Lead investigator admits shredding documents in error
The lead investigator into alleged crimes by Sean Fitz-Patrick, the former chairman of Anglo Irish Bank, failed to conduct a fair investigation, Dublin Circuit Criminal Court has heard.
Kevin O’Connell, the lead investigator with the Office of the Director of Corporate Enforcement (ODCE), admitted that he had been at times ‘spectacularly naive’ and regretted some aspects of the investigation.
But he denied the investigation was ‘some sort of a crusade’ and said that any mistakes made were down to a lack of experience and resources in the ODCE.
Mr Fitz-Patrick (68) is accused of failing to disclose multi-million euro loans to auditors. The prosecution alleges that the amount of the loans was ‘artificially reduced’ for a period of two weeks around the bank’s financial end of year statement by short term loans from other sources, including Irish Nationwide Building Society.
Mr FitzPatrick of Whitshed Road, Greystones, has pleaded not guilty to 27 offences under the 1990 Companies Act. These include 22 charges of making a misleading, false or deceptive statement to auditors and five charges of furnishing false information in the years 2002 to 2007.
On day 69 of the trial, Bernard Condon SC, defending, told Mr O’Connell that he would be arguing that the investigation was marked by coaching and contamination.
‘You failed to conduct a fair investigation. Your investigation of this matter was one marked by coaching of witnesses,’ Mr Condon said.
He said that the two witnesses from the bank’s auditors, EY (formerly called Ernst & Young), were coached and were also permitted to read each other’s statements in advance.
‘You permitted them to be contaminated by each other,’ counsel said.
The witness agreed that he would have anticipated this line of questioning ‘ based on proceedings to date’. The jury heard that Mr Condon had previously cross-examined the witness on these issues, once during the first trial in April 2015 and secondly during the legal argument as part of the current trial.
Mr O’Connell said he had a leading role in the investigation’s interaction with EY. He agreed with Mr Condon that in this context he had more involvement with A&L Goodbody, the ‘ big firm’ of solicitors that represented the auditors from 2009, that he had with the auditors.
Asked if the involvement of the solicitors in the investigation was regrettable, the witness replied: ‘I accept that, at this stage, looking back, it would have been preferable if the investigation had been conducted with less involvement with solicitors for Ernst&Young.’
Mr O’Connell said that his role in the ODCE was that of a legal advisor and that this investigation was the first time he had been centrally involved in conducting a criminal investigation.
He accepted that he had made mistakes in the course of the investigation but said they were made ‘in honest and good faith’.
He said there was a resources issue and that the limited number of gardaí on secondment to the ODCE were predominantly devoted to another investigation.
‘ Too few of us were trying to do too much with too little real experience,’ he said.
Mr Condon put it to the witness that he was focused on one thing, which was to get a charge, and that he had failed to maintain the independence required in a proper investigation.
Mr O’Connell said that while the ultimate end point of an investigation would be a charge, it wasn’t a case of getting to that point ‘at all costs’.
The jury were shown an email dated February 2010 in which Paul Appleby, then Director of Corporate Enforcement, thanked a colleague for her work and said: ‘Let’s hope we get prosecutable offences out of all of your work.’
Mr Condon said that Mr O’Connell had seen this email at the time and hadn’t quibbled with it. He said the statement by Mr Appleby showed there was a desire to get a prosecution and there was failure to conduct an independent investigation.
The witness said that he couldn’t speak for Mr Appleby’s language but that there was a legitimate degree of optimism at the end of a process.
‘ That is not the same as having a completely deplorable attitude to trampling over the rights of people,’ Mr O’Connell said.
Mr Condon said that as investigators the ODCE had a duty to investigate anything which may be consistent with innocence as well as guilt.
‘From the beginning, the ODCE had taken the position that EY were going to be on the side of the angels, and Sean FitzPatrick was going to be in the alternative corner,’ Mr Condon said. The witness said this wasn’t accurate.
Mr Condon put it to Mr O’Connell that investigators decided not to investigate the adequacy of the performance of the auditors, EY, for fear EY would ‘cut and run’ and withdraw their co-operation.
The jury heard that at one point Mr O’Connell emailed a colleague warning that ‘if we start asking too many questions about audit adequacy I think it might lead to a situation where EY might become less willing to co-operate with us.’
Mr Condon asked: ‘ Your concern was if you started to ask too many hard questions about EY, you would not get their co-operation. You decided it was preferable to get their co-operation than to properly investigate them.’
The witness disagreed with this but accepted the ODCE were trying to get assistance from EY.
‘We had no basis on which we could demand co-operation. There was not some sort of a crusade. We genuinely believed that we did not have a role in investigating the adequacy of the audit,’ he added.
He denied that he had not been candid and upfront with EY when he wrote to them in February 2009 asking them to co-operate with a request for documents.
In one letter to EY’s lawyers, A&L Goodbody, he wrote: ‘On public interest grounds alone your client should seriously consider assisting voluntarily with the ongoing examination.’
Mr O’Connell said that in hindsight the rhetoric in such a statement was regrettable. He agreed that at the time ‘ the air was thick with risk for EY’ and that the firm was very concerned about their public image.
The lead investigator into allegations of financial crimes by former Anglo Irish Bank chairman Sean FitzPatrick has accepted that aspects of his investigation were ‘colossally prejudiced’.
Counsel for Mr FitzPatrick (68) described as ‘an outrage’ a decision by Kevin O’Connell, an investigator with the Office of the Director of Corporate Enforcement (ODCE), not to ask witnesses certain questions because they might ‘undermine’ his case.
