Serious nature of bank irregularities forced regulator to make contact with gardaí

THE investigation into Anglo Irish Bank by corporate and financial watchdogs stepped up a gear in February 2009, when the Garda Síochána was asked to intervene.

The financial regulator contacted the office of the Garda Commissioner on February 25 and asked gardaí to begin an investigation into possible criminal transactions at Anglo, which was nationalised the previous month.

A senior garda source said at the time: “The regulator, as part of his inquiry, has discovered what they believe to be possible criminal activity or transactions that come within the ambit of criminal law and he has referred it to us.”

The regulator handed over documentation to the Garda Bureau of Fraud Investigation (GBFI).

The regulator said irregularities uncovered during its investigation at the bank were of “such a serious nature” that it had to refer the matter to the gardaí.

These matters include:

The transfer by then Anglo chairman Sean FitzPatrick, of personal loans, totalling €87m, which were hidden from shareholders, to Irish Nationwide ahead of Anglo’s end of year results so they would not appear in the group’s annual report and accounts.

Loans from Anglo worth €450m to a “golden circle” of investors to buy 10% of shares in the bank.

Short-term deposits, totalling €7.45 billion, from Irish Life and Permanent to Anglo, which were withdrawn after five days. The financial regulator is investigating if this was done to mask large customer deposit withdrawals and described the transactions as “completely unacceptable”.

The Garda investigation is separate to the probe by the Office of the Director of Corporate Enforcement (ODCE). This investigation also involves eight staff from the GBFI, which are seconded to the ODCE.

They corresponded with a team of 10 detectives attached to the GBFI.

The ODCE team carried out searches of Anglo offices, just before the Garda inquiry was launched, and seized a large volume of documentation and computer hardware for analysis.

However, most of the files had to be held in quarantine at the bank’s Dublin headquarters after the bank argued the files had to be kept secret as they fell under “legal privilege”.

Last October, the ODCE and the GBFI managed to take away the computers and files after a judge adjudicated on what was, and was not, legally privileged material.

The ODCE and the GBFI then proceeded in earnest with the mammoth task of examining the electronic and other documentation seized.

The ODCE investigation is concerned about possible breaches of company law, while the garda inquiry relates to possible breaches of criminal law.

At the end of November, Garda Commissioner, Fachtna Murphy, said the GBFI investigation was “extraordinarily complex”, had a massive scope and covered a lengthy period.

He said he bolstered the investigation with 10 additional staff, bringing the team’s strength to 20.

He assured the public he wanted the investigation completed and a file with the DPP “as soon as possible” and predicted this would happen by the end of spring.

He said he wanted to see wrong-doers “prosecuted and punished” if found guilty of breaking the law.

Last December, the ODCE and the GBFI were granted another six-month extension by the courts to retain the documentation seized in February.

The court heard that thousands of electronic files were being examined and up to three million electronic attachments needed to be examined in detail.

The court heard investigators had begun taking statements from Anglo staff and were particularly concerned with the files of 20 staff members relating to the period February 2008 and February 2009.

Last January, senior Garda sources told the Irish Examiner that they would only arrest Sean FitzPatrick when gardaí had completed their work and had prepared their case against him.

That happened yesterday.