THE BOARD of the Irish Financial Services Regulatory Authority has set up an inquiry into the handling of the Seán FitzPatrick Anglo Irish Bank loans controversy.
A spokesman for the authority had no comment yesterday when asked if the Financial Regulator, Patrick Neary, personally knew about the loans since January of last year.
Officers from his office first learned of the existence of the loans when looking at the books of Irish Nationwide in January.
Mr FitzPatrick used Irish Nationwide over a period of eight years to prevent his loans appearing on the books of Anglo Irish Bank.
Upon learning of the loans, officers of the regulator contacted Anglo Irish Bank and also sought external legal advice as to the legality of what Mr FitzPatrick had been doing.
It is understood they may have also made inquiries of the Office of the Director of Corporate Enforcement, but without outlining the reasons for the inquiry.
It is understood the advice received was to the effect that what Mr FitzPatrick had done was legal and that he could not be subjected to sanctions.
The director of corporate enforcement, Paul Appleby, told The Irish Times on Friday that he had only learned of the matter on Thursday, the same day Minister for Finance Brian Lenihan learned of the matter. Mr Appleby's office is now to examine the arrangements and practices followed by Mr FitzPatrick.
The review announced by the board of the regulator will seek to establish when Mr Neary learned of the issue and why the board was not told until its scheduled December meeting last Wednesday. The inquiry will be headed by Dermot Quigley, a former chairman of the Revenue Commissioners and a non-executive director of the regulator's office. The news that the office of the Financial Regulator knew about the practice since January of last year and failed to inform Mr Lenihan, who had in the meantime introduced the State guarantee scheme for Irish banks, and had been working on the recapitalisation of the banks, has drawn sharp criticisms. The regulator's office is also to conduct an inquiry into loans to directors in all the institutions covered by the guarantee scheme. The review is expected to include any loans held by Michael Fingleton, who is chief executive of Irish Nationwide.
Regulatory authority: statement
• The board of the Irish Financial Services Regulatory Authority met on December 19th and 20th to discuss matters surrounding directors' loans in Anglo Irish Bank.
The board takes a very serious view of these issues, which were first brought to its attention on December 17th, 2008.
The authority has taken the following actions:
• As an immediate step, a committee of the authority has been established to undertake an urgent review of these events and the regulatory response and will report to the authority in three weeks.
• The authority has instigated a review to determine the treatment of directors' loans in the institutions covered by the Government guarantee so as to ensure that proper standards are being observed.
• The authority has already intensified its prudential supervision of covered institutions and other regulated entities. Regulator staff have been placed in all covered institutions on a full time basis.
