By Mark Keenan
Monday August 27 2012
THE Financial Regulator has refused to reveal what action has been taken in regard to a serious complaint of liquidity irregularities made to his office in 2007 by a whistle-blowing former banker regarding Unicredit Bank Ireland.
It was alleged that the regulator received details that Unicredit Bank Ireland, an offshoot of Italy's biggest bank, had been operating in the IFSC with liquidity levels vastly below what was required by law. In addition, Jonathan Sugarman, a former executive with Unicredit Bank Ireland, has consistently claimed that the Irish regulator's office took no action regarding his complaint. Mr Sugarman was appointed risk manager for Unicredit Bank Ireland back in 2007 when it had an operation worth $50bn (€39.94bn) based in Dublin's IFSC.
Upon assuming the new position, Mr Sugarman claimed to have noticed serious irregularities in the bank's liquidity levels. The bank was required by law to keep assets and cash in reserve equivalent to 90pc of its liabilities. Mr Sugarman says he believed Unicredit was operating in Dublin with cover of just 70pc. Having called in independent consultants to confirm his fears, he then claims to have raised the matter with his superior at the bank. He says he was told "not to worry."
However, Mr Sugarman resigned his position and claims he then approached the Irish Financial Regulator's office in late 2007 to report the irregularities -- as required by law.
Fraud
He claims the Irish regulator did nothing about his complaint.
Alessandro Profumo, who was CEO of the accused bank's parent company, Unicredit -- from 1997 to 2010 and during the period covered by Mr Sugarman's complaint -- is now preparing to go on trial for fraud in Italy on
October 1.
Mr Profumo and 16 past and present employees of Unicredit will have to answer charges that they had cooked the books to defraud the Italian taxpayer out of €245m taxes on profits.
The charges relate directly to practices during the period 2007 to 2008.
When contacted on this matter, the Financial Regulator Matthew Elderfield said in a statement that: "The Central Bank met with Mr Sugarman and received some information from him and took the appropriate action."
When the Irish Independent enquired about what the regulator meant by "appropriate action", the regulator's office said there would be no more correspondence on the matter.
Late last year investigators from Australia's state-run ABC TV network also contacted the Irish regulator's office to ask what had come of Mr Sugarman's complaint against Unicredit Ireland. In a reply late last year, ABC says it received a letter from the Irish Financial Regulator's office to say that it was still examining the allegations first brought by Mr Sugarman.
Yesterday Fianna Fail's finance spokesman Michael McGrath said: "It is essential that the Irish Financial Regulator should account for how the complaint -- dating to late 2007 and relating to liquidity reserves -- has been dealt with."
Mr Sugarman could not be contacted by the Irish Independent.