Central Bank governor: Anglo Irish Scandal 'a sorry story'

The governor of the Central Bank has said he agrees with a judge’s withering attack on the former financial regulator over a loans-for-shares scam at Anglo Irish Bank.

Patrick Honohan said the illegal July 2008 plot, which two of the watchdog’s top officials at the time – Patrick Neary and Con Horan – oversaw, was “a sorry story”.

Judge Martin Nolan yesterday singled out the regulator at the time, Mr Neary, for what he said was leading two bankers into error and illegality over the fraudulent €450m lending.

Former Anglo directors Pat Whelan and Willie McAteer walked free from court after being told they will serve community service over the scandal. Mr Honohan stressed that regulatory reforms over the last five years ensure that the actions of the past could not occur today.

“I think there’s nothing that we want to disagree with in what the judge has said. This is obviously a sorry story,” he said.

“This is something that is behind us but of course the financial crisis is not behind us. It has a long period of consequence.”

Mr Honohan declined to comment on the lucrative pay-off and pension Mr Neary secured when he quit as regulator – worth more than €100,000 a year.

He also declined to confirm if any member of staff had been sanctioned or disciplined on the back of the Anglo loans-for-shares plot. Cyril Roux, Central Bank deputy governor in charge of financial regulation, said there have been sweeping changes in the watchdog since Mr Neary resigned in early 2009.

“It applies to a regulator of the past,” Mr Roux said. “It’s an historical comment of what happened in 2008 but I don’t think it reflects in any sense what is happening today.”

Whelan, 52, a father of two, of Malahide, Co Dublin, and McAteer, 63, also a father of two, of Rathgar, Dublin, were found guilty of illegal lending after an 11 week trial at Dublin Circuit Criminal Court.

The money was provided to a group of clients known as the Maple 10 to unwind a secret 28% investment in Anglo by now bankrupt tycoon Sean Quinn.

Retired Mr Neary has declined to discuss his role as chief executive at the height of the financial crisis in Ireland - other than to give evidence in the bankers' trial.

Judge Nolan remarked in yesterday’s ruling that the former watchdog had “difficulty in recalling vital events”.

Mr Horan, who also gave evidence in the trial, is on secondment from the Central Bank to the European Banking Authority, based in London.

He is due to return to the Dame Street headquarters at the end of the year but the governor said he would not discuss what role he may take up.

Meanwhile, the Central Bank has been given planning permission to redevelop the unfinished building in the Dublin docklands originally intended as the Anglo Irish Bank headquarters.

Officials will be tendering for the main contractor over coming weeks, with an appointment to be made by the end of the year.

Mr Honohan said the Central Bank would not be rushed into moving to the new build.

“We actually want to get this thing right. It’s a bit more complicated, so we are actually doing a lot to get this spot on and right,” he said.

He added that there would be no issue finding an occupier for the current Dame Street premises and it is likely the building will be sold.

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