Did ‘colossal political interest’ influence inquiry?

His trial actually started on September 21, when the jury was sworn in. Until last Wednesday, however, it had heard no evidence as the judge listened to legal arguments in their absence.

ODCE lawyer Kevin O’Connell, inset, was accused of getting carried away in his investigation of Seán FitzPatrick

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So last Wednesday, on day 58 of the trial, Brian Mahon, a detective sergeant who was seconded to the ODCE, became the first witness. He told the jury he had used search warrants issued by the District Court to seize documents and computer drives from the offices of Anglo Irish Bank in 2009 and Irish Nationwide Building Society (INBS) in 2010.

Under cross-examination by Condon, Mahon confirmed the warrants had been ruled by the court to be “unlawful” and “unconstitutional”. Despite this, the jury would still see relevant documents seized on foot of these warrants. The “unlawfulness” point was also raised by Condon with other garda witnesses.

Dominic McGinn, senior counsel for the prosecution, made his opening speech to the jury last November. He explained that FitzPatrick was accused of “artificially” reducing his borrowing from Anglo, which grew from €10m to more than €130m between 2002 and 2007, and of failing to disclose the extent of these loans to Anglo’s auditors, Ernst & Young (EY), in the bank’s end-of-year statements.

McGinn said the purpose of the loans was irrelevant, and what mattered was FitzPatrick’s alleged failure to notify the auditors of their extent or to reveal them in financial statements issued publicly.

He said the bank was required under company law to make declarations about the level of loans made to its directors. The prosecution alleges that temporary arrangements were made with INBS to help to reduce the size of FitzPatrick’s loans on Anglo’s books at the end of its financial year. FitzPatrick was chief executive and then chairman of Anglo throughout that period.

McGinn said EY required, as part of the auditing process, certain formal representations from the bank’s management known as “letters of representation”. These were made on behalf of the board of Anglo, essentially saying what the auditors had been told was correct and there was nothing else significant they needed to know.

If there were an artificial procedure, whereby amounts of money were removed from the loan portfolio and replaced after year end, then the declarations were false and did not give a true and honest picture of the loan situation, the prosecution said.

McGinn said the first 21 charges against FitzPatrick alleged that letters of representation were false, misleading and deceptive. The final six charges alleged the information in Anglo’s accounts at year end was false and deceptive.

Before O’Connell was called to give evidence, the jury had already heard from gardai and ODCE investigators involved in gathering documents; an Anglo software developer who explained how bank records were stored electronically; and employees of the Companies Registration Office who prepared reports about Anglo’s history and FitzPatrick’s appointment to its board.

O’Connell, in his direct evidence, explained how Paul Appleby, the director of corporate enforcement, had delegated some powers to him. This allowed O’Connell to demand that Anglo produce certain documents connected with FitzPatrick’s loans.

When O’Connell attempted to explain what records banks were required to keep under law, Condon objected. He said the witness should “refrain from giving a tutorial”. It was one of several objections FitzPatrick’s lawyer made to the ODCE lawyer’s evidence, which he claimed veered into attempts at interpreting the law for the jury. “You’ll have to control your witness,” the judge John Aylmer warned the prosecution.

After O’Connell finished his evidence, McGinn said he would recall him later in the case. O’Connell’s cross-examination by Condon soon became tetchy. FitzPatrick’s senior counsel put it to O’Connell that he had drafted a court order for seizing documents relating to the loans that said they were needed for “the purposes of investigation of an indictable offence which has been committed”. Condon said only the jury would decide if his client had committed an indictable offence.

The ODCE solicitor accepted the wording of the order was unfortunate because it suggested the committing of an offence had been confirmed. “Can I suggest you ought to have been more careful?” said Condon.

FitzPatrick’s lawyer said the ODCE had used the document to get a court order to seize private banking records on an assertion that “was flatly wrong”. O’Connell said he could not be sure if the document had been based on a proscribed form.

Condon then asked O’Connell about his use of the ODCE’s delegated director’s powers to demand other documents from Anglo without a court order. “Obviously you didn’t metamorphose in some Star Trekian manner into a different person, but effectively you were the director,” said Condon. He accused the ODCE investigator of getting “carried away” with himself because he was investigating Anglo and FitzPatrick.

