The 26-County coalition government of Brian Cowen is in crisis over a ‘golden circle’ of wealthy Irish developers who received almost half a billion Euro to purchase shares in a potentially fraudulent transaction at the scandal-plagued Anglo-Irish Bank.

The transaction, which is likely to cost the taxpayer 451 million Euro, has created huge political controversy for the coalition government, which is under pressure to name those involved.

The loans were issued in July on the extraordinary basis that the money would be used to buy shares of Anglo-Irish Bank itself, which were collapsing in value at the time. The shares served as the only collateral required for the loans.

The apparent plan was to artifically support the bank’s share price, while rewarding ‘circle’ participants with a one-way gamble: if the bank failed, the debts would be written off.

A further 15 per cent stake in the bank bought by the family of Cavan billionaire Sean Quinn was also financed using the bank’s own money. This means that over a quarter of the bank’s shares were purchased in private deals last July, using the bank’s own money.

The Dublin government stands accused of complicity, seen in the bank’s subsequent nationalisation and its continuing refusal to name the ten people involved. They are believed to be major customers of the bank and include prominent Fianna Fail supporters.

Brian Cowen is also known to have been closely involved in the banks’s activities. Last year, Cowen dined privately with directors of the bank at a Dublin hotel after he had been warned of a dangerous position with the bank’s shares that threatened the entire Irish financial system.

The collapse in the bank’s share price risked triggering a mountain of share selling, largely a result of trading by Sean Quinn in high-risk, leveraged contracts known as ‘contracts for difference’. Trading in the CFDs is a form of spread-betting on the bank’s share price.

Anglo-Irish Bank’s collapse became inevitable last month following revelations that its financial statements were manipulated to disguise the scale of the bank’s balance-sheet problems and shore up its stock price.

The scandal began over the issue of irregular loans by the bank to its directors, which continues to rumble on. It led to the resignations of Anglo’s chairman, Sean Fitzpatrick, and chief executive, David Drumm, in December. In a statement today [Friday], the bank said it was unlikely to recoup the loans, which total 255 million Euro.

The scandal has also placed the move by the Minister for Finance Brian Lenihan to guarantee deposits in the state’s banks last September 30 -- the final day of Anglo’s financial year -- in the context of a desperate attempt to cover up Anglo’s misdeeds and malpractice.

More generally, it has threatened to collapse the state’s entire banking system at a time of a profound global economic recession.


In the wider meltdown in the Irish banking sector, this past week has seen three further resignation announcements, most notably that of Peter Fitzpatrick, finance director of Ireland’s third biggest financial services group Irish Life & Permanent.

His departure arose from the disclosure last week that the bank had put billions of Euro temporarily on deposit at Anglo Irish Bank in time for September 30. Fitzpatrick said he “apologised unreservedly” for “mistakes”, but it is still unclear what trajectory the funds passed through.

Meanwhile, the chairman of Irish Nationwide Building Society, Michael Walsh, suddenly bolted from his position on Tuesday, declaring the institution “cannot survive” without significant government support and reorganisation.

And it was also announced that Bank of Ireland chief Brian Goggin, who infuriated the public last week when he complained that his disclosed compensation had fallen below two million Euros per annum, will quit his post within three weeks.

Public anger at Ireland’s wealthy nexus of bankers, developers and politicians, who profited most from Ireland’s recent boom and are seen to have contributed most to its downturn, is fuelling protests and demonstrations. Most cutbacks, pay cuts and redundancies introduced in recent months have been directed at average or low-paid workers, or those in receipt of social welfare.

Fianna Fail strategy in both the banking and the broader economic crisis appears focused on keeping property valuations high at all costs, partly to bolster over-leveraged developers, but also to hold back a potential avalanche of property selling and foreclosures.

The party’s coalition partners in the Green Party are coming under immense pressure to abandon their support for the hated Cowen administration. The Greens, who issued another warning that they could pull out of government, were dramatically told on Wednesday night to “put up or shut up”.

Fine Gael’s Phil Hogan made the charge after the Green Party’s chairman Senator Dan Boyle said his party could end its alliance with Fianna Fail if its politicians are implicated in the ‘golden circle’ scandal.

“Soon it will be time to put up or shut up. It’s time for them to decide whether they want to be part of Government decisions that collude with the status quo and conceal information arising from the banking scandals stretching back to September 2008,” said Mr Hogan.


Sinn Féin President Gerry Adams warned that the ‘golden circle’ of the 1980s associated with former Taoiseach Charles Haughey was “alive and well” in Irish politics.

Speaking from Kerry, where he was meeting with community and resident organisations and local businesses, Mr Adams said the government’s failure to deal with the banking crisis had linked Ireland to corruption and damaged its reputation internationally.

“Once again it is the actions of bankers, property developers and inept Ministers that has almost brought this country to its knees,” he said.

Mr Adams said the admission by Minister Lenihan that he didn’t fully read a report on the state of Anglo-Irish Bank prior to its nationalisation was “intolerable”.

“Finance Minister Brian Lenihan should be removed and this government should resign from office,” he said.

“The details that have emerged over the last number of days about the book-cooking of Anglo-Irish Bank and Irish Life & Permanent are nothing less than corporate corruption.

“Banking executives in both institutions must be investigated and those who have and indeed still are behaving illegally should be charged and subjected to due process.”


Meanwhile, a damning report on the FAS training agency, was released today, which found the agency breached financial procedures at a heavy cost to the taxpayer. The report was commissioned in the wake of revelations that the agency had funded six-figure Florida vacations for political cronies, including current Health Minister Mary Harney.

“It is worth remembering that it is Mary Harney in her former ministerial role with responsibility for Trade, Enterprise and Employment who presided over FAS for much of the period covered by the report,” said Sinn Féin’s Arthur Morgan.

“And lets be honest, heads will have to roll in FAS but the buck ultimately stops with the government who have overseen the budgets and management of this state body.

“The golden circle culture embraced by Fianna Fail and the PDs since the 1980s has fundamentally undermined Ireland’s economy, its banking system and the delivery of state services over the last three decades and we are all now paying the price for it,”

“The public anger that is growing on foot of every revelation of institutionalised corruption on the government benches cannot be underestimated. Today’s report is further evidence that government needs to start looking from the top down rather than the bottom up when it comes to public sector savings.”

Urgent Appeal

Despite increasing support for Irish freedom and unity, we need your help to overcome British and unionist intransigence. We can end the denial of our rights in relation to Brexit, the Irish language, a border poll and legacy issues, with your support.

Please support IRN now to help us continue reporting and campaigning for our national rights. Even one pound a month can make a big difference for us.

Your contribution can be made with a credit or debit card by clicking below. A continuing monthly donation of £2 or more will give you full access to this site. Thank you. Go raibh míle maith agat.

© 2009 Irish Republican News