Former financial regulator Patrick Neary has said he did not ask Seán Quinn about the size of his stake in Anglo Irish Bank when the two men met in early 2008 because he didn't think it was "fair or appropriate" to "tackle" the tycoon on his investments.
Mr Neary told the trial of three former Anglo directors he was not told the full extent of Mr Quinn’s stake in the bank until late March 2008 – six months after the bank found out.
By then Mr Quinn had built up a 28 per cent stake in Anglo through contracts for difference (CFDs), which are financial tools that involve betting on a share without buying it.
Quinn stake
The size of the Quinn stake prompted concern that it was destabilising the Anglo share price and posed a threat to the wider financial system. Mr Neary said when he found out he was "extremely worried about the potential implications".
Mr Quinn’s position was eventually unwound in July 2008 when the so-called Maple 10 investors and six members of the Quinn family each bought shares in the bank.
Former Anglo directors Sean FitzPatrick (65) of Greystones, Co Wicklow; Willie McAteer (63) of Rathgar, Dublin; and Pat Whelan (51) of Malahide, Co 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.
Defence counsel Brendan Grehan SC, for Mr Whelan, said evidence had been given that the board of Anglo became concerned about Mr Quinn's holding in September 2007 and asked chief executive David Drumm to inform the regulator of the position. The board understood "you were told", Mr Grehan said.
'Personal nature'
Mr Neary said he agreed to a request from Mr Drumm for what he understood to be "a special meeting of a personal nature" at the Central Bank around that time.
He said they discussed the rumours about the Quinn position but that Mr Drumm never disclosed that he knew it was as high as 24 per cent.
Asked by Mr Grehan did he not ask Mr Drumm about the size of the position, the witness replied: “I don’t recall asking and he didn’t tell me.” He agreed he took no notes of the meeting.
Mr Neary said CFDs were unregulated and he had no way of find out about Mr Quinn’s position. After the meeting with Mr Drumm, an internal report was prepared for Mr Neary on what CFDs were.
Mr Neary told Dublin Circuit Criminal Court that at a meeting with Mr Quinn in January 2008, the businessman told him he had a small CFD holding in Ryanair and Anglo but didn’t intend to hold onto it.
Mr Neary said he didn’t ask him “straight up” as he “didn’t feel it would be fair or appropriate to tackle a person about his own investment portfolio.”
Cross-examination of Mr Neary will resume next week.
