THE ABILITY of former Anglo Irish chairman Seán FitzPatrick to hide the existence of €87 million worth of loans from the bank for years shows that banking regulatory rules have failed "monumentally", the Opposition has charged.
Auditors should been able to spot by annual checks the repayment of loans by Mr Fitzpatrick shortly before Anglo's financial year ended, said Labour TD Joan Burton.
She said tight accounting rules were in place to monitor loans by companies to its own directors, and company internal and external auditors examined directors' loans accounts every year.
In addition, they carried out so-called "post-balance sheet" checks to see if any large sums moved into a company's accounts after their last audit was completed, said Labour's finance spokeswoman.
"This is a regulatory failure of monumental proportions. The whole system is a complete joke.
"Loans of this size would have to be okay-ed by the chief executive, and by the bank's risk committee," said Ms Burton.
She asked Financial Regulator Pat Neary to explain if he had told his own board about the FitzPatrick loans when they were finally unearthed in Irish Nationwide's accounts last January.
"Did he report his findings to his own board. If not, our system has totally failed," said Ms Burton.
"I believe that Mr FitzPatrick's actions are a financial three-card trick that appear to run a coach and four through the spirit if the not the letter of the requirements of financial reporting."
The Labour TD has called for an emergency meeting on Monday of the Oireachtas Finance and the Public Service Committee to interview both the regulator and Minister for Finance Brian Lenihan.
Fine Gael finance spokesman Richard Bruton said the affair raised "big questions" about the regulator's performance. It was "strange" that top bank executives would "self-destruct" in the face of the imminent publication of information that had been known to the regulator since January.
Mr Bruton said there was "no doubt" but that Mr FitzPatrick "had broken the rules of the Irish Stock Exchange, if nothing else. They may not be considerable in themselves, but they are the rules of the game."
Speaking in the Seanad yesterday morning, Mr Lenihan said he was "determined to ensure the financial stability of all our institutions".
Amid speculation that some of the banks may need to be recapitalised quickly, he said the Government "stands behind these institutions and all capitalisation arrangements will be completed in the shortest possible time".
Meanwhile, it emerged yesterday that Mr Lenihan had known before he issued a statement on banking recapitalisation to the Dáil on Thursday that Mr FitzPatrick was going to resign, but he made no mention of it then.
Department of Finance officials had been contacted on Wednesday evening by Anglo and met with company executives on Thursday morning, who told that Mr FitzPatrick was "thinking" of resigning, a Department of Finance spokesman said last night.
However, no mention of this could be made until Anglo's board meeting took place later that afternoon, and Mr FitzPatrick's decision to quit was formally declared and accepted, he said.
The Department of Finance claimed that the Minister had asked Mr Neary to examine Anglo's directors' loans 10 days ago after noticing that Anglo's directors had three times the loans taken out by their counterparts in AIB, a much bigger bank.
Green Party Senator, Dan Boyle repeated his party's belief that many existing senior banking executives will have to resign.
"Many of those running our financial institutions are not and cannot be those who work with the State on where we go from here. It is a violent word but there should be a cull of executives in the banking system."
Resignations will not interrupt recapitalisation: page 18;
Anglo stays silent over who knew of loans: page 19
