WHERE DO probity and integrity stand in Irish banking? After all of the turmoil and chaos in the banking world over the last few months, the consequences of Seán FitzPatrick’s duplicitous manoeuvrings are likely to engender a further collapse in public confidence.
Mr FitzPatrick’s claim that he did not break any law is meaningless since he admits to arrangements that misled investors, employees and the regulatory authorities about his financial dealings with Anglo Irish Bank over eight years. And it was not some trivial oversight. It was the deliberate and orchestrated concealment of his debts of up to €87 million to the bank while he held the post of chief executive and latterly chairman.
By any yardstick, his actions were dishonest. The mere fact that he went to such lengths to conceal the loans is testament to the fact that he knew that his actions would be viewed very negatively.
It beggars belief that Mr FitzPatrick found his eight years of duplicity to be “inappropriate and unacceptable” only on very recent reflection. Taken at face value, his comments betray a frightening lack of morality and cast a shadow over the ethical culture of the bank he ran for most of the past 33 years.
The revelations about Mr FitzPatrick’s loans have already resulted in the resignation of David Drumm, the bank’s chief executive and Lar Bradshaw, one of the non-executive directors. But any attempt to draw a line at this point would be both wrong and facile.
There must be accountability both inside and outside the bank. The bank’s internal audit, external audit and corporate governance systems have all failed. Responsibility for this lies collectively with the board. The Financial Regulator must also account for how Mr FitzPatrick’s activities went undetected for seven years and his anaemic response to the matter when it was uncovered.
Very important questions have also been raised about corporate governance at Irish Nationwide which was involved with Mr FitzPatrick. The regulator must pursue this issue with Michael Fingleton, the building society’s chief executive. What is his explanation for the role his institution, and he himself, played?
The affair will make the already formidable task of recapitalising the Irish banks more difficult, just as the issue appears to be on the verge of resolution. The reputation of the Irish financial services industry is greatly diminished by the revelation that one of its most public figures was less than forthright in his banking dealings .
The market, which has already taken the view that Anglo Irish is a broken business, will now be wondering if it is also a fundamentally corrupt one. The concern is that prospective investors in the Irish banks – and the public – are unlikely to distinguish between Anglo and its bigger peers when weighing up whether to support the recapitalisation.
The revelation brings into question the logic of the Government’s commitment to ensure the survival of Anglo Irish in its present incarnation. This is a shameful episode.