Anglo Irish Bank hidden loans controversy

Protestors outside Anglo Irish Bank during protests against the bank bailout in April 2010

The Anglo Irish Bank hidden loans controversy (also known as the circular transactions controversy) began in Dublin in December 2008 when Seán FitzPatrick, the chairman of Anglo Irish Bank (the state's third-largest bank), admitted he had hidden a total of 87 million in loans from the bank, triggering a series of incidents which led to the eventual nationalisation of Anglo on 21 January 2009. FitzPatrick subsequently resigned his position and was followed within twenty-four hours by the bank's non-executive director, Lar Bradshaw and chief executive, David Drumm.[1] A new chairman of Anglo, Donal O'Connor, was quickly appointed from the board, a move welcomed by the Irish Minister for Finance, Brian Lenihan. A number of investigations have been launched into the reasons behind the three resignations. The Central Bank of Ireland is carrying out a review of the bank's dealings, although its Financial Regulator, Patrick Neary, has also since resigned his position. So too did a number of other chairmen, directors and executives involved with Anglo, Irish Life and Permanent and Irish Nationwide.

Within days of the initial admission, an announcement was made that Anglo Irish Bank would be one of three (alongside Allied Irish Bank and Bank of Ireland) that would be recapitalised by the Irish government.[2] The recapitalisation of Anglo Irish Bank was expected to be effected in mid-January 2009,[3] following an Extraordinary General Meeting (EGM). Lenihan instead unexpectedly announced the nationalisation of Anglo Irish Bank the night before the EGM due to difficulties he encountered with the recapitalisation process. Recapitalisations of the other two banks mentioned were expected by the end of March 2009 but, according to Taoiseach Brian Cowen, were expected to be finalised in early February 2009 at a total of €7 billion.[4] The nationalisation of Anglo Irish Bank on 21 January 2009 followed two more resignations earlier that month. On 7 January 2009, another director, Willie McAteer, resigned, becoming the fourth casualty of the controversy. Two days later the Financial Regulator Patrick Neary retired amidst much criticism over his handling of the affair. After the nationalisation, the Chairman of Irish Nationwide, Dr Michael Walsh, resigned on 17 February, one week to the day that government-appointed directors announced they were investigating a deposit of billions of euro by Irish Life and Permanent, placed in Anglo Irish Bank before the end of its financial year.[5]

Taoiseach Brian Cowen denied claims that he was protecting a "Golden Circle" of wealthy financiers from being identified. This mysterious group of ten businessmen is said to have received loans from Anglo Irish Bank in return for buying shares, in a move designed to keep the bank afloat.

  1. ^ "Drumm quits Anglo in loans fall-out". Raidió Teilifís Éireann. 19 December 2008. Retrieved 19 December 2008.
  2. ^ "Bank move a good deal for taxpayers: Lenihan". Raidió Teilifís Éireann. 22 December 2008. Archived from the original on 22 December 2008. Retrieved 22 December 2008.
  3. ^ "Bank Government Announcement on Recapitalisation". Financial Regulator. 21 December 2008. Archived from the original on 29 January 2009. Retrieved 30 December 2008.
  4. ^ "Bank recapitalisation finalised soon – Cowen". Raidió Teilifís Éireann. 7 February 2009. Archived from the original on 8 February 2009. Retrieved 7 February 2009.
  5. ^ "Anglo directors probe 'billions' deposit". Raidió Teilifís Éireann. 10 February 2009. Retrieved 10 February 2009.

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