He highlighted a letter O’Connell wrote to Natasha Mercer, Anglo’s company secretary, in which the solicitor sought certain records and warned Mercer that if she concealed, falsified, destroyed records “or failed to give reasonable assistance”, she might be guilty of an offence.

Condon said O’Connell had “chosen to go in high” and with his “studs showing”, but his legal warning was wrong because failing to give reasonable assistance was not an offence. After a break for lunch, O’Connell accepted he should have expressed this warning “in a more nuanced manner”.

O’Connell was accused of having an “I don’t care” attitude. He denied this, saying he had a painstaking way of drafting documents. Condon said that in “due course” the trial would “be going through your involvement in the investigation”. He said the letter to Mercer was “consistent with you abusing the powers you have been given” and him “getting carried away”.

O’Connell rejected the allegation. Condon persisted. He then asked the ODCE solicitor about his warning to Mercer that it would be a criminal offence to destroy documents relevant to the investigation. O’Connell said he accepted that would be a wrong thing to do.

Condon asked, wouldn’t the destruction of documents have a profound effect on an investigation? O’Connell said that depended on what the destroyed documents were, and if there were copies.

Condon remarked that a person who destroyed such documents ought to expect “to have their collar felt by the gardai”. O’Connell accepted it could be an offence to destroy documents under the Companies Act.

The senior counsel then moved onto the political interest in the FitzPatrick investigation. He showed the jury letters from 2010 that confirmed Mary Coughlan, then the tanaiste and minister for enterprise, trade and employment, had been briefed about the investigation on a confidential basis by the ODCE. O’Connell said the extent to which the minister was kept informed was small, and the law provided a mechanism allowing the ODCE to do this.

Condon said there was “colossal political interest” in the case and this could not have passed O’Connell by or been without impact. O’Connell insisted that no aspect of the investigation had been influenced “by the political side”.

“I at no time experienced anything that suggested there was political pressure being inappropriately exerted on any of us,” said O’Connell. “Or that any of us felt there was anything lacking in our powers, ethics or independence that led us to succumb to such pressure.”

Condon said O’Connell was operating in the “teeth” of “gale-force political outrage” over the case. The ODCE solicitor said he had read media reports expressing bewilderment about why the investigation was taking so long but he knew it was a complicated and nuanced matter. While he saw the “simplistic analysis”, investigators kept going with their painstakingly slow and methodical work.

Condon finished his cross-examination with a promise to “come back to this” when O’Connell returns to the witness box later in the trial. The jury have been told it is expected to finish at the end of March.

On Friday afternoon, Joe McWilliams, a lending director at Anglo in 2006, told the jury he took over “loan team 16”. This group had responsibility for managing FitzPatrick’s borrowings among the €7.5bn loans for which McWilliams was responsible.

McWilliams agreed it was “no secret” that FitzPatrick’s loans were transferred to another bank before Anglo’s year end as he had heard about this within the bank before he assumed responsibility for managing them in 2006. “That Anglo facility remained in place. The facility was drawn down again after year end and the other bank was paid,” he said.

Although McWilliams had the power to approve loans of up to €5m, all FitzPatrick’s applications for further borrowing had to go to the group credit committee after his exposure surpassed that limit.

McWilliams was shown credit committee applications he had co-signed to increase the amount borrowed by FitzPatrick and his family in 2006 and 2007. A document from May 30, 2007, put the total amount lent to FitzPatrick and his family across the bank at €138.55m. It noted the limit available to him was €140.75m.

The security given by FitzPatrick to the bank for his loans included a charge over his Anglo shares and various property investments. David Drumm, Anglo’s former chief executive, was among the signatories on one of FitzPatrick’s loan applications. In the forms, FitzPatrick’s “name of business” was filled in with the word “chairman”. His payment history was described as “excellent” in each form. “There was never any issue in relation to Seán FitzPatrick’s loans,” McWilliams testified.

The jury was asked to return on Monday morning, when the trial will continue.