Executives at Anglo Irish Bank could face up to two years in jail if the bank is found to be in breach of company law for lending up to €300m to investors to fund purchases of Anglo shares.

Weekend reports claimed executives at Anglo authorised loans of up to €300m to a "golden circle" of investors to allow them to buy Anglo shares last summer.

The new revelations came as a top-level Dail committee sent an invitation to former bank chief Mr FitzPatrick to answer questions about €87m in hidden loans he took out from Anglo.

However, Mr FitzPatrick cannot be compelled to attend the hearing.

According to the latest reports on share dealings, the €300m share purchase was made when Cavan billionaire Sean Quinn unravelled his 25pc position in Anglo contracts into a 15pc regular shareholding, leaving the billionaire with 10pc of Anglo's stock to dump on the market.

Rather than letting Mr Quinn's extra 10pc flood the market and send the bank's share price hurtling downward, Mr FitzPatrick is reported to have helped assemble a group of business people who would buy the 10pc.

These buyers are reported to have put up a small stake of their own cash, with much of the remainder reported to have been loaned by Anglo.

After Anglo's recent nationalisation, the businessmen's share is virtually worthless, though under normal banking arrangements they would remain liable for the loans.

Corporate watchdog Paul Appleby is understood to be poised to investigate the transaction to see whether it complies with company law, which prohibits companies from lending money to buy its own shares unless the money is loaned "as part of the ordinary business of the company".

If Mr Appleby finds the money was loaned as part of Anglo's day-to-day business as a bank, then the executives behind the scheme will face no penalty.

However, if the loans are found to have breached the Companies' Act regulation, executives involved could face up to two years in prison.

The two-year sentence, along with a fine of up to €2,500, only applies if the officers are convicted on indictment.

A sentence of up to six months plus a fine of no more than €500 applies if the executives are summarily convicted.

Meanwhile, the chairman of the Oireachtas Committee on Economic and Regulatory Affairs Michael Moynihan said last night he had attempted to make contact with Mr FitzPatrick on Friday to invite him to answer questions about his loan dealings.

A letter will be sent today inviting him to explain the loans which were concealed from shareholders.

The auditors to Anglo Irish Bank, Ernst and Young, will also be invited to attend.

"I would hope that Mr FitzPatrick would accept the invitation and afford members the opportunity to ask him some questions," Mr Moynihan said.

"It's also important that the auditors explain how they appear to have missed these transferals over eight years. We are in a precarious position at the moment in the economy, and people are clearly angered by recent events."

Mr FitzPatrick, who returned home from holidays this weekend, said he had "great sympathy" for shareholders in all the Irish banks, including Anglo Irish Bank.

He added that the recent nationalisation of the bank was a "very sad day".

Asked if he should be compelled to return the loans, as suggested by Finance Minister Brian Lenihan, the former bank boss said: "Of course. If I borrowed money, I do intend to pay it back."