Sean Fitz­Patrick

The ‘bi­ased’ pur­suit of the for­mer An­glo boss.

The Irish Times - Weekend Review - - FRONT PAGE - Colm Keena Le­gal Af­fairs Cor­re­spon­dent

In Fe­bru­ary 2010, the then di­rec­tor of cor­po­rate en­force­ment Paul Ap­pleby drafted a memo on how the crim­i­nal in­ves­ti­ga­tions into An­glo Ir­ish Bank and Seán Fitz­Patrick were pro­gress­ing.

The then taoiseach Brian Cowen and the then tá­naiste Mary Cough­lan were anx­ious for in­for­ma­tion. Ap­pleby’s memo out­lin­ing the pos­si­ble of­fences that were be­ing looked into was de­liv­ered by hand to Cough­lan. The Of­fice of the Di­rec­tor of Cor­po­rate En­force­ment ( ODCE) boss wanted the de­tails kept con­fi­den­tial, and ar­ranged for the note to be hand-de­liv­ered back to him af­ter it had been read.

Back then ev­ery­thing to do with An­glo and Fitz­Patrick was highly charged po­lit­i­cally, and for good rea­son.

In De­cem­ber 2008, when it was an­nounced that Fitz­Patrick had re­signed as chair­man of the bank, it was also re­vealed that Fitz­Patrick had been con­ceal­ing the huge loans he had with the bank by “ware­hous­ing” them with Ir­ish Na­tion­wide Build­ing So­ci­ety at the end of each fi­nan­cial year. By do­ing this he didn’t have to de­clare the loans in the bank’s an­nual ac­counts.

The dis­clo­sure of this un­eth­i­cal prac­tice by the man seen as syn­ony­mous with An­glo led to a pro­found loss of con­fi­dence in the bank, and con­trib­uted to its early na­tion­al­i­sa­tion. The bank’s col­lapse would cost the pub­lic bil­lions of euro, and was a step along the road that led to the Repub­lic en­ter­ing the hu­mil­i­at­ing troika bailout pro­gramme.

On the same day as Fitz­Patrick’s res­ig­na­tion was an­nounced, the ODCE’s in­quiries into the ware­hous­ing of his loans be­gan. Soon the ODCE and the Garda Bureau of Fraud In­ves­ti­ga­tions were in­volved in a num­ber of in­ter­linked in­quiries con­cern­ing An­glo, the com­plex­ity of which was un­prece­dented for both agen­cies. With the col­lapse of the bank­ing sec­tor, it was not just the econ­omy and the pub­lic fi­nances that were put un­der enor­mous strain.

Var­i­ous in­quiries

On March 21st, 2011, there was a high-level meet­ing in the Depart­ment of En­ter­prise to dis­cuss the var­i­ous in­quiries then un­der way aris­ing from the fi­nan­cial col­lapse.

Those present in­cluded the then sec­re­tary general of the depart­ment Sean Gorman, his coun­ter­part in the Depart­ment of Jus­tice Sean Ayl­ward, the then Garda com­mis­sioner Martin Cal­li­nan, Kevin O’Con­nell, a so­lic­i­tor with the ODCE who was head­ing up the ware­hous­ing in­quiry, his col­league Sean Ward, and oth­ers. Ap­pleby was not present.

Gorman told the meet­ing that there was a need to keep the Cabi­net in­formed as to what was hap­pen­ing. There was a keen pub­lic in­ter­est in the in­quiries, and grow­ing im­pa­tience with the pace of progress. The in­de­pen­dence of the agen­cies in­volved was “fully re­spected”, and there was a clear de­sire “at all lev­els” that noth­ing would be done that would im­pinge on this. Nev­er­the­less, it was le­git­i­mate and nec­es­sary that the gov­ern­ment be kept up to date on de­vel­op­ments.

The sec­re­taries general were briefed on the com­plex­ity of the in­ves­ti­ga­tions. These top­ics in­cluded multi­bil­lion euro back- to- back loans used to boost An­glo’s bal­ance sheet, loans to An­glo di­rec­tors, the ware­hous­ing is­sue, loans to the fam­ily of Sean Quinn, and t he l oans to t he so-called Maple Ten in­vestors.

The Garda and the ODCE were do­ing all they could in dif­fi­cult cir­cum­stances, the meet­ing was told. It was hard to say how much longer the in­quiries would take.

