Au­di­tors had no his­tory of is­sues with An­glo di­rec­tors

Bray People - - NEWS -


The man in charge of au­dit­ing An­glo Ir­ish Bank for seven years told a jury last Tues­day (Fe­bru­ary 14) that he would have con­sid­ered an al­leged re­fi­nanc­ing ar­range­ment of loans to Sean Fitz­Patrick as sig­nif­i­cant to the au­dit.

Mr Fitz­Patrick (68), the bank’s for­mer chair­man, is ac­cused of mis­lead­ing au­di­tors about multi-mil­lion euro loans from 2002 to 2007. He has de­nied all charges.

On day 79 of the trial at Dublin Cir­cuit Crim­i­nal Court, Do­minic McGinn SC, prose­cut­ing, showed Kieran Kelly, a part­ner with au­dit firm EY (pre­vi­ously Ernst & Young) a num­ber of loan fa­cil­ity let­ters from Ir­ish Na­tion­wide Build­ing So­ci­ety for the years 2002, 2003 and 2004.

The pur­pose of the loans from Ir­ish Na­tion­wide were listed var­i­ously as the re­fi­nanc­ing of An­glo loans in the name of the ac­cused as well as loans in the name of Tri­ona, J and D Fitz­Patrick and loans linked to the ac­cused’s share­hold­ing in the Bea­con part­ner­ship.

The loan fa­cil­i­ties, of­fered in Septem­ber of each year, went as high as €18.3m in 2004. The jury saw the fig­ure for di­rec­tors loans was given in the bank’s 2004 an­nual ac­counts as just over €10m.

Mr Kelly said in 2002 that he was not aware of a €4.4m loan ar­range­ment Mr Fitz­Patrick had with Ir­ish Na­tion­wide (INBS).

The wit­ness also viewed doc­u­ments, known as let­ters of rep­re­sen­ta­tion, pre­sented by the bank to the au­di­tors. He said rep­re­sen­ta­tion let­ters were ‘very im­por­tant’ for con­firm­ing ‘im­por­tant as­pects’ of an au­dit.

Mr McGinn told the wit­ness that it will be for the jury to de­cide if the pros­e­cu­tion has proved what the INBS fa­cil­ity let­ters amount to and whether those re­fi­nanc­ing ar­range­ments should have been part of the let­ters of rep­re­sen­ta­tion.

He asked Mr Kelly about the sig­nif­i­cance of the loans to his au­dit in the case where the jury were to con­clude Mr Fitz­Patrick’s loans were in ex­is­tence dur­ing the fi­nan­cial year and Mr Kelly had not been told about the loans dur­ing the au­dit process.

Mr Kelly said that the draw­ing down of the loans from An­glo wouldn’t have had a big im­pact on the au­dit.

‘Di­rec­tors may take loans dur­ing the year and may re­pay, what­ever their per­sonal cir­cum­stances may have been and there may well have been a pat­tern of such ac­tiv­ity,’ he said.

Mr McGinn then asked Mr Kelly would his view change if the jury were to con­clude that ar­range­ments were put in place at the year end specif­i­cally for those loans to be re­fi­nanced.

The wit­ness replied: ‘I would con­sider that to be of a greater sig­nif­i­cance to the au­dit.’

He said he would first seek to un­der­stand the pre­cise na­ture of the ‘re­fi­nanc­ing’. He would also seek to un­der­stand ‘ that all ac­count­ing and dis­clo­sure obli­ga­tions in re­la­tions to our du­ties as au­di­tors have been prop­erly ad­dressed.’

He added that if he judged what was hap­pen­ing to be un­usual he would be obliged to make re­ports to the bank’s board and au­dit com­mit­tee.

Con­clud­ing his di­rect ev­i­dence Mr Kelly told Mr McGinn that he stood over the truth and ac­cu­racy of a state­ment made by him to in­ves­ti­ga­tors and de­scribed by lawyers de­fend­ing Mr Fitz­Patrick as con­tam­i­nated by coach­ing.

The process used to put the state­ment to­gether has been ruled ‘un­law­ful’ by the trial judge, Judge John Aylmer.

He said that col­leagues from EY, lawyers from A&L Good­body, a le­gal firm rep­re­sent­ing EY, Kevin O’Con­nell and garda col­leagues from the Of­fice of the Di­rec­tor of Cor­po­rate En­force­ment were in­volved in the process of pro­duc­ing the state­ment.

He said he knew at the time that he was sign­ing a dec­la­ra­tion that he could face pros­e­cu­tion if he stated any­thing in the state­ment that he knew to be false or mis­lead­ing.

‘I be­lieve that the contents of this state­ment at the time I made it and I be­lieve now, to be true and ac­cu­rate,’ he said.

