Auditors to Irish Nationwide warned key directors of the significant 'reputational risk' to the building society in February 2008 of making controversial loans to former Anglo Irish Bank chairman Sean FitzPatrick.
The disclosure was made at a heated AGM of the building society today.
Irish Nationwide auditor Vincent Reilly of KPMG was questioned about the loans to Mr FitzPatrick, which had the effect of keeping his loans from Anglo out of the public domain.
Mr Reilly said the auditors had noticed the loan. He said they enquired about it and found it lasted for no more than a week, just for the end of Anglo Irish financial year at the end of September, and was paid back shortly afterwards.
Mr Reilly said the auditors had been told that the transaction was authorised by the society's board.
However, he said the auditors noted the 'reputational risk', given the short length of the loan.
Mr Reilly also said the Financial Regulator knew about the loan.
Earlier, Irish Nationwide Chairman Daniel Kitchen told shareholders at its AGM that mistakes were made, but recrimination would solve nothing.
Mr Kitchen said some members might have mixed feelings towards former Chief Executive Michael Fingleton, but he said he had taken the society from a minnow to a substantial financial institution.
He said the board would like to wish Mr Fingleton a happy retirement.
Referring to his €1m bonus, he said it was not linked to the performance of the society in 2008, but was a bonus for the retention of his services when he was eligible.
He said there was no breach of the Government's guarantee scheme in this case.
Referring to Mr Fingleton's pension arrangement, he said he had worked for the society for over 37 years and over the years the society had made payments into the fund for his defined benefit pension scheme.
In 2007, he said Mr Fingleton wished to transfer these resources to a private pension and an independent actuary calculated the figure necessary as €27.6m.
He said the society ended up getting a rebate of €1.7m from the fund.
