Haughey’s aide ran one- man bank – Sunday February 11 2001 – Gene Kerrigan relates the story of Hanover and Tony Fitzpatrick, the former government press secretary whose international bank dealt with dirty money. A FORMER aide to Charlie Haughey was last week named, in a US Senate report, as the owner of “a one-man bank” run from his home in Ireland. The Hanover Bank, owned by Tony Fitzpatrick, who was government press secretary in the early 1980s, apparently became says a report from the US Senate Permanent Subcommittee on Investigations “a magnet for financial fraud and suspect funds”.

The bank, licensed in Antigua, paid no interest on its customers’ deposits. It attracted custom from people who required”confidentiality”.

The report links Hanover to a number of suspect multimillion-dollar transactions, ranging from Ireland to Japan, from the Channel Islands to the Caribbean and New York.

Terry Wingrove, described as a British art dealer with access to substantial funds, made large deposits with Hanover Bank without requiring paperwork. He told Senate investigators last July that he warned Fitzpatrick, “If my money goes walkabout, you go walkabout.” Wingrove is now in Wormwood Scrubs prison in London.

Fitzpatrick operated and Hanover Bank is still in existence free of any regulation by Irish authorities. The report says that “even after learning of [the bank’s] existence in the jurisdiction, Irish regulators were hesitant to exercise oversight of a bank that was licensed in the Caribbean, accepted deposits in the Channel Islands, and limited its day-to-day activities in Ireland to making telephone calls and faxing wire instructions.”

Although authorities in Washington, London and the Channel Islands became worried about Hanover Bank, and conducted investigations in 1993 and 1998, and although Antigua briefly revoked the bank’s licence in 1997, the authorities in Ireland remained ignorant of Fitzpatrick’s international banking activities. The Central Bank told the Senate investigators: “Ireland does not exercise any regulatory authority over Hanover Bank, since it is licensed by [Antigua] and apparently does not solicit deposits in Ireland.” Everybody, it seems, knew about Hanover, except the Irish.

Charlie’s PR man and his Hanover bank

Tony Fitzpatrick is a former journalist. After serving as government press secretary to Charlie Haughey, he went into ‘public relations’ (a well-trodden route for government press secretaries) and had plush offices on St Stephen’s Green.

In August 1992, with no banking qualifications or experience, he set up Hanover Bank. Accountants Price Waterhouse, in Antigua, were paid $25,000 to arrange registration in the tiny Caribbean tax haven ($10,000 of that was the Antiguan licence fee).

Price Waterhouse arranged for two men living on the island to serve as bank director and local registered agent, satisfying Antiguan law. Hanover had no physical existence; it operated entirely out of Fitzpatrick’s home.

Fitzpatrick, who voluntarily co-operated with the Senate investigators, being interviewed by them on June 26 last year, impressed the authorities in Antigua with a personal resumé which included, says the report, “serving from 1981-82 as public relations advisor to the Honorable Charles Haughey, then Prime Minister of Ireland”.

Fitzpatrick was “Chairman of the Board” and “Managing Director” of Hanover Bank. However, there was no board to chair and no full-time staff to manage, although the bank had five nominal employees. One man interviewed by investigators, John Burgess, laughed when told he is listed as general manager: “That’s the first I’ve heard of it.”

People were occasionally hired part-time. The annual bank audit was carried out by what the report describes as a one-man accountancy firm, operating from the accountant’s home in Birmingham. To impress Antiguan authorities, Fitzpatrick recruited a British citizen named Richard O’Dell Poulden, who had degrees from Oxford and Harvard Business School and was said to be a “practising barrister”, as shareholder and director.

HERE’S how, according to Senate investigators, such a rinky-dink little outfit got into the big time, with over $17m in deposits passing through the bank in one three-month period in 1998.

Poulden, the well-educated Brit, was on the board of several companies, including a venture capital company. Also on that board was David J Berkeley, a senior executive of Standard Bank, Jersey, a Channel Island-based bank. Poulden rang up Berkeley and said that Hanover Bank would like to enter a “correspondent” relationship with Standard Bank. This is an arrangement whereby small banks bring business to bigger banks. In return, their clients can use the services of the bigger bank in areas where the small bank has no presence. Berkeley, the report says, arranged for this to happen.

Standard, in turn, has a “correspondent” link with a US bank called Harris Bank International, based in New York. Harris International is owned by Harris Trust and Savings, one of the three biggest banks in Chicago. Essentially, Hanover was “nesting” within Standard, and thereby acquired the right to use Harris for American transactions.

Hanover Bank achieved a listing in the authoritative Bankers’ Almanac, being ranked 3,166th of all the world’s listed banks (by comparison, Bank of Ireland is ranked 127th and NIB is ranked 1,135th). Hanover is listed as having $6m in assets, whereas Standard (ranked 2,031th), within which it “nested”, has assets of $600m. And Harris Trust (ranked 311th) has assets of $26bn. The rinky-dink outfit could now carry out transactions in the USA via Harris, and in practical terms was represented in the USA by a subsidiary of the $26bn bank.

