Toxic Irish bank sues former auditor

Bailed-out Anglo Irish Bank said Thursday it had taken legal action against its former auditors Ernst & Young for failing to identify the bank's exposure to the Irish property bubble. Anglo Irish Bank was nationalised in 2009 having collapsed spectacularly after years of aggressive lending fuelled Ireland's property bubble of the last decade. Ernst & Young audited the bank's books from the 1990s and received 9.1 million euros ($11.8 billion) in audit fees for the decade to August 2009, when it was replaced by its rivals Deloitte. The bank, which issued legal proceedings on Tuesday in the High Court, has cost the Irish taxpayer 29.3 billion euros since the onset of the financial crisis. The bank, now known as Irish Bank Resolution Corporation, (IBRC) said the proceedings "relate to the role of Ernst & Young as auditors to Anglo Irish Bank Plc pre-nationalisation". "The move to legal proceedings is very significant," Simon Carswell, author of the book "Anglo Republic: Inside the Bank that Broke Ireland", told AFP. "It's the first time an Irish bank has taken legal action against a former auditor over its conduct in the lead up to the Irish banking crisis. "It's not clear yet what the nature of the proceedings are but it's understood that because of a six year time limit to take legal action the bank had to act," he added. Ernst & Young has said it cannot comment further until they receive details of the bank's allegations. "Although Ernst & Young is aware of proceedings issued by IBRC (formerly Anglo Irish Bank), we have not formerly been served with nor have we received a Statement of Claim setting out the details of IBRC's claim. "We have consistently said we stand by the quality of our work performed in the Anglo audit and will vigorously defend any such proceedings," Ernst & Young said in a statement. In 2010, the bank posted a 17.65 billion euro loss, the largest corporate loss in Irish history. It is now in the process of being wound down.