IBRC, formerly Anglo and Irish Nationwide, is suing its former auditors, Ernst and Young

I wonder does Sean Quinn senior have access to the internet in Mountjoy? If he does, I hope he doesn’t choke on his cornflakes this morning if he reads the breaking report from Simon Carswell at the Irish Times which states that IBRC, formerly Anglo and Irish Nationwide, is suing its former auditors, Ernst and Young and the “case relates to the firm’s role as auditors before the bank’s nationalization” Later in the article, the Irish Times states “The timing of the action is thought to be aimed at beating a six-year legal time limit that would have blocked the action. Ernst & Young signed off the bank’s accounts for the year to the end of September 2006 on December 5th, 2006. These accounts are believed to be crucial to the bank’s legal action.” 

So when Sean’s big case against IBRC comes before the courts next year, this action against the auditors might be crucial, and no doubt Sean’s legal team – if he has one, beyond his son-in-law – will surely seek discovery of the details of the newly lodged claim. Next year, Sean will be arguing that he doesn’t owe IBRC some €2.4bn of loans provided to him by Anglo, apparently for the purchase of Anglo shares. It has been a continuing theme pushed by the Quinn camp that Sean was relying on false accounts when making his investment decisions, that and the claim the loans are “tainted with illegality”. It is hard to see how IBRC’s case against Ernst and Young won’t be relevant to Sean’s big case next year. Sean was reported to have built up a 5% stake in Anglo by January 2007, though by mid-2008 he had amassed an interest in the bank which could have led to him controlling 28% of the shares. 

On here, there is relief that IBRC has at last been prodded into action. In September 2012, Minister Noonan responded to questions in the Dail and incredibly claimed that IBRC couldn’t identify the “principal person or persons” at Ernst and Young responsible for the audits. Minister Noonan was just about able to identify the auditor at Irish Life and Permanent who signed off the accounts. In June 2012, Minister Noonan (again !) washed his hands of mistakes in loan documentation at the banks which meant that NAMA acquired €455m of loans without paying a cent. There just didn’t seem to be interest at an official level in pursuing the auditors, at least to establish if there was any culpability in signing off the accounts based on poor records or inaccurate information. 

Last week, it was reported that Ernst and Young’s revenues in Ireland have rocketed to €130m a year. This is the company which until recently employed Alison Kramer (Alice Kramer), wife of disgraced former NAMA employee, Enda Farrell. To many people, it will be amazing that it is four years after the disastrous banking guarantee to stop the banks collapsing, that the first-known legal action has been initiated against an auditor of a bank. Here’s a reminder of the auditors in the banks during the boom/bust. 
http://namawinelake.files.wordpress.com/2010/10/theauditors1.jpg 

In a separate but related matter, there doesn’t appear to have been any progress in the case taken by the administrators of Quinn Insurance against its former auditors, PwC.