Department says IL&P loan was ‘not approved’

THE Department of Finance has insisted that a controversial €7.4 billion loan from Irish Life and Permanent to Anglo Irish Bank “was not approved by the state”.

Anglo dressed up the loan as customer deposits in its 2008 end-of-year accounts in an apparent attempt to present a stronger picture of health than actually existed at the bank.

A Sunday newspaper yesterday reported that the loan was agreed with the state, quoting from a statement which former IL&P chief executive Denis Casey provided to the gardaí.

According to the paper, Mr Casey said in the statement that the department, the Financial Regulator and the Central Bank were all aware of the September 2008 transaction well in advance of Anglo publishing its financial results in December of that year.

In January 2009, according to the paper, senior department official Kevin Cardiff thanked IL&P for its support, saying it had been “very important for the banking system”.

But in a statement last night, the department insisted the €7.4bn transaction had not been approved by the state. It described as “completely untrue” the remarks attributed to Mr Cardiff, who is now head of the department.

“The €7.4bn transaction between IL&P and Anglo Irish Bank was not approved by the state,” the department said. “The suggestion that a department official said the €7.4bn had been ‘important for the Irish banking system’ is completely untrue. There is absolutely no evidence for this claim.

“It was Department of Finance officials that identified the transaction in question and alerted the statutory regulatory body, the Financial Regulator, to the transaction for further investigation,” the statement added.

“Both the chairperson and the former chief executive officer of IL&P have made clear that neither the Financial Regulator nor the board of IL&P knew in advance of the transaction, therefore, it could not have been given prior approval.”

A spokesman for Finance Minister Brian Lenihan also described as “bizarre rubbish” suggestions that Mr Lenihan had expressed fears about retaining his job to an IL&P official.

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