Ernst & Young attempt to stop investigation

Last Updated on Saturday, 16 April 2011 17:33 Saturday, 16 April 2011 17:10

By: fanatic

Ernst and Young have launched a High Court action in Ireland to stop an investigation into its auditing of Anglo Irish Bank. The bank has lost billions of euro on speculative loans made to developers and builders during the boom years in Ireland. Taxpayers have so far put 29 billion euro into the bank which is in the process of being wound down, although the final amount could be higher still.

An investigation was launched by the Chartered Accountants Regulatory Board into Ernst & Young's role as auditors to the bank. But on Friday, Ernst & Young marched into the High Court seeking to have the investigation halted over a technicality. Special investigator John Purcell had been appointed by the Regulatory Board to conduct the investigation following a meeting of the board's complaints committee in 2009. He was supposed to carry out an investigation into directors' loans at the bank and the role of the auditors who failed to spot them.

Sean Fitzpatrick, former Chairman of Anglo Irish Bank until 2008, had taken out 155 million euro in secret loans from the bank. When year end approached, the Chairman borrowed money from another equally badly run bank, Irish Nationwide, to repay his own bank. Once the new financial year began, Fitzpatrick again took out loans from his own bank thus avoiding any requirement to notify the AGM of his loans AT year end and omitting to notify them of his loans throughout the remainder of the year.

Ernst & Young told the court that although it had been co-operating with the investigation, it discovered last month that no formal complaint had been made against it as was required by the bylaws of the Chartered Accountants Regulatory Board. The investigation had been initiated by the board on foot of media reports.

The auditors were granted permission by the High Court to have the investigation and its findings quashed, or failing that to have a right to review the findings of the investigation prior to publication and to make submissions on them.

Ernst & Young were also the auditors to Lehman Brothers in the U.S.