Late on the evening of December 18, news broke that the Chairman, former C.E.O. and arguably onlie begetter of Anglo-Irish Bank, had resigned. This coincided with the revelation that, for 8 years, he had hidden from shareholders the fact that he owed the bank €87 million.
The news reached me as I retired to bed, but from early next morning I left many comments on the affair via Twitter. It is now time to expand on some of them.
Question # 01
This aspect has received plenty of attention in media comment, most notably from Joan Burton F.C.A.,T.D. (Labour Party Finance spokesperson) and Niamh Brennan F.C.A. (Professor of Management at University College Dublin), who both echoed my comment on this aspect as well as adding their own observations. (See e.g.Burton statement and Brennan article.)Nothing has yet emerged to explain how a respected firm, such as the auditors to the bank (Ernst & Young), apparently had the wool pulled over their eyes for 8 years.
Mr FitzPatrick was, in fact, only one of three chartered accountants in the Bank's top management layer. Perhaps unsurprisingly, the Institute of Chartered Accountants has started an enquiry.
Question # 02
There has been very little turnover in the composition of the Board of directors of the bank in the last ten years. If, as we have been told, the loans were properly authorised and on normal commercial terms, who, if not the Board, was involved in the decision to extend them ? And if the Board was involved, how is it that none of the directors noticed that the note to the balance sheet regarding directors' loans gave a total for such loans which could not possibly be correct ?
One hopes that there is no way that the reason could be that the Board itself was kept totally in the dark, even though - in one sort of parallel universe - one might so conclude from the fact that only the CEO followed his Chairman out the door.