Politicians to grill Neary

Financial regulator Patrick Neary is to make his first public appearance since resigning over a secret loans scandal at troubled Anglo Irish Bank when he is grilled by an Oireachtas Committee in Leinster House tomorrow.

The all-party body confirmed Mr Neary will attend to answer questions on the controversial issue alongside Irish Financial Services Regulatory Authority (IFSRA) chairman Jim Farrell.

The regulator announced last Friday that he will retire on January 31 to maintain public confidence in IFSRA even though an internal report found he had no prior knowledge of €87m worth of secret loans at Anglo Irish Bank.

Bank chairman Sean Fitzpatrick, who quit last month over the scandal along with three other executives, admitted he temporarily transferred the loans to another institution every year between 2000 and 2007 to hide them from shareholders and the public.

Mr Neary was unable to attend the Joint Committee on Economic Regulatory Affairs on two previous occasions before Christmas and again last week because the issue was still under investigation by IFSRA.

But an Oireachtas spokesman said today: “Mr Neary and Mr Farrell will be attending the committee as scheduled.”

The 15-member committee is chaired by Fianna Fáil TD Michael Moynihan.

IFSRA consumer director Mary O’Dea has been appointed as acting chief executive while the Government considers nominees to fill the position.

An investigation by an IFSRA committee found Mr Neary had no knowledge of the Anglo Irish Bank loans because the watchdog’s banking supervision department, which was probing the issue, did not inform him due to a breakdown in internal communications.

“There is no suggestion from any party that any communication – verbal or written – on this issue was made to the chief executive in the period to December 2008,” the report said.

Three executives including chief executive David Drumm, non-executive director Lar Bradshaw and finance director William McAteer later quit the firm over the scandal.

IFSRA also admitted it did not exercise its option under legislation to alert the director of corporate enforcement nor did it contact Irish Nationwide, to whom Mr Fitzpatrick had transferred the loans.

IFSRA promised to review the quality of its communication channels and document filing procedures within its organisation.

The watchdog is still working on an inquiry into directors’ loans at all banks covered by the Government’s guarantee scheme.

Anglo Irish Bank is holding an EGM of shareholders on Friday to approve the Government’s €1.5bn bank capitalisation scheme.

Mr Moynihan said the committee will want to know why the organisation, which knew of the secret loans in January, failed to alert the Finance Minister especially as he was negotiating with the banks on the bank guarantee scheme and recapitalisation.

The TD added: “Concerns have been raised about the role of the regulator in supervising the banking system and whether the regulator’s checks and balances are adequate to deal with the sector and whether it failed to curb excessive and reckless lending by the banks.”

Politicians will be looking for a comprehensive explanation of the events at Anglo Irish Bank as well as asking questions about the broader supervision of the banking system.

“This meeting will afford us an opportunity to query those individuals charged with regulating the lending practices of the banks and safeguarding the interests of depositors,” Mr Moynihan said.