Mr Kelly com­pleted his di­rect tes­ti­mony at lunchtime and Bernard Con­don SC, de­fend­ing, asked the case to ad­journ. The court heard that the de­fence had been served with a new dis­clo­sure of a ‘con­sid­er­able amount of doc­u­men­ta­tion’.

‘I need to be fully pre­pared,’ Mr Con­don said, re­fer­ring to his cross-ex­am­i­na­tion of the wit­ness.

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.


An au­di­tor for An­glo Ir­ish Bank de­nied that he en­gaged in ‘per­for­mance theatre’ while speak­ing to in­ves­ti­ga­tors who were ex­am­in­ing al­leged of­fend­ing by the bank’s for­mer chair­man Sean Fitz­Patrick.

De­fence coun­sel Bernard Con­don SC put it to the bank’s au­di­tor Kieran Kelly, who is a part­ner with firm EY (pre­vi­ously Ernst & Young), that he put on a ‘pan­tomime’ and en­gaged in ‘some sort of per­for­mance theatre’ when meet­ing with in­ves­ti­ga­tors from the Of­fice of the Di­rec­tor of Cor­po­rate En­force­ment (ODCE).

Mr Kelly said he wasn’t try­ing to en­gage in an act and de­nied that he was try­ing to ‘ buy time’ by ask­ing that he be al­lowed ex­am­ine cer­tain doc­u­ments.

He said his so­lic­i­tors had told him be­fore the meet­ing that he should ex­am­ine the doc­u­ments to un­der­stand them and ‘if I needed to re­flect I was to do that.’

Mr Kelly also de­nied that he was given a ‘ tu­to­rial’ by his lawyers be­fore meet­ing with in­ves­ti­ga­tors. Mr Con­don pointed to notes from his meet­ing with the lawyers which state ‘ the less you say the bet­ter’ and ‘ think things through.’

Mr Kelly said the lawyers were ad­vis­ing him on how to an­swer to the best of his abil­ity.

The wit­ness ac­cepted that he gave ‘mis­lead­ing ev­i­dence’ to Judge Mary Ellen Ring dur­ing a ear­lier trial.

Mr Con­don said he was ‘not for a mo­ment’ sug­gest­ing Mr Kelly wil­fully per­jured him­self or in­ten­tion­ally mis­led the court. Mr Con­don said he be­lieved his ear­lier ev­i­dence was down to a ‘ lack of rec­ol­lec­tion’ which he later tried to cor­rect.

Mr Kelly ac­cepted he had in­ad­ver­tently given mis­lead­ing ev­i­dence in the pre­vi­ous trial about how his garda state­ment was com­piled.

Mr Con­don put it to the au­di­tor that dur­ing the 2015 trial he was ‘rather stark’ in his ev­i­dence that the state­ment he gave to gar­daí and of­fi­cers from the Of­fice of the Di­rec­tor of Cor­po­rate En­force­ment (ODCE) was en­tirely his own words in re­sponse to ques­tions put to him.

‘You seemed to sug­gest the state­ment was taken in oral meet­ings where you were asked ques­tions and the gar­daí and the ODCE wrote down the an­swers,’ coun­sel said.

Mr Kelly ac­cepted this was his ev­i­dence. He said he also now ac­cepts that the ev­i­dence was not en­tirely ac­cu­rate and that he had seen por­tions of an­other EY au­di­tor’s state­ment prior to mak­ing his own.

‘You now ac­cept you did see Vincent Ber­gin’s state­ment in ad­vance of mak­ing your own state­ment when you said you didn’t be­fore?’ Mr Con­don asked.

Mr Kelly said that he did. He said that when he gave the pre­vi­ous ev­i­dence he ‘didn’t re­mem­ber the en­tirety of the process of tak­ing the state­ment.’ He added, ‘ to that ex­tent…my rec­ol­lec­tion wasn’t com­plete.’

The wit­ness agreed that his draft state­ment was pre­pared by the so­lic­i­tors firm A&L Good­body and then emailed to him and var­i­ous other peo­ple in­clud­ing oth­ers within EY.

Mr Kelly said that when giv­ing his state­ment he would have been happy to meet with ODCE and garda in­ves­ti­ga­tors with­out lawyers be­ing present.

Mr Con­don said that the lead in­ves­ti­ga­tor with the ODCE, Kevin O’Con­nell, didn’t be­lieve he would have met with him with­out lawyers.

‘Pre­sum­ably you are an­noyed that he is say­ing your not telling the truth,’ Mr Con­don asked.

‘I’m sur­prised at that, yes,’ Mr Kelly said.


An au­di­tor never told the board of An­glo Ir­ish Bank that they may face pros­e­cu­tion if they lied to au­di­tors, the trial of for­mer An­glo chair­man Sean Fitz­Patrick heard last Fri­day.

