Everything about the loans at the centre of a trial against three former directors of Anglo Irish Bank was "topsy-turvy" and "spectacularly not in the ordinary course of business", a jury at the Dublin Circuit Criminal Court was told yesterday.
Paul O’Higgins SC, prosecuting, said a lot of what was put out in documents for the loans was “bogus”. Documents were dated on the wrong days or signed “scarcely with regard to date” and loans were committed to “long before the credit committee supposedly considered them”.
Seán FitzPatrick (65), Greystones, Co Wicklow; William McAteer (63), Rathgar, Dublin, and Pat Whelan (51), Malahide, Dublin, are charged with providing unlawful financial assistance to the Maple 10 in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act. Mr McAteer and Mr Whelan are also charged with six counts of providing unlawful financial assistance to six members of the Quinn family.
Businessman Seán Quinn had holdings in Anglo which were of concern to the bank and in July 2008, a deal was developed to unwind the holding. The Maple 10 businessmen borrowed €45 million each to buy shares underlying the holding and members of the Quinn family borrowed almost €170 million to buy shares.
Mr O’Higgins said almost everything about this scheme made it “a scheme obviously and spectacularly not in the ordinary course of business”. The loans really were not for the benefit of borrowers, they were for the benefit of the bank to try and “shore up anticipated problems if there was a sudden unwind” of the Quinn holding, he said. And there was an effort “to make it look like everything was done properly”.
He highlighted evidence given by expert witness Tom Reid who said in ordinary loans, one person did the lending and another did the assessment to see if it was prudent and shrewd. Mr Whelan not only sponsored the lending by making phone calls to the investors, “he also signed up the documents” that gave the lending. He was “up to his neck in it”.
Mr O’Higgins said chief financial officer Matt Moran said he was told by Mr McAteer on the evening of July 8th about the deal to unwind the Quinn holding and the following morning, Mr McAteer went through the details with him and with Fiachre O’Neill, head of compliance. “He was plainly involved,” Mr O’Higgins said. He said in his evidence to gardaí Mr McAteer was “a genius at the modh coinníollach”, the conditional voice. This included his response to a question about whether he signed off on the loans. “I could have signed off on them but I could also have been on holidays,” Mr McAteer had told gardaí, Mr O’Higgins said.
Mr O’Higgins told the jury that Mr FitzPatrick was phoned by chief executive David Drumm on July 9th, who told him they were lending to 10 individuals to buy the shares and he did not need to know their names. He said it was very hard to see how a director would not ask for more.
He said Mr FitzPatrick knew about the huge lending and he knew the purpose of the lending was so the Quinn share position could be unwound and “the risk to the solidity of the bank could be avoided”. He also knew the lending was “of a character and for a purpose that put it outside the ordinary course of business”.
The lending was authorised by all three defendants, “implicitly by Mr FitzPatrick, but if not authorised, he permitted it”, Mr O’Higgins said.