Fitzpatrick’s bank, Hanover, didn’t pay interest on deposits. It didn’t prepare bank statements. Most people using his bank, Fitzpatrick told investigators, “were concerned about confidentiality, and did not want monthly statements sent to them because they did not want others knowing they had an offshore account.”

Potential clients needing confidential banking were introduced to Hanover by third parties, who received commission. All client money was kept, not by Hanover which had nowhere to keep money, no computers, no electronic ledger and no facility for making or receiving its own wire transfers but in the “correspondent” accounts in bigger banks. Client account records consisted of the monthly statements from those bigger banks. These were kept at Fitzpatrick’s home.

In business for just a few months, according to the Senate report, “Hanover Bank became involved in a major financial scandal involving £20m, a prominent British insurance company called Clerical Medical, and a fraudulent investment scheme involving prime bank notes. Prime bank notes are fictitious financial instruments which typically contain a false promise or ‘guarantee’ by a well-known or ‘prime’ bank to pay a specified amount of funds, and the notes are then fraudulently characterised as available for trade at a discounted price.”

The report continues: “Fitzpatrick said during his interview that he now knows that no trading market exists for prime bank notes and they are considered a warning sign of financial fraud, but that he did not have that information at the time.”

Letters of credit and cash from drugs

In the summer of 1993, with the Clerical Medical scandal about to erupt, a man named Eric Rawle Samuel who, according to Fitzpatrick, “occasionally performed services” for Hanover twice went to the USA with letters of credit from Hanover Bank. He engaged in negotiations to exchange the letters of credit for cash from drug deals. He offered to launder up to $12m through Hanover. He sought to enhance his credibility by mentioning Hanover’s connections with Standard Bank in the Channel Islands, and Harris Bank in the USA.

What Samuel didn’t know was that he was talking to an FBI informant. In September 1993, after swapping a $1m Hanover Bank letter of credit for $100,000 cash, at a hotel, he was arrested and four months later pleaded guilty to money-laundering charges and got five years. Fitzpatrick sent money for Samuel’s legal fees.

Fitzpatrick told the Senate investigators that Samuel’s case was “clear entrapment”, that Samuel had been enticed into the deal by someone he knew in the USA, who was secretly helping the FBI in return for a lesser sentence for their own crimes. Fitzpatrick told investigators he drafted the $1m letter of credit that Samuel exchanged, not knowing there was anything illegal going on. He said he believed Samuel’s acquaintance had $800,000 to invest and only later had the acquaintance told Samuel he wanted to get rid of “dirty money” and that Samuel “fell for it”.

Poulden, the well-educated Brit, left Hanover after the Clerical Medical scandal. And Standard Bank, in the Channel Islands, ended its “correspondent” arrangement with Hanover. This cut off Hanover Bank from Harris Bank in the USA.

Not too much is known about the next three years. Hanover is believed to have had “correspondent” arrangements with other banks.

In 1997 or 1998, Poulden reappeared and offered to buy Hanover for $1m, on behalf of two Japanese businessmen, Fitzpatrick told the Senate investigators. As part of the negotiations (which eventually fell through) Poulden was made chairman of the bank, and one of the Japanese men, Theoddor Tsuru, was made a director. According to Fitzpatrick, Poulden now had the power to open accounts and co-sign for cash movements.

The connection to Standard Bank had been discontinued five years earlier. According to the Senate report, Poulden rang up David J Berkeley, the senior executive of Standard Bank, the Channel Islands bank, and caught him at an airport. Could he re-establish the “correspondent” arrangements? Berkeley, says the report, told Poulden he’d ring him back in five minutes after he contacted a Standard Bank employee. He did so, and Hanover again had its “correspondent” link through Standard into Harris Bank in the USA.

Hanover now went through a period of wild swings, becoming involved in two separate scandals.

How the miracle returns went missing

In the United States, a retiredswimming-pool contractor named William Koop set about conning hundreds of people out of millions of dollars. Koop, from New Jersey, had no financial credentials, but he promised miracles. Invest with his outfit, IFS, and you’d get a return of 489 per cent within 15 months. The money would be held in an offshore trust. Confidentiality that very important word among certain types of investors was guaranteed. “It is up to you to report your income to Uncle Sam as you see fit to do so,” Koop’s promotional material said. “We do not report it to anyone.” People rushed to hand over their money.

Koop had associates. There was a guy in South Carolina, Johnny Cabe, a religious minister who had a company called Hisway International Ministries. Johnny solicited money from followers of his church. There was a guy in Nevada who ran a ‘Breath of Life’ foundation and found it lucrative. In England, there were two gentlemen involved, including Terry Wingrove.

