Commission probes disgraced Irish banker’s loan top-up
An investigation may be launched into a multi-million euro loan extension given by Anglo Irish Bank to a French property company co-owned by its disgraced former chairman Sean FitzPatrick.
The secretary-general of the Irish Department of Finance, Kevin Cardiff, said the loan deal could fall within the scope of the Commission of Inquiry into the banking crisis.
He made the comments at the Dail's Public Accounts Committee (PAC) yesterday after the Irish Independent had revealed how the company, SCI Saint Roch, was allowed to increase its borrowings from Anglo on January 21, 2009 — the very day that the bank was taken into state ownership.
The firm, owned by FitzPatrick and corporate financier Angela Cavendish, was involved in the purchase and renovation of a villa on the French Riviera.
The refinancing deal allowed it to increase its borrowings from Anglo to €17.2m (£14.5m) — just a month after Mr FitzPatrick was forced to resign from the bank over a directors' loans scandal. It was completed without the knowledge of Irish Finance Minister Brian Lenihan.
PAC chairman Bernard Allen said it raised concerns that Mr FitzPatrick was using the bank as his “own personal piggybank”.
Mr Cardiff said he was not aware of the full details but said the revelation was precisely the sort of thing that could be probed by the Commission of Inquiry.
He indicated that the loan could be a sign of a broader corporate governance problem in Anglo.
Mr FitzPatrick's company used borrowings from Anglo to buy the villa in the exclusive Saint Jean Cap Ferrat area for €10.25m (£8.7m) in May 2007.
However, within a year-and-a-half, he was having difficulty servicing his portion of the loan and talks began with Anglo on a refinancing deal.
This involved a €2.6m (£2m) loan being added to an existing €14.6m (£12.4m) loan given by Anglo. In return, Ms Cavendish took over liability for borrowings.
The villa is now on the market for €20m (£17m). The €2.6m portion of the loan does not have to be paid back until the villa is sold.