Bankers ‘Claimed regulator support’

Joe O'Reilly

Anglo Irish Bank executives told a select group of clients they had legal advice and regulator support for loans for a shares deal in the bank, a court has been told.

The so-called Maple 10 network of wealthy builders and developers were rounded up by the now defunct lender in a €450m plot to unwind a secret holding built up by former billionaire Sean Quinn.

The bank’s former chairman Sean FitzPatrick, 65, former chief risk officer Willie McAteer, 63, and former managing director of lending Pat Whelan, 51, deny 16 charges of providing unlawful loans for clients to buy shares in the bank.

The fraud trial heard how Anglo executives claimed they had support for the deal from the financial regulator and the Central Bank of Ireland.

Joe O’Reilly, who built Dundrum shopping centre and the Grand Canal theatre and was worth about €1bn, said he was in the Algarve when he was called by Whelan on July 4 2008 with an offer to get in on the plan.

Over Sunday lunch in a restaurant in Faro two days later, Mr O’Reilly met Whelan and then chief executive David Drumm and was offered €60m to buy 1% of Anglo’s shares with a loan from the bank.

“At the end of the meeting I had agreed,” he said.

“This was after they had explained again that they had legal advice from Matheson Ormsby Prentice, a senior counsel, they had Morgan Stanley, the regulator was on board and there was some other body.”

Day five at the Dublin Circuit Criminal Court heard from two of the Maple 10.

Sean Reilly, a wealthy developer client of the bank for about 20 years, was called into Anglo’s headquarters on St Stephen’s Green, Dublin, two days after the other deal and offered the same finance.

Both men said the loan arrangement left them personally responsible for a quarter of the borrowings if the plan went “belly up”.

Mr Reilly told the court he felt he could not lose – the share price had already fallen 75% from its peak and would need to fall another 75% for him not to be able to turn some sort of profit.

He was up €7m at one stage.

He said Whelan and Mr Drumm, who is living in the United States and not on trial, were in the Anglo offices when the 60m euro was put on the table.

“They said they had legal opinion from MOP (law firm Matheson Ormsby Prentice) and that the financial regulator was aware of it, and the Central Bank, everyone was aware of it, and they wanted it done. That was it,” Mr Reilly said.

The meeting lasted 30 minutes. Mr Reilly said he was only told the deal was to unwind a position and there was no mention of Mr Quinn.

The deal saw him take about 10m shares – 8m million of which he sold before the bank was nationalised in early 2009.

The trial also heard detail of letters dated from July 2008 confirming the loan arrangements. Follow-up letters were dated between July and January 2009 which showed alterations to the loan arrangements and the personal recourse levels.

Ultimately the loan deals involved sums of €45m.

Earlier, Sean Quinn Junior, son of the bankrupt former billionaire, finished his evidence by disputing whether letters signed by him were dated correctly.

Mr Quinn Jr, 35, who lives in Dublin, also said he believed money lent to him and his sisters to buy ordinary shares from his father’s secret stock holding was illegal.

“I think it’s fair that we would be at one with the state and we would feel that the money that was lent was illegal,” he said.

“It would be fair to say that it would be our view that the security obtained by the bank was obtained in a fraudulent and illegal manner and therefore we are not liable for those loans.”

Several members of the Quinn family, including mother Patricia, were also in court to confirm their signatures on correspondence with Anglo.

Mr Quinn, of Ballyconnell, Co Cavan, said yesterday he lost €3.2bn gambling on Anglo shares in 2007-2008.

The shareholding was built up by a Portuguese-registered company, Bazzely Ltd, which was part of the Quinn empire.

It used complex trading derivatives called contracts for difference (CFDs), which at the time did not have to be publicly divulged and essentially amounted to undeclared bets that the share price would increase.

The three accused pleaded not guilty to providing unlawful financial assistance to individuals in July 2008 for the purchase of shares in the bank, contrary to Section 60 of the Companies Act.

Whelan has also pleaded not guilty to a further seven charges of being privy to the fraudulent alteration of loan facility letters to seven individuals.

Lawyers for FitzPatrick and Whelan have said they accept the loans were made but they deny any illegality.

FitzPatrick, of Whitshed Road, Greystones, Co Wicklow; McAteer, of Auburn Villas, Rathgar, south Dublin; and Whelan, of Coast Road, Malahide, Co Dublin, are on bail.

The trial is expected to run until the end of May.

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