Anglo trial jury told to ignore legal advice of accused

The jury in the trial of three former Anglo Irish Bank executives has been told they must disregard evidence of legal advice taken by the accused before the execution of an allegedly illegal share deal.

Anglo trial jury told to ignore legal advice of accused

The jury in the trial of three former Anglo Irish Bank executives has been told they must disregard evidence of legal advice taken by the accused before the execution of an allegedly illegal share deal.

The accused are alleged to have played a role in lending money to 16 people to buy stock in the Anglo in an effort to unwind a 29% controlling stake in the bank which had been built up by businessman Sean Quinn.

The trial heard evidence from a former Anglo board member Donal O'Connor who said he was informed by one of the accused, Sean FitzPatrick, that the loans to ten share buyers, known as the Maple Ten, were "on normal terms" and subject to 100% personal recourse.

Mr O'Connor said he later learned that the recourse was actually reduced to zero by another of the accused, Pat Whelan.

The jury also heard evidence, via video link from London, from a Morgan Stanley employee. William Chalmers detailed how Morgan Stanley was involved in various efforts to unwind the Quinn's control of the bank, including the Maple Ten deal.

Former Anglo Chairman Sean FitzPatrick and fellow ex-directors William McAteer and Pat Whelan, are accused 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. The 16 individuals are six members of the Quinn family and the so called "Maple Ten" group of investors.

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

After over a week of legal argument the jury was instructed by Judge Martin Nolan that any legal advice taken by Anglo in the run-up to the deal was irrelevant and should be disregarded.

He told the jury: 'As a result of a legal ruling by me, the issue of whether legal advice was obtained by Anglo in relation to the loans in July has been ruled irrelevant to the issues you have to decide.

You should not speculate on what steps were taken or what any legal advice might have been. These issues are simply not relevant to the guilt or innocence of the three accused of the charges before you.'

The judge said there will be no further questioning of witnesses in relation to legal advice and that any evidence on the subject already given by witnesses is also irrelevant.

The trial then heard from Donal O'Connor, a former senior partner at Price Waterhouse Cooper, who was appointed a non-executive director at Anglo in June 2007.

Mr O'Connor, who also served on the board of the Dublin Dockland Development Authority, told prosecuting counsel Paul O'Higgins SC that Mr FitzPatrick called him in July 2007 and told him about the Maple Ten deal.

He said Mr FitzPatrick told him ten customers of the bank were going to borrow money to buy shares in the bank. Mr FitzPatrick told him the loans were going to be "on normal terms" with the Maple Ten being liable for 100% recourse.

The witness said that during an informal board dinner in August 2008 David Drumm told the board members that the loans had been made at only 25% recourse.

Mr O'Connor said Mr FitzPatrick "appeared to show surprise" on hearing this. Mr FitzPatrick's counsel, Michael O'Higgins SC, asked him if this reaction could be better described as frustration or anger.

Mr O'Connor replied that he recalled a "surprised reaction", adding "there was certainly a reaction from Mr FitzPatrick."

Mr O'Connor said he was appointed chairman of Anglo on December 18, 2008 after Mr FitzPatrick stepped down. The next day he took on the duties of CEO David Drumm after Mr Drumm also resigned.

A week later one of the accused, Pat Whelan, approached him and said he needed to tell him something. Mr Whelan revealed that the Maple Ten were subject to no personal recourse whatsoever. Since August Mr O'Connor had been under the impression there was 25% recourse.

Mr Whelan told him steps had been taken "to reduce the 25%t recourse to nil" and that it was his idea.

Mr Whelan told him that he had brought the idea to Mr Drumm who approved it. Mr Drumm later confirmed this in a phone call to Mr O'Connor.

Mr O'Connor said that as soon as he heard about the zero recourse he informed the Anglo board and the Department of Finance. A report was also prepared on the issue over Christmas by Mr Whelan.

The trial continues before Judge Nolan and a jury of eight women and seven men.

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