Ex-finance chief of Anglo Irish Bank arrested in fraud probe of debt-crippled Dublin lender

By Shawn Pogatchnik, AP
Wednesday, March 24, 2010

Fraud police arrest ex-finance chief of Irish bank

DUBLIN — Fraud detectives arrested Anglo Irish Bank’s former finance director Wednesday on suspicion of aiding the cover-up of massive losses at the debt-crippled Dublin lender.

William McAteer, who resigned 14 months ago amid the bank’s imminent nationalization, became the second former executive to be arrested in a year-old fraud probe into Anglo, the bank worst hit by Ireland’s sharp slide into recession. Anglo is expected soon to announce 2009 results featuring the worst losses in Irish corporate history.

Last week, fraud detectives arrested the bank’s former chief executive and chairman, Sean FitzPatrick, but released him without charge pending further investigations into the dealings of Anglo’s so-called “golden circle” of favored investors.

FitzPatrick has already admitted hiding more than euro85 million ($120 million) of his personal loans from shareholders by transferring them briefly into the books of another Dublin bank, Irish Nationwide, annually for eight years. He is currently being sued by Anglo’s new board for repayment of euro70 million in ill-secured borrowings.

Anglo — a specialist commercial lender that took great risks at it profited handsomely from the Celtic Tiger’s Europe-leading property boom of 1994-2007 — faced catastrophic losses when the Irish property-speculation bubble burst in 2008.

Government-empowered accountants caught Anglo trying to conceal the scale of its losses, and to prop up the bank’s plunging share price, with off-the-books transactions.

Besides FitzPatrick’s cloaking of his own borrowings, Anglo tried to present a speedy back-and-forth euro4 billion transfer with another Dublin bank, Irish Life & Permanent, as a new cash deposit.

Anglo also secretly loaned more than euro450 million to 10 top customers in 2008 on condition they used the funds to buy shares in Anglo. That effort failed to prevent Anglo shares from hemorrhaging 98 percent of their peak value before their withdrawal from trade on the Dublin and London stock markets.

The government in January 2009 seized control of Anglo and pumped euro4 billion in emergency aid into its coffers. Anglo is expected to receive several billion more in a plan being unveiled next week in tandem with Anglo’s 2009 accounts.

Anglo says it also plans this year to transfer euro28 billion worth of defaulting property-based loans to Ireland’s new government-run “bad bank,” the National Asset Management Agency. NAMA has been designed to remove toxic debts from the loan books of five Irish banks.

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