Watchdog did not tell minister of irregular dealings

MONEY-LAUNDERING allegations involving multi-million sums of AIB shares were not communicated to the Department of Finance, who remained unaware that a Garda investigation was taking place into the dealings.

The Financial Regulator reported the suspicious share dealings to the gardaí when concerns were raised in 2001, but it failed to inform the department or minister for finance, who only found out about it in recent weeks.

Representatives from the Financial Regulator’s office will appear before the Oireachtas Committee on Economic Regulatory Affairs on Wednesday to face questioning on the irregular share dealings.

Details of the practice only came to light two weeks ago when former AIB auditor Eugene McErlean blew the whistle at the committee’s last meeting. He revealed that Goodbody stockbrokers (a subsidiary of AIB) were routing clients’ shares to the Caribbean tax-haven island of Nevis.

For an unknown period of at least nine months, ending in 2001, all shares purchased in AIB by clients of Goodbody were put in the name of a company in Nevis.

When Goodbody were asked to sell AIB shares on behalf of its clients, it sold shares held by the company in Nevis which was then listed as a “black spot” with which Irish financial institutions were not allowed to trade.

Goodbody claimed it was dealing in shares through the German beer company, Furstenberg, but in fact was using the account of a customer named Furstenberg who was no relation to the beer dynasty.

The Financial Regulator, then part of the Central Bank, was informed of this practice through an audit report. The Irish Stock Exchange were also told of the practice which was stopped soon after concerns were raised.

However, Finance Minister Brian Lenihan admitted that this was not communicated to his department “due to confidentiality obligations”.

The gardaí were unable to confirm if its investigation concluded, when, and what, if anything, it found, saying they are “not in a position to comment on disclosures made under money laundering legislation”.

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