On his sec­ond day un­der cross-ex­am­i­na­tion, one of the banks au­di­tors, Kieran Kelly, ac­cepted that guide­lines state that au­di­tors may wish to re­mind di­rec­tors of an or­gan­i­sa­tion that it is a crim­i­nal of­fence to pro­vide mis­lead­ing in­for­ma­tion.

Mr Kelly told Bernard Con­don SC, de­fend­ing, that he didn’t re­mind An­glo’s board of this. He said he be­lieved he didn’t need to be­cause they were ‘ex­pe­ri­enced di­rec­tors’ and be­cause the warn­ing was con­tained in other doc­u­men­ta­tion pro­vided to them.

‘You don’t think you should have told them there’s a risk of go­ing to jail? Is that your po­si­tion?’ Mr Con­don asked. Mr Kelly con­firmed that it was.

The court heard that the An­glo board sub­mit­ted ‘ let­ters of rep­re­sen­ta­tion’ to the au­di­tors be­tween 2002 and 2007 which stated the amount of loans to di­rec­tors. Mr Con­don put it to Mr Kelly that the 2002 let­ter con­tained a clear con­tra­dic­tion in one dec­la­ra­tion and was es­sen­tially ‘gob­bledy­gook.’

Coun­sel con­tin­ued that the 2002 state­ment was ‘il­lit­er­ate’ and asked Mr Kelly why he didn’t raise this with the board of An­glo.

Mr Kelly said the let­ter was ‘per­haps crudely worded’ and con­tained a dou­ble neg­a­tive in one sen­tence but that it gave him the in­for­ma­tion he needed.

Mr Con­don said Mr Kelly’s fail­ure to ques­tion the let­ter had led to the cur­rent crim­i­nal pros­e­cu­tion of Mr Fitz­Patrick. He said he found this ‘chilling’.

The wit­ness replied that the pros­e­cu­tion of Mr Fitz­Patrick was a re­sult of a de­ci­sion by the Di­rec­tor of Pub­lic Pros­e­cu­tions, not him.


On Mon­day, the for­mer au­di­tor of An­glo Ir­ish Bank told the trial that loans linked to Sean Fitz­Patrick made up a very small por­tion of the bank’s loan book.

On his third day un­der cross-ex­am­i­na­tion one of the banks au­di­tors, Kieran Kelly, agreed that Mr Fitz­Patrick’s loans made up a ‘very small’ per­cent­age of An­glo’s en­tire loan port­fo­lio.

He said it would be around 0.20 per cent of the bank’s loan book, which in 2002 stood at around €19bn.

Bernard Con­don SC, de­fend­ing, put it to Mr Kelly that the loans to di­rec­tors rep­re­sented a very small fig­ure in the con­text of the over­all bal­ance sheet of the bank and that any likely im­pact was con­sid­ered small.

Mr Kelly replied: ‘We didn’t con­sider loans to di­rec­tors as be­ing a sig­nif­i­cant au­dit risk area.’

He said that the dis­clo­sure of loans to di­rec­tors of the bank and re­lated par­ties was con­sid­ered a low risk area.


A for­mer au­di­tor of An­glo Ir­ish Bank told the trial on Thurs­day that au­di­tors had no his­tory of is­sues with loans to the bank’s di­rec­tors.

On day 84 of the trial Vincent Ber­gin, who is a part­ner with au­dit firm EY (pre­vi­ously Ernst & Young), told the jury that he led the au­dit of An­glo for the years 2005 to 2008.

He told Do­minic McGinn SC, prose­cut­ing, that in re­spect of An­glo the au­di­tors as­sessed the risk in re­la­tion to di­rec­tors’ loans as be­ing low.

He said this was a qual­i­ta­tive as­sess­ment rather than a fi­nan­cial one and was based on a num­ber of fac­tors. Th­ese in­cluded the rou­tine ap­pear­ance of the trans­ac­tions and the fact that ‘we en­coun­tered no is­sues with them in the past’.

He said the ag­gre­gate bal­ance of the loans, in so far as the au­di­tors were aware, would not have had an im­pact on the bal­ance sheet.

He said that a doc­u­ment called the let­ter of rep­re­sen­ta­tion was ‘ hugely im­por­tant to us as au­di­tors’.

Mr Ber­gin said that its pri­mary pur­pose was to en­sure that the un­der­stand­ing of the di­rec­tors who were re­spon­si­ble for pre­par­ing the bank’s fi­nan­cial state­ments or ac­counts and the un­der­stand­ing of au­di­tors was the same.

He said if di­rec­tors from a com­pany did not sign the let­ter of rep­re­sen­ta­tion the au­di­tors would not is­sue the au­dit opin­ion.

The trial con­tin­ues be­fore Judge John Aylmer and a jury.

Sean Fitz­Patrick.

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