Refinancing Anglo loans ‘annual practice’

A former financial controller with Anglo Irish Bank has said he was surprised that external auditors never queried the annual refinancing of the bank’s loans to former chairman Seán FitzPatrick.

Cyril Boyd told Mr FitzPatrick’s trial at Dublin Circuit Criminal Court that there was never any attempt to hide the refinancing of multi-million euro loans using loans from Irish Nationwide Building Society (INBS). He said that it was an annual practice and was common knowledge. He said that the Central Bank never queried the loans to Mr FitzPatrick or the refinancing of them.

“If they had queried it I would not have any issue speaking to them about it,” he said. He testified that the bank sent quarterly reports to the Central Bank disclosing the total value of directors’ loans and they could have seen the figure dropping annually in the final quarter, when the refinancing was carried out.

It’s the State’s case that the amount of Mr FitzPatrick’s loans was “artificially reduced” for a period of two weeks around the bank’s financial end-of-year statement by short term loans.

Mr FitzPatrick, aged 68, of Whitshed Road, Greystones, Co Wicklow, is accused of failing to disclose to auditors the extent of multi-million euro loans linked to him between 2002 and 2007.

He has pleaded not guilty at Dublin Circuit Criminal Court to 27 offences under the 1990 Companies Act. These include 22 charges of making a misleading, false or deceptive statement to auditors and five charges of furnishing false information in the years 2002 to 2007.

Mr Boyd said that the 1990 law introduced new obligations on a bank to disclose a figure for the total amount of loans to its directors.

In 1995, some of Mr FitzPatrick’s loans were with a partnership with people who were not directors of the bank and there was a concern the amount of their loans would have to be disclosed too.

A loan from INBS was paid into Anglo for the purposes of refinancing Mr FitzPatrick’s borrowings from Anglo. This was done in September prior to the bank’s financial end of year on September 30 and became an annual practice, he said.

“It was common knowledge. There was no attempt to hide it. I was surprised the auditors did not query it this year or subsequent years,” he told Bernard Condon SC, defending.

He said he knew Kieran Kelly, the bank’s auditor from Ernst & Young, and said he would have told him about the refinancing arrangement if he had asked him.

“I don’t recall him asking,” he said. He said he would give the auditors anything they asked for.

“They are entitled to whatever they want to get, they are entitled to it, you can’t refuse them information,” he said.

The trial continues before Judge John Aylmer and a jury.