Ayl­ward ref­er­enced the fact that the bank­ing col­lapse was seen as hav­ing brought the coun­try to its knees, and told the com­mis­sioner and the ODCE of­fi­cials that any ad­di­tional re­sources they felt were needed would be given. How­ever both agen­cies said they had ad­e­quate re­sources.

In the trial that ended this week O’Con­nell said that, even though he had no ex­pe­ri­ence of con­duct­ing se­ri­ous crim­i­nal in­ves­ti­ga­tions, he be­came the lead in­ves­ti­ga­tor of the in­quiry into the ware­hous­ing is­sue.

The Garda re­sources sec­onded to the of­fice were mostly tied up with the in­quiry into the grant­ing of loans by An­glo to in­vestors for the pur­chase of the bank’s shares. De­spite his lack of ex­pe­ri­ence, O’Con­nell took on the role in the spirit of the “more for less” ethos then be­ing asked of from pub­lic ser­vants.

Charged

In July 2012, Fitz­Patrick was ar­rested and charged in re­la­tion to the loans to in­vestors case, along with his for­mer An­glo col­leagues Wil­lie McA­teer and Pat Whe­lan.

The trial got un­der way in Jan­uary 2014, and in April Fitz­Patrick was ac­quit­ted of all charges in re­la­tion to the so-called Maple Ten loans fol­low­ing a ma­jor­ity ver­dict by the jury. Two other de­fen­dants were found guilty by the same jury. Fitz­Patrick’s coun­sel, Michael O’Hig­gins SC, said his client had been “sin­gled out” by the pros­e­cu­tion.

The trial also in­volved charges in re­la­tion to loans given to the fam­ily of busi­ness­man Sean Quinn, but Judge Martin Nolan di­rected Fitz­Patrick’s ac­quit­tal on these charges on the grounds of lack of ev­i­dence to sup­port the charges.

In April 2015, Fitz­Patrick went on trial again, this time on charges of fail­ing to dis­close to An­glo’s au­di­tors, EY, in­for­ma­tion about the loans that he “ware­housed” with Ir­ish Na­tion­wide. That trial col­lapsed af­ter seven weeks.

Most of the seven weeks were taken up with le­gal ar­gu­ment in the ab­sence of the jury, dur­ing which Fitz­Patrick’s coun­sel, Bernard Con­don SC, ex­plored how the ODCE had gone about tak­ing wit­ness state­ments from two EY au­dit part­ners.

Shred­ding

The trial col­lapsed af­ter it emerged that O’Con­nell, dur­ing what he de­scribed as a panic at­tack, shred­ded doc­u­ments he found in his of­fice which should have been dis­cov­ered to the trial. The panic at­tack, he said, was brought on by the re­al­i­sa­tion dur­ing the trial that the con­duct of the ODCE in­quiry had in­volved fun­da­men­tal er­rors, and con­cern that he would be blamed for this while oth­ers would step away. A few days af­ter shred­ding the doc­u­ments, O’Con­nell sought psy­chi­atric help, and was hos­pi­talised for al­most two months.

De­spite these de­vel­op­ments, the Di­rec­tor of Pub­lic Pros­e­cu­tions de­cided to have a sec­ond go at pros­e­cut­ing Fitz­Patrick on the same charges.

The sec­ond trial be­gan in Septem­ber of last year, was mostly taken up with le­gal ar­gu­ment, and cul­mi­nated in the de­ci­sion this week of Judge John Aylmer to di­rect the jury to ac­quit. It had sat for 127 days, the long­est crim­i­nal trial to date.

In mak­ing his de­ci­sion Judge Aylmer said the ODCE had con­ducted a par­ti­san and bi­ased in­quiry, and had been try­ing to “build or con­struct a case, rather than to in­ves­ti­gate the case in­de­pen­dently and im­par­tially”.

The prepa­ra­tion of wit­ness state­ments had in­volved “coach­ing”, and there had been a fail­ure on the part of the ODCE to seek out ev­i­dence in sup­port of in­no­cence as well as guilt.

He re­ferred to in­ter­nal ODCE doc­u­ments in­di­cat­ing that par­tic­u­lar ques­tions should not be put to the au­di­tors lest the an­swers might be “un­help­ful” to the case be­ing made by the agency.

