had borrowed from the bank. That controversy claimed the scalps of Mr FitzPatrick, chief executive David Drumm and executive director Lar Bradshaw.
