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Regulator hires partner from Anglo auditor
Sunday, January 18, 2009 By Richard Curran
The Financial Regulator has hired a partner from Ernst & Young, the accountancy firm that audited Anglo Irish Bank, to advise on the €440 billion bank guarantee scheme.

The Sunday Business Post has learned that Cormac Murphy, a partner in Ernst & Young’s financial services advisory group, has been seconded to the Financial Regulator to help it to deal with the banks in the scheme.

The appointment comes despite the fact that serious questions have been asked about why Ernst & Young did not spot the massive loans that former chief executive Sean FitzPatrick concealed from his shareholders for eight years. Shareholders attending Anglo Irish Bank’s extraordinary general meeting in Dublin last Friday were scathing in their criticisms of Ernst & Young for failing to detect that FitzPatrick had concealed the loans.

Ernst & Young earned a combined €6.2 million in fees for its audit of Anglo Irish Bank and related accounting services over the last eight years, according to an analysis by The Sunday Business Post.

In 2007 and in previous years, Ernst & Young signed off on Anglo Irish Bank’s accounts stating that they gave a true and fair view of the company’s financial position.

In the 2007 accounts, it was reported that FitzPatrick had loans of just €7 million, but Donal O’Connor, the new chairman of Anglo Irish Bank, revealed at the egm that FitzPatrick had directors’ loans of €129 million that year. The Financial Regulator confirmed that ‘‘a partner from Ernst & Young has been seconded to the Financial Regulator, providing support to the Government Guarantee Unit, in setting up new processes and systems to deal with the covered institutions. It is a short-term secondment, and the partner involved is dedicated exclusively to this task.

Ernst & Young has not been engaged to work on this project.” Ernst & Young issued a statement last Friday saying it was confident of all audit opinions expressed to Anglo Irish Bank shareholders in the bank’s financial statements.

“‘As part oft he normal audit process, Ernst & Young received certificates from directors setting out their loan balances with the bank at the end of the financial year. Until late 2008, Ernst & Young was unaware of the refinancing transactions undertaken by the former chairman of the bank, which concealed the extent of his loans with the bank during previous years.”

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