Fall from grace: Banking tycoon to criminal suspect

THE dawn arrest of Sean FitzPatrick completed the 10 sorrowful steps in a career which descended from banking prefect to criminal suspect.

The former chairman and chief executive of Anglo Irish Bank had been the driving force behind the bank which three years ago made profits of €1.2 billion.

However, the revelations of loans he took out with the bank and the bookkeeping habits at Anglo destroyed his legacy and forced him to resign in late-2008.

March-May 2008: Billionaire Sean Quinn had built up a massive and undetected investment on the fortunes of Anglo.

International speculators decided to bet heavily against his stake and this compromised the entire foundation of the bank.

The bank secretly arranged a consortium of 10 large investors to take out loans from the bank with which they could buy €450m worth of shares in Anglo in July.

Mr Quinn had lost more than a billion euro, which he admitted was a mistake, and had to buy an official 15% stake in the bank.

The bank was in terminal decline.

September 2008: Billions of euro were leaving the economy as backers from around the world lost faith in our banking institutions. By the end of the month the Government was considering nationalising Anglo because its problems were so great.

A €440bn Government guarantee for Irish-based financial institutions was opted for instead with the hope it would stop the run on Anglo.

The next day was the end of Anglo’s financial year and to puff up its books it arranged for an overnight loan of €7.5bn from Irish Life and Permanent. Its shares lost half their value.

The Financial Regulator’s office was supportive of the bank’s efforts to stabilise its situation temporarily.

October 2008: Immediately after the guarantee, Mr FitzPatrick goes on the offensive to defend himself and his bank.

In an interview with Marion Finucane he denies Anglo was over-exposed and said he could not see the point in apologising.

“I can’t say sorry with any degree of sincerity.”

Mr FitzPatrick denied his bank was in any more danger than other institutions. He said mistakes were natural for a business which relied on taking risks.

December 2008: Sean FitzPatrick resigned on December 18, along with non-executive director Lar Bradshaw.

The bank’s chairman admitted to having directors’ loans from Anglo worth €87m. This arrangement had been ongoing for eight years, but was hidden from investors by the use of temporary loans from other banks. These have not been repaid.

The same month the Government took extraordinary measures to announce plans to recapitalise AIB, Bank of Ireland and Anglo Irish Bank.

The bank’s chief executive, David Drumm, followed his former boss out the door.

January 2009: Following the resignation of the Financial Regulator, Patrick Neary, speculation on the fate of Anglo intensified.

Six days later the empire fell. The bank, which Mr FitzPatrick built up in the 1980s, had fallen from a share price of €17 at its height and was now effectively worthless.

At an EGM in Dublin’s Mansion House shareholders were told they were likely to be left with nothing, but a valuation tribunal has still to decide if this is the case.

Details of the €7.5bn back-to-back loan, through the arms of Irish Life and Permanent, compounded the perception of Anglo as a toxic institution.

February 2009: Public appetite for reparations was temporarily abated with a high-profile raid on Anglo’s headquarters by the Office of the Director of Corporate Enforcement.

Twenty-two gardaí were involved in the day-long raid which was focused on the arrangement of the 10-member consortium to prop up Anglo in 2008, the loans to its directors and the purpose of the loan from Irish Life and Permanent.

Spring-summer 2009: The Office of Director of Corporate Enforcement is granted extra staff from the Garda and the Department of Enterprise.

It interviewed more than 100 witnesses and seized computer files and phone records.

Meanwhile, details of communications between the Financial Regulator and Anglo were revealed.

However, the public is warned not to expect any speedy arrests.

Autumn 2009: Pressure on the Director of Corporate Enforcement Paul Appleby to speed up his investigation into Anglo grows.

Government-appointed director Alan Dukes said it was a distraction from the attempts to turn the bank around and needed to be completed.

The opposition and Government backbenchers make similar calls. This would eventually feed demands for an Oireachtas inquiry into the crisis.

March 2010: The nationalised Anglo goes to the Commercial Court in an attempt to recover the €87m worth of loans extended to Mr FitzPatrick.

Finance Minister Brian Lenihan had already said the bank would vigorously pursue every person who owed it money, including its former directors.

The bank had previously issued proceedings against its former CEO David Drumm. However, Mr FitzPatrick had indicated he was unable to pay the money back.

A statement of affairs for Mr FitzPatrick showed he had lost €16m worth of shares in Anglo’s competitor banks.

The Government meanwhile unveiled the men who would investigated the banking collapse.

March 18, 2010: Sean FitzPatrick is arrested. It is two years and one day after the “St Patrick’s Day Massacre”, when Anglo lost 15% of its value and €3.5bn was wiped off Irish shares following moves against Sean Quinn’s Anglo stake. The 6am call by detectives to his Greystones home brings Mr FitzPatrick to a new low in a battle to protect his wealth and reputation.