Anglo sues former auditors for €50m

The former Anglo Irish Bank is suing its former auditors Ernst & Young for more than €50m damages over losses allegedly resulting from the firm’s “repeated failure” to un-cover alleged “highly unusual and improper” “bed and breakfast” loan transactions by former Anglo chairman Seán FitzPatrick.

It is claimed the auditors were in breach of contract in failing to uncover an alleged practice where, for brief periods around the end of Anglo’s financial year, Mr FitzPatrick repaid his large Anglo loans with monies borrowed from Irish Nationwide Building Society, but reversed those transactions days later.

The net result was that large loans otherwise due from Mr FitzPatrick were moved from Anglo’s balance sheet, creating the impression he owed less than he did, the bank claims. The alleged transactions were called “bed and breakfast” transactions because INBS provided temporary accommodation for the loans until they returned to their “true” home in Anglo.