The trial heard ev­i­dence that some of the ma­te­rial in both wit­ness state­ments was ac­tu­ally writ­ten by the then di­rec­tor of cor­po­rate en­force­ment Paul Ap­pleby.

The trial in­volved 27 charges and a lot of rather dry de­tail. How­ever, one as­pect of the case could be seen as il­lus­tra­tive of an un­fair ef­fort to “get” Fitz­Patrick.

Widely shocked

While the na­tion was widely shocked to hear about the ware­hous­ing of loans by the for­mer An­glo chair­man in 2008, it quickly emerged that this was not nec­es­sar­ily il­le­gal. Each year-end com­pany di­rec­tors are obliged to de­clare any loans they had from their com­pany dur­ing the year. How­ever, bank di­rec­tors dur­ing the 2000s had a dif­fer­ent obli­ga­tion. They had to de­clare only loans they had at the year’s end.

The An­glo di­rec­tors, in­clud­ing Fitz­Patrick, were asked by the bank’s au­di­tors EY to sign doc­u­ments set­ting out their loans from the bank. How­ever, the di­rec­tors were mis­tak­enly given doc­u­ments us­ing a tem­plate ap­pro­pri­ate for “nor­mal” com­pany di­rec­tors rather than bank di­rec­tors. So they ended up sign­ing doc­u­ments that re- ferred to loans dur­ing the year rather than at year-end.

The pros­e­cu­tion case against Fitz­Patrick in­cluded charges that he had mis­rep­re­sented his po­si­tion to the au­di­tors in re­la­tion to his loans when he had signed these doc­u­ments. Yet this was only be­cause he was given the wrong type of doc­u­ment to sign, one that re­ferred to loans dur­ing the year, rather than at year’s-end.

Ac­cord­ing to Judge Aylmer, the use by the au­di­tors of the wrong tem­plate was re­garded by the ODCE as “for­tu­itous in the con­text of their en­deav­ours to build a case of mis­rep­re­sen­ta­tion”.

‘Most alarm­ing’

The “coached” state­ments from the au­di­tors did not clear up the fact that the au­di­tors were not in­ter­ested in know­ing what the An­glo di­rec­tors loans were dur­ing the year, only at year- end. It was only when t hey were in t he wit­ness box be­ing cross- ex­am­ined that this emerged. The judge de­scribed this state of af­fairs as “most alarm­ing”.

While the short­com­ings of O’Con­nell’s work were cen­tre stage dur­ing the trial, there was also ev­i­dence show­ing that of­fi­cials in the DPP’s of­fice, of­fi­cials else­where in the ODCE, and mem­bers of An Garda Síochána, were aware of what was hap­pen­ing, or should have been, well be­fore the 2015 trial got un­der way.

The is­sue now to be ad­dressed is a se­ri­ous one. How could a bi­ased and par­ti­san crim­i­nal in­ves­ti­ga­tion, lead­ing to not one at­tempt but two to con­vict a cit­i­zen through the courts, have oc­curred?

The de­fen­dant in the case was of­ten por­trayed as a key con­trib­u­tor to Ire­land’s bank­ing col­lapse. How­ever, this does not ex­cuse vi­tal State agen­cies, work­ing in a charged at­mos­phere and be­ing scru­ti­nised by politi­cians, from mak­ing fun­da­men­tal er­rors while deal­ing with the lib­erty of a cit­i­zen.

The trial col­lapsed af­ter it emerged that O’Con­nell, dur­ing what he de­scribed as a panic at­tack, shred­ded doc­u­ments he found in his of­fice which should have been dis­cov­ered to the trial The prepa­ra­tion of wit­ness state­ments had in­volved ‘coach­ing’, and there had been a fail­ure on the part of the ODCE to seek out ev­i­dence in sup­port of in­no­cence as well as guilt

Main: Sean Fitz­Patrick (68) of Whit­shed Road, Grey­stones, Co. Wick­low, leav­ing court on Wed­nes­day with his daugh­ter af­ter he was found not guilty of 27 of­fences un­der the 1990 Com­pa­nies Act; above: Kevin O’Con­nell, lead in­ves­ti­ga­tor of the in­quiry. PHO­TO­GRAPHS: COLLINS COURT

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