US Firm Defrauds Ireland Of 3.2m Euros

The National Treasury Management Agency (NTMA) , the government body that manages the Irish exchequer's funds, has accused a US financial services firm of defrauding the country's pensions during a transaction last year.

State Street, a global financial services firm, has admitted overcharging the NTMA by $4.1m (€3.2m) when it was hired to manage the sale of billions of euros worth of assets to fund the recapitalization of Irish banks.

The chief executive of the NTMA, John Corrigan, told an Oireachtas committee that the agency had reported the bank to the UK's financial regulator and to the Gardai.

"What happened here was fraudulent in nature and it's totally unacceptable," he said.

"We have communicated this view ... very clearly and in unequivocal terms to State Street."

The bank was due to be paid a fixed fee of €698,000 for managing the complex transactions, but instead it took a percentage of the massive sales.

"Within State Street, there was 0.7 percent chipped off the sale price that they got when they went out onto the open market," he said.

The overcharging was spotted by the State spending watchdog, the Comptroller and Auditor General in September, but Mr Corrigan's description of it as fraud took the issue to a new level.

State Street admitted the overcharging and said those responsible no longer worked for the bank.

"In a limited number of instances, we charged commissions on transition-management mandates that were not consistent with our contractual agreements.

"As a result of our own internal analysis, we have determined that certain employees failed to comply with the high standards of conduct, communication and transparency that we expect.

"Those individuals are no longer with the company."

Finance Minister Michael Noonan backed the NTMA boss John Corrigan, and said he was happy with the way Ireland's pension funds are being managed by the agency.

"I understand that everything that was misappropriated has been repaid, so that there is no loss to the State, that's my priority."

"The case is entirely exceptional and very surprising," said Mr Noonan.