On day 70 of the trial at Dublin Circuit Criminal Court, Bernard Condon SC, defending, continued his cross-examination of Mr O’Connell, a legal advisor with the ODCE who dealt with witnesses from EY (the Ernst & Young), Anglo’s auditors from 2002 to 2008.
He put it to Mr O’Connell that in April 2010 he had gone into his first meeting with key witnesses from EY with an acceptance that they had not known about the movement of loans to Irish Nationwide.
Mr O’Connell replied: ‘I see it suggests a degree of prejudgement,’ but added that there was nothing in the evidence he had so far received that the loans had been disclosed to the auditors.
Mr Condon said that if the loans had been made known to EY ‘we wouldn’t be here’ in court.
‘ That is an absolutely colossal piece of prejudice. That was wrong to do,’ he said. Mr O’Connell said he agreed adding: ‘It was a very inexperienced way of approaching the matter.’
Counsel described as ‘an outrage’ the failure of investigators to ask witnesses about auditing standards which suggested auditors remind directors that it was a criminal offence to mislead auditors.
‘You were charged with carrying out a fair and impartial investigation,’ counsel said, accusing Mr O’Connell of deliberately deciding not to ask about these standards.
Mr O’Connell agreed it was ‘a very serious mistake’ adding: ‘I very much regret that this was not something that was addressed within the full engagement with EY. I don’t in any way seek to stand over that decision.
‘We were seeking to build the case. We did not at this early stage want to start setting out the weaknesses in the case.’
Mr Condon suggested asking certain questions ‘would hurt your case’.
‘If they were to say something about this, it would undermine your ability to bring a prosecution at all. I think that is so,’ counsel said.
Mr O’Connell told the jury that his team did not have the resources it needed to properly investigate the case.
The court heard that in early 2009 civil servants from government departments were assigned to the ODCE and that around 16 of these, including legal staff and gardai, were involved in the Anglo investigation.
Mr O’Connell said that with all due respect to these personnel in hindsight he felt they did not have the necessary skills needed for a criminal investigation.
‘What were needed were skilled investigators. Their skills were not in area of criminal investigation. That was what was needed at time, not more people who lacked that background.
‘At the time we did not appreciate the risks being created by people like me undertaking work that would have been better done at gardaí,’ he said. He said that he had ‘oversubscribed’ to the idea of ‘doing more with less’ and had taken on more than he was qualified for.
The jury heard that in March 2011 Mr O’Connell attended a meeting with the senior government officials, the then garda commissioner Martin Callinan, and his deputy, Derek Byrne.
Counsel put it to Mr O’Connell that at the time the ODCE were offered by very senior officials ‘any resources, anything they wanted’. A note from the meeting states that ‘ both gardai and the ODCE stressed they had adequate resources’.
Mr O’Connell said the then Director of Corporate Enforcement, Paul Appleby, had a view regarding resources and that it was not his position to go ‘out on a limb’ and ‘independently or separately lay claim to resources’.
The witness agreed that he was involved in taking witness statements despite being ‘untrained’ in that area.
The jury heard that during the trial in April 2015 the judge found this process to be ‘sub-optimal’ and since that it has changed so that statements in ODCE investigations are now only taken by gardaí.
Mr O’Connell denied that he encouraged the auditor witnesses, Vincent Bergin and Kieran Kelly, to involve their lawyers in the process of making their statements. He said that he didn’t think they would have agreed to make a statement without being ‘ lawyered up’ but accepted that he never asked them to do so.
Mr Condon accused Mr O’Connell of witness coaching during a meeting with Mr Bergin and in house lawyers from EY.
‘We can never know what they would have said without your intervention,’ counsel said. Mr O’Connell
agreed but said he didn’t think this meant the witness evidence was completely damaged.
He agreed that it was inappropriate of him to have said, during this meeting in April 2010 that ‘we hope there is an adequate basis to prosecute Sean FitzPatrick’.
He denied that the mindset of the ODCE was to ‘ try and do Mr FitzPatrick’.
The jury heard that Mr Bergin’s final statement provided to the investigation team came about after a six month process involving 20 drafts going back and forth internally within EY and their lawyers.
A lead investigator into allegations of crimes by former Anglo Irish Bank chairman Sean FitzPatrick has admitted shredding documents that he should not have shredded.
On day 71 of the trial in Dublin Circuit Criminal Court, Bernard Condon SC, defending, continued his cross-examination of Kevin O’Connell, a legal advisor with the ODCE who dealt with witnesses from EY, Anglo’s auditors from 2002 to 2008.
Mr O’Connell was answering questions about the ODCE’s process of drafting witness statements in consultation with witnesses and their lawyers. He agreed that during the first trial of Mr FitzPatrick in April 2015 ‘a bright light was shone’ on this process and it was revealed to be ‘sub-optimal’.
The witness said since then the ODCE changed their practice so that witnesses in criminal investigations are now only interviewed by gardaí.
He said that this process of the ODCE engaging with witnesses and lawyers was alleviated by the extensive recording, describing ‘an unusually detailed chronicle as to what was going on’.
Mr Condon put it to the witness that this only went as far as where documents still existed and not where documents may have been shredded.
Mr O’Connell then told the jury that he had in fact shredded what he said were ‘a tiny proportion of documents’ at a latter stage.
‘At a latter stage I made a calamitous error. I shredded a small number of documents which I ought not to have shredded,’ he said. He agreed that they were shredded just after he had been cross-examined by Mr Condon in April 2015.
‘It was a time of enormous pressure. I made a dreadful mistake which thereafter I acknowledged and admitted,’ the witness said. He said they related to notes from conversations he had with A&L Goodbody, the lawyers for EY.
The trial continues before Judge John Aylmer and a jury.