As Koop raked in the money, he sent about $12m into three offshore banks, including $5m that went to Hanover Bank. The money went from the suckers to Harris Bank in the USA, “for credit to” Standard Bank in the Channel Islands, “for credit to” Hanover, the Irish-owned bank in Antigua.

Koop told investors that their money was in their accounts in Hanover Bank, and gave them details such as “Acct A01001001 INT”. There was no such account number. Over 200 American investors in Koop’s fraud were given such details of fictitious accounts in Hanover Bank. As soon as the money arrived in Hanover it went into Wingrove’s account, says the report, and from there effectively having been laundered through Harris, Standard and Hanover it was transferred into other accounts around the world.

The evidence is that there was no contact between Koop and Tony Fitzpatrick, who told Senate investigators that he “had no idea at the time that Koop was purporting to open Hanover Bank accounts”.

WINGROVE, who described Fitzpatrick as his “personal banker”, explained to investigators why he didn’t expect proper documentation from Hanover: “You don’t go into a fish and chip shop and ask for filet mignon.” He said he warned Fitzpatrick: “If my money goes walkabout, you go walkabout. That wasn’t a threat, it was a promise.”

One of Koop’s victims, according to a New York Daily News report, was Glenn Schmidt, inventor of the Big Bertha golf club, who invested $2.5m on the promise of a $20m (or 800 per cent) return within 45 days. When the dividend didn’t arrive, Schmidt sued. A year ago, in a criminal case, Koop pleaded guilty to fraud.

The Senate report concludes that “Hanover Bank, whether knowingly or unknowingly, became a conduit for millions of dollars in illicit fraud proceeds”.

In 1997, Hanover’s customer deposits multiplied tenfold over the previous year, to $14m. Net profits reached $1.3m. The bank’s audited financial statements showed the sole shareholder, Tony Fitzpatrick, receiving a dividend of $350,000.

In 1998, according to financial statements, deposits fell from $14m to $650,000, and profits to $1.1m. Yet Fitzpatrick’s dividend went up to $1.9m. The lone shareholder’s dividend was recorded as almost twice the bank’s net profit. In 1999, deposits were down to $563,000, profits to $210,000 and the lone shareholder didn’t get a dividend.

The Casio scam and likely correspondents

The source of much of the $14m in 1997 deposits is suspect money. That year, the Japanese computer firm Casio was the victim of a $100m fraud. According to a civil case the firm took in New York, “various conspirators lied to, and cheated, Casio and each other, generated fraudulent records to conceal the frauds, and engaged in an elaborate series of wire transfers in an effort to launder the stolen funds and conceal their racketeeringactivities”.

One of those conspirators, the company alleged, was a man named Theoddor Tsuru, who along with well-educated Brit Richard Poulden was supposed to buy Tony Fitzpatrick’s bank and became a director of Hanover in 1997.

Tsuru had a $1.8m apartment in New York and houses in Japan and Florida each worth $2m. All of Tsuru’s assets were frozen by order of a London court in June 1998. Several civil suits are pending against Tsuru and in one he has already been ordered to pay back $3.3m to Casio.

The Senate investigators believe it “likely” but “far from conclusive” that three deposits made into Hanover Bank in 1998, via the Standard and Harris “correspondent” bank route, totalling $12.6m, were associated with the Casio fraud.

Fitzpatrick told the investigators he first found out about the Casio fraud through an article in The Observer that “had Tsuru’s name all over it”. Fitzpatrick told investigators he rescinded Tsuru’s directorship, and Poulden’s appointment ended.

IN 1997, the Antiguan government revoked Hanover’s licence. Not because of any of the bank’s activities but because it didn’t pay its 1996 licence fee. The licence was quickly restored in circumstances that remain unclear.

In 1998, authorities in Jersey and the UK investigated Hanover. The investigation alerted US authorities to the fact that something was wrong, and this led to the discovery of the Koop fraud. William Koop awaits sentence in April. Terry Wingrove is in Wormwood Scrubs, fighting moves to extradite him to the USA on criminal charges in connection with the Koop scandal.

Controversies surrounding Fitzpatrick and Hanover were reported in Irish newspapers in 1993, 1994, 1997 and 1998. The Central Bank, however, told the Senate investigators it was unaware of his involvement in banking.

Jersey authorities censured Standard Bank. The senior executive who arranged the “correspondent” link with Hanover resigned. Richard Poulden would not co-operate with investigators. Hanover is still listed in the Bankers’ Almanac.

Tony Fitzpatrick told Senate investigators he wants to sell his bank. (Interested parties may contact Hanover at Chancellor Chambers, Newgate Street, St John’s, Antigua & Barbuda, Leeward and Windward Islands: Tel: 00 1 268 4624468.)

http://www.independent.ie/opinion/analysis/haugheys-aide-ran-one-man-bank-506743.html