THE FORMER chief executive and chairman of Anglo Irish Bank has sought to give his version of that institution’s disastrous history.
Anglo Irish Bank took too much risk in the period after his retirement in January 2005, Seán FitzPatrick has suggested in interviews with the authors of a new book.
He has also said he accepts his share of responsibility for what happened at the bank and the financial damage it caused to the entire Irish economy.
The bank, which was nationalised in January 2009 when news broke that FitzPatrick had been hiding personal loans from Anglo of more than €100 million, will cost the State tens of billions of euro and has contributed to it having to rely on funding from the International Monetary Fund.
He told authors Tom Lyons and Brian Carey that he accepts responsibility for his role.
“I think that I have been blamed too much, but that is a side issue. So do other bankers as well. Were we the only ones? No. We were part of a group of people.
“If you are looking back at who is to blame, you could argue that the regulators contributed to it. The Government contributed to it. The punters contributed to it as well, the investors contributed to it.
“I had a duty. To whom? Investors. What was it? It was to make them more money. How do we make money? We made it doing what we did. We were admired for doing that and doing it well.”
He said it was a reasonably sized bank when he resigned as chief executive and was replaced by David Drumm. The bank kept growing. “I can’t abdicate responsibility up until then, nor can I after it, because I was still chairman of the bank. In a way I was still in a pivotal position to stop it. Cries from me that I wasn’t really responsible diminish when you take that stance. I accept that.”
The book, The FitzPatrick Tapes, charts changes in the bank's board and risk committee in the period after Drumm took over and says FitzPatrick agrees that over time and in retrospect, the bank's attitude towards risk changed.
“I would find it hard to fight with you on that, in hindsight.”
He said a decision was taken around 2005/2006 to stop lending to property development in Ireland. However, the decision was qualified. “Existing customers, if they had a very good track record, of course we would support them.”
As the Irish economy and the property sector worsened through 2008, Anglo continued to lend. It loaned out €9 billion, one-third of which went to 10 investors who agreed to buy Anglo shares that had been secretly bought by Seán Quinn by way of contracts for difference.
FitzPatrick said the bank continued to deal with well-known clients who were perceived to have large amounts of equity in what they already owned. The bank would release part of the equity and the developers would then use this to invest in more property, borrowing from other banks. In this way the customer was getting into greater debt, using money from Anglo.
This practice “was actually creating the monster that brought us all down”.
He said Anglo was also afraid it would lose large clients to AIB, Bank of Scotland (Ireland) and Ulster Bank, which were lending heavily at the time.
FitzPatrick described the former financial regulator, Pat Neary, as an okay guy. “He didn’t look the part. He didn’t sound the part. But a decent enough guy. I never thought he was over-endowed with grey matter, but I didn’t think he was an idiot either.”
In the book FitzPatrick recounts how he and two others invested a total of €25 million in the purchase of the Savoy Hotel group in London for €1.13 billion, in a 2004 deal headed by financier Derek Quinlan and funded by Anglo.
“I rang Denis [O’Brien]. No. I rang Gary McGann . No. I rang Lar Bradshaw. He said, yeah but I have no money. I said, don’t worry, I will look after you on that.”
He also rang Donegal developer Pat Doherty. “He knew nothing about it but he said, yeah, you can count me in.”
In a matter of months the three investors sold their involvement back to the other investors, at a profit of €4 million each. It was his first big personal deal and once he had retired as chief executive he began to invest more.
FitzPatrick was involved in property syndicates and other investments, using borrowings from Anglo, but he did not disclose these borrowings in the bank’s annual reports. Instead he temporarily moved the loans to Irish Nationwide at each year’s end, so they would not appear in the Anglo accounts.
He said he never discussed the matter with former Nationwide boss Michael Fingleton. “I hardly ever met Fingleton. I did not know Fingleton. To the best of my recollection I never actually spoke to any director, manager or employee of Irish Nationwide.”
After he resigned as chief executive in January 2005, FitzPatrick became more heavily involved in personal investments. His €27 million in borrowings in 2005 grew to €127 million by 2007. “I was no longer in the bank so now I was free to do what I wanted to do. I would invest here, there and everywhere.”
He did not use professional advisers or wealth managers. “I said, yeah, yeah, that sounds great. Put me in for that.”
The bank advanced $40 million to FitzPatrick and Bradshaw to invest in an oil well in Nigeria. After the nationalisation of Anglo, FitzPatrick’s Anglo shareholding, once worth millions, became worthless, and his oil investment became key to his avoiding bankruptcy.
