Ex-Anglo Irish finance director charged in fraud probe

DUBLIN Mon Jul 23, 2012 11:31am EDT

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DUBLIN (Reuters) - Two former top executives at Anglo Irish Bank were the first to be charged on Monday in a long-running fraud investigation into the failed lender synonymous with Ireland's financial meltdown.

Former Finance Director Willie McAteer, 61, who resigned from the bank ahead of its nationalization in January 2009, was charged on 16 counts, chiefly over his role in loans allegedly given to a group of 10 wealthy clients to buy shares in the bank.

Former managing director for Ireland Pat Whelan, 50, faced the same charges.

He and McAteer face a maximum sentence of five years each in prison and/or a fine of just over 3,000 euros ($3,700) if they are found guilty.

Ireland's Office of the Director of Corporate Enforcement (ODCE) and the police have been investigating the actions of the bank for over three years, including the loans given to the group, referred to by local media as the "golden circle", as well as whether deposits were used to mask large withdrawals.

Anglo, recently renamed the Irish Banking Resolution Corporation (IBRC), is slowly being wound down after years of reckless lending left the state with a 30 billion euro bill, almost half of the amount needed to bail out the entire sector.

Voters have been angered that nobody has been jailed for the mismanagement of banks that helped fuel the runaway "Celtic Tiger" economy.

Monday's decision raises the prospect that others may be charged.

Sean Fitzpatrick, the face of Ireland's banking crisis after serving as chief executive of Anglo for almost two decades before becoming its chairman in 2005, has been arrested twice in connection with the probe.

FitzPatrick said in December 2008 he had kept shareholders in the dark for years about loans worth 84 million euros he had received from Anglo. Issues to do with loans to directors also form part of the overall investigation.

GOLDEN CIRCLE

McAteer, who was arrested for the third time early on Monday before being brought to court, was released on bail of 11,000 euros and both he and Whelan, who also made bail, were ordered to appear again on October 8 when evidence will be heard.

A police sergeant told the court that they had been charged with permitting the bank to give unlawful financial assistance for the purpose of or in connection with the purchase of shares in Anglo. They made no reply to the charges.

Among those the pair were accused of helping were Paddy McKillen, Gerry Gannon and Joe O'Reilly, property tycoons who achieved celebrity status during a boom that came crashing to a halt when house prices more than halved from 2008 onwards.

The wife and children of Ireland's former richest man Sean Quinn, one of whom was jailed last week in a separate case to do with the bank, were also among the list of 16 people the bank was accused of assisting.

Bankrupt businessman Quinn, who is also facing the threat of prison over his failure to cooperate with the former Anglo's attempts to seize assets he is hiding abroad, lost his 4 billion euro business empire over a disastrous investment in the bank.

He built up a stake of more than 20 percent in it via contracts for difference (CFDs) - which do not have to be publicly declared - and offloaded a stake of 10 percent to the group of 10 Anglo clients, without placing them in the market.

The stock became worthless once the government took over the bank, leaving Quinn with debts to the bank of almost 3 billion euros.

($1 = 0.8219 euros)

(Writing by Padraic Halpin; Editing by Jon Loades-Carter and David Cowell)

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