Auditors EY cited client confidentiality
TOP accountancy firm Ernst & Young cited client confidentiality when it was initially approached to provide a statement to detectives investigating the former Anglo Irish Bank, according to informed sources.
The firm, one of the top five in the country, was criticised last Friday for its role as auditor of Anglo at the sentencing of three former bank executives for conspiring to transfer €7.2bn to conceal losses on Anglo’s balance sheet in 2008.
Judge Martin Nolan said it “beggared belief” that Ernst & Young had signed off on Anglo’s interim accounts.
Informed sources said detectives investigating the €7.2bn transfer from Irish Life and Permanent to Anglo Irish Bank approached Ernst & Young — now rebranded EY — for a statement relating to the accounts.
Approaches were made through the firm’s solicitors, A&L Goodbody, according to an informed source. Detectives were told EY was not in a position to make a statement because of client confidentiality.
Garda investigators then “changed tack” and approached the nationalised Anglo Irish Bank — which had been renamed IBRC — to discuss the possibility of waiving client confidentiality.
However, EY was in a position to provide a statement to gardai in 2011, according to the informed source.
In a statement issued after Friday’s sentencing, EY said it had fully co-operated with requests from prosecutors regarding its role as auditor for the bank.
“EY was not a party to these proceedings. EY fully co-operated with requests from the prosecution for witnesses and documentation in this matter.
“Neither the prosecution nor the defence chose to call any EY witness to give evidence at the trial in front of Judge Nolan. We will not be commenting further on this matter due to ongoing proceedings.”
Willie McAteer (65) and John Bowe (52), both former Anglo executives, and Denis Casey (56), the former chief executive of Irish Life and Permanent, received jail sentences last Friday for conspiring to move €7.2bn from Irish Life and Permanent on to Anglo’s books in a circular transaction.
At the sentencing, Judge Nolan commented on EY’s role as auditors to the bank. The judge said the firm “should have known what was happening if they did their job properly”.
He said “it seems incomprehensible how these accounts were signed” and that he did not know if it was “blindness or wilful blindness”.
IBRC, as the bank was renamed after it was nationalised, issued legal proceedings against EY in 2012 but the civil action has been suspended pending the outcome of criminal cases.
In a statement responding to news of the IBRC’s civil action in 2012, EY has said it will defend “the quality of our work performed in the Anglo audit and we will vigorously defend any such proceedings”.
An investigation by the Chartered Accountants Regulatory Body, Carb, has also been on hold at the request of the DPP. A spokesperson for Carb said the organisation would be “resuming contact” with the DPP to establish the next step.
EY took a High Court case to halt the regulator’s inquiry into its conduct as auditor but lost that case in 2011. The High Court ruled the firm was out of time and had not shown arguable grounds to “effectively torpedo and thus fatally terminate” the inquiry by Carb’s special investigator.
EY argued that the investigation was unfair.