FitzPatrick had bulk of bank chiefs’ loans

OF THE €179 million in loans outstanding to directors at Anglo Irish Bank at September 30, 2008, almost half was made up of borrowings by Sean FitzPatrick, the bank’s disgraced former chairman.

The notes with the accounts for the bank’s financial year-end show Mr FitzPatrick had a total of €83.3m in loans outstanding at the end of the bank’s last financial year compared with €6.8m at the end of September 2007.

The 2007 figure reflects the fact that Mr FitzPatrick had been hiding loans he had from the bank for a period of seven years.

That deception was achieved by transferring his debt to Irish Nationwide Building Society (INBS) prior to the audit each year, which he returned to his own bank once year-end was over.

The notes with last year’s accounts show that during the course of 2007 loans totalling €122m that included €9m on behalf of another director, were drawn down by Mr FitzPatrick.

The director is not named in the report but it is assumed to be Lar Bradshaw who resigned along with Mr FitzPatrick once it emerged he had been hiding the substantial nature of his borrowings which were hidden from the bank and the shareholders.

The accounts show that during 2008, €115m was repaid by directors including the former chairman which left him with a total amount outstanding of over €83m.

The bank said given the tough climate in the Irish market it would be making a bad debt charge against the loans in the current year.

Executive chairman Donal O’Connor said in his statement included with the accounts that the bank has initiated its own formal review of governance, focusing on the area of directors’ loans, which is being undertaken by an independent firm of solicitors.

That exercise is being overseen by the governance review committee, he said.

“In line with my comments at the extraordinary general meeting on January 16, 2009, the bank did not identify directors’ loans as a high-risk area.”

But he said some of the processes regarding directors’ loans “need significant strengthening”.

“The board is committed to ensuring that the governance processes in the bank are of the highest standard and intends to implement the recommendations of the review process,” he said.

In the past week it has also emerged that Mr FitzPatrick received millions of funding in sterling and dollars from INBS to help him sustain the cover-up on the amount of debt he had incurred as chair of the bank, that he built up with meagre resources when he was chief executive.

The publication of Mr FitzPatrick’s total borrowings is not the end of the affair however.

There are a number of reviews ongoing by external authorities including the Office of the Director of Corporate Enforcement, the Financial Regulator and The Institute of Chartered Accountants whose reports will be watched with interest.