In March 2009 he flew with Denis O’Brien and Bradshaw to Nigeria, in O’Brien’s jet. O’Brien had offered to help FitzPatrick reassure his Nigerian partners, who were worried by what they were hearing about FitzPatrick.
In December 2009 FitzPatrick was offered $20 million plus the settlement of the $40 million Anglo loan for the Irish share in the oil well, but refused it. FitzPatrick filed for bankruptcy in July 2010.
“I don’t feel ashamed but I do feel regret, very serious regret,” FitzPatrick is quoted as saying in the book.
Seán Fitzpatrick's own words:
Brian Cowen
:
On March 17th, 2008, the Anglo share price fell by 15 per cent and the board was concerned there might be a run on deposits. Director Fintan Drury, a friend of Brian Cowen, suggested to FitzPatrick that he call the then minister for finance, who was in Kuala Lumpur.
FitzPatrick and Cowen spoke “about the whole issue of rumours going round about the bank that were unfounded. He just said yeah. He was just taking it all in.”
“I told him that [Seán] Quinn had through CFDs, I think. I am not sure. What I said was, what was really happening was that pressure was coming on from the shorters, these guys, the hedge funds, trying to get Quinn.”
On the same day a spokesman for Mr Cowen issued a statement saying the fall in the price of Anglo and other bank shares was an international development as opposed to a local one.
Brian Cowen attended a dinner in Anglo’s Heritage House on St Stephen’s Green, Dublin, on April 24th, 2008. Director Fintan Drury introduced the then Minister for Finance to the other directors and executives. FitzPatrick says he didn’t discuss the Quinn situation with Cowen.
“I am not saying that it was right or wrong. I just didn’t do those things. I never saw politicians as important in that way. Clearly they were important but I never saw them as to be used or anything like that.
“It never struck me once in my whole life that Fintan would be very useful because he was on our board and because he knew Cowen so well. It never struck me once.
“I never asked him to do anything with the minister for finance when he was on the board of the bank. Ever. Never even gone near it.”
Liam Carroll:
In 2002 Anglo funded a number of parties trading in shares in Dunloe Ewart plc. According to FitzPatrick, during the deals businessman Dermot Desmond asked him not to back solicitor Noel Smyth, who was putting himself forward for captaincy of the K Club.
An attempt by Smyth to buy Dunloe was thwarted when other parties, including Desmond, bought shares. Many of the investors were funded by Anglo. In the end developer Liam Carroll became involved.
“I met him. He came in and he had a notebook, an open-necked shirt. I didn’t like him at all. I knew I wasn’t getting on with him, so instead of having a row .”
Seán Quinn: On September 11th, 2007, FitzPatrick and the then Anglo chief executive David Drumm met Seán Quinn and his associate Liam McCaffrey in the Ardboyne Hotel in Navan, Co Meath, so Quinn could tell them about his huge clandestine investment in the bank via "contracts for difference" (CFDs).
“David was more up to speed clearly about the activities of CFDs. He was bringing me because he always felt that Quinn regarded me as a superhuman, as a superhero. He wanted Quinn to see how disappointed I would be.”
When FitzPatrick learned the size of the Quinn holding “I was physically shocked. I wasn’t expecting that. I said: What! David said afterwards to me that he looked at [Quinn] and that he saw the surprise in Quinn’s eyes at my reaction.”
Fitzpatrick thought Quinn was a “real 1960s Irishman. He was one of those hail fellow well met, ah sure I will go down there and play the old cards, five or six lads for 10 bob, or whatever it was. He was always producing all that and would be nearly blessing himself. Everything will be all right. He was very human but, I didn’t easily like him.”
On March 25th, 2008, the four men met again, this time in a room in Buswells Hotel in Dublin. The ongoing fall in the Anglo share price was threatening the Quinn business empire and the bank. At one stage Quinn and FitzPatrick were alone in the room.
“He was very close to tears. He could see what was happening.”
On being arrested: FitzPatrick was arrested on March 18th, 2010, by gardaí investigating certain events at Anglo.
“I hadn’t been inside Bray Garda station since I was a child. I will remember it for the rest of my life, being in the Garda station at 6.50am.
Meeting the member in charge. Taking off my tie and watch. There was no shoelaces because I was wearing slip ons. They put me in a cell and referred to me formally as “the prisoner”. There was a peephole where they check you out. Then a place in the middle of the door where they put the food through.
