Former Anglo Irish Bank chairman Sean FitzPatrick owed the bank €129 million around the time of its financial year end in September 2007, it emerged today.
Mr FitzPatrick resigned from the bank’s board last month after it was revealed that he owed it €84 million, but had not disclosed this fact to shareholders.
Instead, he covered the fact up by repaying the loan with cash borrowed from another financial institution shortly before the bank’s balance sheet date on September 30th. He then drew down the loan again soon afterwards and repaying the other lender.
This meant that he was not obliged to disclose the figure to shareholders. Mr FitzPatrick regularly used this mechanism to cover up the fact that he owed Anglo Irish Bank money.
At an extraordinary general meeting today, current chairman Donal O’Connor revealed that in 2007, Mr FitzPatrick owed a total of €129 million to the bank of which, just €7 million was reported as he repaid €122 million before the balance sheet date.
Mr FitzPatrick had an ongoing credit facility with the bank that allowed him to borrow various sums. The bank has not said what the limit on that facility was. Its credit committee was aware of the deal.
Shareholders at the meeting in Dublin’s Mansion House criticised board members and the bank’s auditors, Ernst & Young, for failing to identify the loans.
The bank’s own explanation was that directors’ loans were not regarded as posing a risk to the business and therefore did not come to the board’s and auditors’ attention. The Government is preparing legislation to nationalise the bank which is due to be published on Tuesday.
The move is a bid to safeguard the bank’s future. In September it said it has put aside €500 million to deal with potential losses on commercial loans. Anglo was a leading lender to property developers and speculators and the value of the properties against which these debts are secured has collapsed over the last year.
Mr FitzPatrick and current and former directors owe the bank a total of €179 million. According to figures published by Anglo, the former chairman owes €84 million, current board members owe €23 million and the remaining €72 million is due from former directors.
Hundred of investors attending today's meeting in Dublin's Mansion House demanded the sacking of the board . Addressing the meeting, newly appointed chairman Donal O’Connor said: “I apologise on behalf of myself and the board. I am really sorry that this has happened."
The chairman pointed out that the Government would replace the present management in coming months and he encouraged customers to continue to deposit money into the bank. “We would be delighted if people put more deposits into the bank. This would be in the mutual interest of shareholders and taxpayers,” Mr O’Connor said.
High-profile Senator Ross likened the bank’s actions to closing the stable door after the horse had bolted. Applause erupted when 85-year-old John O’Leary, of West Cork, called for Mr Ross to be nominated to the bank’s board. As supporters clapped he added: “These loans should have been discovered and stopped eight years ago.”
Other calls were made for High Court inspectors to investigate Anglo Irish. “It was a cosy cartel at the top, with no supervision and nobody to keep an eye on each other,” another man said.
He added: “A lot of small shareholders have lost their shirts. Anglo Irish is a cowboy bank an, until the cowboys are gone, we won’t have the solution.”
Another voice in the crowd threatened a class action by shareholders: “There is going to be a lot of law and a lot of litigation before this is all over.”
There was one dissenting voice. A lone investor paid tribute to Mr FitzPatrick for building up the bank from €5 million to its 2007 value of €13 billion. "I think he did a wonderful job over the years and one mistake and he gets destroyed,” he said.
Meanwhile, Ernst & Young said this afternoon that all of the audits conducted for Anglo Irish Bank shareholders were undertaken in accordance with the appropriate auditing standards.
It said it was confident that the accounts "show a true and fair view of the state of affairs and results of the bank in accordance with the information and explanations received".
It added that it was unaware of the refinancing transactions undertaken by Sean FitzPatrick until late last year.
Additional reporting PA