If public confidence in the Irish banking system is to be restored and if permanent damage to Ireland’s reputation internationally is to be averted, it is essential that there be a full investigation into the manner in which Anglo-Irish Bank conducted its affairs.

Since details have emerged of the way in which the Chairman of Anglo Irish, Sean Fitzpatrick, systematically transferred over an eight year period €87m in loans with Anglo to another bank before the end of each financial year, the public mood has moved from shock and surprise to one of unprecedented anger. There is also no doubt that the world wide publicity that this bizarre affair has attracted could cause enormous damage to our reputation. This is particularly significant for a country that depends so much on the financial services sector for employment.

I believe that the best course of action would now be for the Director of Corporate Enforcement to apply to the High Court for the appointment of an inspector to carry out a full investigation into the way in which Anglo’s affairs have been conducted.

There would certainly appear to be sufficient grounds under the 1990 Companies Act to justify an application to the courts in this case. For instance under Section 8 of the Act, the Director may ask the court to appoint one or more inspectors to investigate the affairs of a company if the court is satisfied that there are circumstances suggesting:

(a) that its affairs are being or have
been conducted with intent to defraud its creditors or the creditors of any
other person or otherwise for a fraudulent or unlawful purpose or in an
unlawful manner or in a manner which is unfairly prejudicial to some part of
its members, or that any actual or proposed act or omission of the company
(including an act or omission on its behalf) is or would be so prejudicial,
or that it was formed for any fraudulent or unlawful purpose; or

(b) that persons connected with its formation or the
management of its affairs have in connection therewith been guilty of fraud,
misfeasance or other misconduct towards it or towards its members; or

(c) that its members have not been given all the
information relating to its affairs which they might reasonably expect.”

The case for the appointment of an inspector is strengthened by the terms of Section 220 of the Act, to maintain proper books of account. The directors of the company are required to ensure that this requirement is complied with. It is a criminal offence for any director of the company to fail to take all reasonable steps to ensure compliance with this requirement.

According to section 202 (1), proper books of account should:

* correctly record and explain the transactions of the company;

* at any time, enable the financial position of the company to be
determined with reasonable accuracy;

* enable the company’s directors to ensure that the balance sheet and
profit and loss account comply with the Companies Acts, and;

* enable the accounts to be readily and properly audited.

Section 202, (2) requires that books of account be kept on a continuous and
consistent basis, “that is to say the entries made in them must be made in a
timely manner and be consistent from one year to the next”.

The government has taken an extraordinary casual approach to the shocking disclosures regarding Anglo-Irish. The strongest term the Minister for Finance has used in his reaction to the disclosures has been to express his ‘disappointment at the circumstances of the resignation of Mr. Fitzpatrick’.
In its approach the government has shown, yet again, how much it is out of touch with public opinion.

“The public has a right to know what was going on in Anglo Irish and other shareholders or those whose pensions depended on the bank are entitled to know. The most effective way to establish this is through the appointment of an Inspector. I would urge the Director of Corporate Enforcement to make an early application to the court for this purpose.

The way in which the Fitzpatrick loans were processed also raises serious questions about procedures within the Irish Nationwide Building Society, which may also require investigation.