Regulator to explain handling of AIB irregular share deals

THE Financial Regulator is being called in to a Dáil committee tomorrow to explain how it dealt with irregular share dealing involving AIB and Goodbody Stockbrokers.

The Irish Examiner revealed this week that the Regulator did not inform the Department of Finance about allegations that money was being laundered through Caribbean tax havens in 2001, despite referring the matter to the gardaí for investigation.

The regulator’s office wrote to the Oireachtas Committee on Economic Regulatory Affairs last week complaining about the allegations made at a committee meeting two weeks ago by a former auditor of AIB.

Eugene McErlean 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 was 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, and when, and what, if anything, it found, saying they are “not in a position to comment on disclosures made under money laundering legislation”.

Committee chairman Michael Moynihan (FF Cork North West) said it is his intention to get to the bottom of what happened and AIB, Goodbody and the Irish Stock Exchange are likely to be called in to answer questions.