Maple 10 investor in Anglo Irish Bank John McCabe has told the trial of former Anglo executives he was told the deal was "totally legal" when he asked whether it was so.
He said he was told the Central Bank and Financial Regulator were aware of the plan and that the regulator was anxious to proceed with it.
His main reason for getting involved, he said, was that he wanted to co-operate with the bank and to keep doing business with it.
“I was anxious to help when I was asked,” he said. “The bank had been very good to me.”
Mr McCabe said he had dealt with Anglo from the 1980s and drew down about €500 million in loans from the bank over the years for development purposes.
These loans were typically at interest rates of between 1.5 and 3 per cent.
He knew Pat Whelan as Anglo's head lender in Ireland and had dealt with him for the previous 15 years.
On July 9th, 2008, he testified, he got a call from Mr Whelan who said he had a proposition for him. The next day, Mr McCabe met Mr Whelan and Anglo chief executive David Drumm.
The Anglo figures told him that a major investor controlled 25 per cent of Anglo shares and was only willing to redeem 15 per cent. He was later told the identity of this investor.
He was told the bank was looking for four or five long-term clients to buy the remaining 10 per cent of the stock. They wanted Mr McCabe to buy a 1 per cent stake.
Mr McCabe said he asked if it was legal and was told it was “totally legal”.
They discussed him borrowing about €60 million to buy the shares, with 25 per cent recourse applying to him over the loan.
“I made all the inquiries I could and was happy with what I heard from those two gentlemen,” he said.
Mr McCabe said he had nearly no experience in stocks and shares. He “wasn’t into them” and “didn’t want to get into them”.
He said his main reason for getting involved was that he wanted to co-operate with the bank and to keep doing business with it.
After a meeting that he thought may have lasted about an hour, he agreed to the proposal and signed a facility letter.
Mr McCabe agreed with Mr Whelan’s defence counsel Brendan Grehan SC that his memory of details was “absolutely” hazy.
He agreed that he made a Garda statement on the matter over three years after these events occurred and had to rely on documents for a lot of the details.
Seán FitzPatrick (65) of Greystones, Co Wicklow; Willie McAteer (63) of Rathgar, Dublin; and Pat Whelan (51) of Malahide, Dublin, have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals. All three men have pleaded not guilty to the charges.
The trial continues.