Anglo subject of three separate inquiries

ANGLO Irish Bank is the subject of investigations by three separate state bodies, the Garda Fraud Bureau, the Office of the Director of Corporate Enforcement and the Financial Regulator, it has emerged.

Commenting on the background to these investigations the Minister for Finance, Brian Lenihan, has claimed the difficulties that led to Anglo being nationalised and the requirement that €30 billion of toxic property assets be placed with NAMA are similar to problems encountered by banks across Europe.

Speaking on RTÉ television, however, senior economist with the Economist Intelligence Unit, Dan O’Brien, dismissed the minister’s assessment and said the “bank was a particular case” which combined with an ineffective Irish financial regulatory system had meant Anglo had been allowed to get up to “really crazy behaviour”.

“Outside of possibly Iceland I do not think there was another bank across Europe that got so out of hand as Anglo Irish did.”

All three state bodies investigating Anglo, amounting to over 30 full-time investigators, are known to be focusing their resources on four major issues:

- The golden circle:

How a series of loans amounting to €451 million were organised for a group of 10 property developers and long-term bank customers so they could purchase shares formally controlled by Ireland’s richest man Sean Quinn and his family.

Mr Quinn converted his 25% interest in the bank, held without paying the full share value through so-called contracts for difference, into a 15% share-holding.

The bank then organised for the 10 investors to purchase a remaining 10%. The aim of the operation was to artificially shore up the bank’s share price.

Although criminal investigations are ongoing it has since emerged the nationalised bank has written off around €300 million of the loans leaving the taxpayer to pick up the tab.

- “Bed and Breakfast” loans

Irish Life & Permanent’s placing of up to €7 billion in deposits with Anglo Irish Bank before the bank’s financial year ended – including €4 billion just hours after the Government guarantee was put in place last September.

These loans were hidden from shareholders and artificially strengthened the appearance of the group’s balance sheet prior to its financial year end.

The transitory nature of the loans lead to them being called “Bed and Breakfast” loans. The criminal investigation centres on whether these transactions could amount to market manipulation.

- Seanie’s secret loans

Former Anglo chairman Sean FitzPatrick’s personal loans of up to €87 million which were hidden from shareholders.

It emerged this week that Mr FitzPatrick may no longer be paying interest, that may amount to €400,000 a month, on the secret loans and additional €20 million he had declared. Minster Lenihan said he had not been aware that this was the situation.

- Management loans

Loans were made to a number of other senior and middle management executives in Anglo, some of whom continue to be employed by the bank. These loans, some amounting accumulatively to several million euro were then used to purchase property and Anglo shares.

The manner in which these loans were provided is now being investigated.

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