-- Former Anglo Irish chairman FitzPatrick arrested and charged
-- Indictments relate to allegations he helped individuals prop up the bank's shares in 2008
-- Charges come as investigation into Anglo Irish ends
(Adds details, background throughout.)
By Eamon Quinn
DUBLIN--Authorities in Ireland arrested and indicted the former
chairman of Anglo Irish Bank Corp., Sean FitzPatrick, who becomes the
most senior executive to face charges in an investigation into financial
irregularities at the lender that helped push the country into its huge
debt crisis.
A Dublin court heard that Mr. FitzPatrick was arrested early Tuesday
at Dublin airport after returning from overseas. He is charged with
helping the bank provide funds to individuals to help purchase shares in
the bank. He was released on bail ahead of the next court hearing in
early October.
A spokesman for the law firm representing Mr. FitzPatrick said it had no comment to make.
The charges come after a joint investigation between the country's
Director of Corporate Enforcement, or ODCE, and Irish fraud police was
officially started about three years ago into the bank that cost Irish
taxpayers at least 32 billion euros ($38.8 billion) to keep it from
collapse when the property
market crashed in 2008.
Along with other lenders, the now nationalized Anglo Irish lent huge
amounts to small groups of property lenders during the country's boom
years. The monumental bill facing Ireland for rescuing its banking
system amounted to about EUR64 billion, equivalent to 40% of the
country's annual economic output.
That left Irish taxpayers facing one of the world's most expensive
bank-rescues. Ireland was eventually forced to strike a EUR67.5 billion
bailout deal with the European Union and International Monetary Fund in
late 2010, and it now wants the euro zone to retro-finance its banking
costs.
A Dublin court on Monday heard indictments against William McAteer, a
former finance director at Anglo Irish, and Pat Whelan, a former
managing director of the bank in Ireland, that they unlawfully permitted
funds to be given to named individuals to help buy shares in the bank
as the lender's stock hurtled toward collapse in July 2008.
The solicitor for Mr. McAteer and Mr. Whelan have thus far made no
comment on the case when contacted. Under the Irish court system the
accused don't have to enter pleas at this early stage in the process.
Mr. FitzPatrick helped shape Anglo Irish, first as chief executive for
almost 20 years to 2005, and then as its chairman until his resignation
in December 2008.
Unchecked by regulators during the boom years, the bank tapped cheap
wholesale funds and rode the country's asset bubble to become the
country's largest real-estate specialist lender.
But amid the property crash, and in a desperate attempt to get a grip
on its mounting losses, the Irish government nationalized Anglo Irish in
January 2009. Mr. FitzPatrick was declared bankrupt in 2010.
A senior judge and lawmakers have in the past criticized the length of
time it has taken to complete investigations of Anglo Irish, which was
last year merged with Irish Nationwide Building Society, and jointly
renamed the Irish Bank Resolution Corp.
Irish fraud police examined the provision of funds by Anglo Irish to
customers and other business people to buy its shares. They had also
investigated so-called back-to-back deposits of about EUR7.4 billion
made between Anglo Irish and another lender in September 2008.
The ODCE has previously said it is investigating loans made to former
Anglo Irish directors which may not have been adequately reported by
Anglo Irish for many years, and the content of Anglo Irish's 2008
financial reports and statements and the provision, in 2008, of a loan
to one of the bank's directors.
Irish law suggests that if he were convicted, Mr. FitzPatrick could face a prison sentence of up to five years.
But Shelley Horan, a barrister and law lecturer at Trinity College
Dublin, said that in criminal cases involving a number of charges a
judge can--in rare circumstances--impose longer sentences.
Write to Eamon Quinn at eamon.quinn@dowjones.com
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