A 2012 High Court case brought by the former Anglo Irish Bank against its auditors prior to the financial crash has been settled on confidential terms.
The state-owned bank, which became Irish Bank Resolution Corporation (IBRC), is suing Ernst & Young (EY) for more than €50 million in damages over losses allegedly resulting from the auditor’s “repeated default”, allegedly “highest uncovering ‘unusual and inappropriate’ loans Transactions, known as ‘bed and breakfast’ transactions, by former Anglo chairman Seán FitzPatrick.
EY defended its work as an auditor to the bank and rejected the claims.
On Wednesday, the IBRC liquidators’ lawyer, Eoin McCullough SC, told the court that the parties involved had reached a confidential compromise. He asked that the matter be brought to court at a later date.
Ernst & Young’s Andrew Fitzpatrick SC said his client agreed to the request.
Judge Denis McDonald congratulated the attorneys for solving a case of this magnitude.
The IBRC’s legal action was delayed for several years by a series of criminal cases involving Anglo.
In its lawsuit, the bank alleged that the auditors breached the contract by failing to uncover an alleged practice whereby, for brief periods towards the end of Anglo’s financial year, Mr FitzPatrick combined his large Anglo loans with those borrowed from the Irish Nationwide Building Society monies repaid. but these transactions were reversed days later.
The net result was that large loans otherwise due from Mr Fitzpatrick were pushed off Anglo’s balance sheet, giving the impression he owed less than he actually did, the bank claimed.
They were called “bed-and-breakfast” transactions because INBS provided temporary housing for the loans until they returned to their “true” Anglo homes, it said.
The practice came to light in 2008 when market turbulence prevented Mr FitzPatrick from refinancing his loans with INBS “as usual”, the bank claimed. In December 2008 he resigned as chairman of Anglo.
It was alleged that the failure to expose the BB practice significantly increased Anglo’s exposure to Mr FitzPatrick after the end of fiscal 2006.
EY rejected the allegations.
https://www.independent.ie/business/liquidators-of-former-anglo-irish-bank-settle-legal-case-against-former-auditors-over-pre-crash-accounts-42312764.html Insolvency practitioners of ex-Anglo Irish Bank settle legal battle against ex-auditors over pre-crash accounts