Anglo jury shown latter from Financial Regulator

The jury in the trial of three former Anglo Irish Bank executives was today shown a letter from which stated the Financial Regulator had not given its approval for the Maple Ten deal.

Matt Moran, Anglo’s former Chief Financial Officer, continued giving prosecution evidence today. The court has heard Mr Moran has been granted immunity from prosecution in this matter.

Mr Moran said he believed this was an effort by the Regulator to row back from its previous knowledge and involvement in the deal.

It was day 11 of evidence in the trial of Mr FitzPatrick who is accused, along with fellow ex-directors William McAteer and Pat Whelan, of providing funding for the purchase of its own shares in contravention of the 1963 Companies Act.

The three accused have been charged at Dublin Circuit Criminal Court with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank.

Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.

Mr FitzPatrick (aged 65) of Greystones, Co Wicklow, Mr McAteer (aged 63) of Rathgar, Dublin and Mr Whelan (aged 51) of Malahide, Dublin have pleaded not guilty to all charges.

Mr Moran told prosecution counsel Paul O’Higgins SC that two days before the deal took place, he was involved in a conference call with Con Horan of the Financial Regulator’s office, Anglo officials and Morgan Stanley officials who had been hired by Anglo to complete the deal.

He said that during the call the Regulator was told that members of Quinn family would acquire 2.99% of shares each, with ten of the bank's clients acquiring up to 1.3pc each.

"The fact that the bank would lend to these parties was highlighted in the call," Mr Moran said.

The jury was shown a letter sent by the head of banking supervision in the Regulator, Mary Burke, to Mr McAteer on August 11, 2008, nearly a month after the Maple Ten deal went through.

It refers to a previous letter sent by Anglo to the Regulator’s office which stated the Regulator had been kept fully informed about the transaction. Paragraph two of Ms Burke’s letter took issue with this.

Ms Burke wrote: “With regard to the comment in the letter that Anglo ‘kept the Financial Regulator informed of the transaction’, I would point out that the Financial Regulator did not advise as to whether the transactions required approval nor was it in a position to do so given the information available to it.”

Mr Moran said his interpretation was that the letter “seemed in some way to resile from what I understood of the Regulator’s knowledge and involvement”.

He said it seemed at variance with the information supplied to the Regulator’s office during the conference call before the transaction went through.

Mr Moran was asked if he met Mr FitzPatrick during or after the Maple Ten transaction.

The witness said that within two weeks of the completion of the transaction, the Anglo Chairman came into his office and wondered if they had done the correct deal.

Mr Moran told counsel that Mr FitzPatrick said: "He wondered was that the right transaction to do, specifically in respect of the recourse to the borrowers."

"He questioned if 25% was enough," Mr Moran added.

The witness said the chairman was also sorry he had not taken a bigger role in the transaction.

"He made a comment to me that he regretted that he didn't become more personally involved in this issue than he had done,” Mr Moran said.

Mr Moran said that in the run up to the deal he met intensively with Morgan Stanley to sort out the details.

In the days before it was finalised he met with Pat Whelan and the bank’s head of Compliance, Fiachre O’Neill. The prosecution said Mr O’Neill will be called to give evidence at a later date.

Mr Moran said he was concerned about a “side letter” which was going to be part of the deal. He explained that a side-letter is sometimes sent with a main agreement and it would usually concern a tangential matter or a third party.

The witness said this side letter stripped the requirement of 25% personal recourse to the Maple Ten on the loans.

He told Mr Whelan that it was “inappropriate” to include this detail in a side-letter as it was directly concerned with the main agreement.

“If the recourse element was not to be in place because of the side letter that would be inappropriate. I was told the side letter would take away the 25% recourse element.”

He said he went into Mr Whelan and asked him: “Why would you do that?”.

He said Mr Whelan agreed and assured him the side-letter would not be sent out.

The trial continues with Mr Moran’s cross-examination before Judge Martin Nolan and a jury of seven men and eight women.

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