Quinn family used firm as their 'personal bank' and withdrew €1.95bn, High Court hears

Aoife, Brenda, Ciara, Colette and Sean Quinn Jr pictured at the Four Courts last week. Picture: Collins Courts

Sean Quinn’s family used the Quinn group as their “personal bank” from which they extracted some €1.95bn to fund their personal lifestyles, property acquisition and significant losses from investments related to shares in Anglo Irish Bank, the High Court has been told.

The €1m bill for Ciara Quinn’s wedding in 2007 was paid by the Sliabh Russell Hotel Ltd company but that bill was never repaid, Paul Gallagher SC said.

The money taken out by the Quinns was “far in excess” of what they were entitled to and jeopardised the financial stability of a group which was projected in 2010 as being worth €3bn when it was in fact insolvent, he said.

The Quinns used whatever cash they could to fund “enormous losses”, including funds taken out of Quinn Insurance Ltd which now has a shortfall of more than €1bn, he said.

They had taken a total €1.95bn out of the company, including €1.6bn in 2007 alone which was almost the entire worth of the Quinn group.

A sum of €511m loaned to the Quinns in December 2007 was raised to loan monies to the group to repair holes in its finances and to meet the requirements of banks and bondholders, he added.

In that context, the children’s action disputing liability under personal guarantees and share charges concerning loans advanced by Anglo to Quinn companies on grounds including the bank acted in an “unconscionable” way is “extraordinary”, laden with “cynicism” and “beggars belief,” he said.

Counsel was setting out the opening statement by Irish Bank Resolution Corporation, into which Anglo was nationalised following its collapse, opposing the children’s case against IBRC and against receivers appointed over shares.

In their action, Aoife, Brenda, Ciara, Colette and Sean Quinn Junior, contend the guarantees and share pledges signed by them are invalid and have no legal effect.

They claim the guarantees were required by Anglo for loans advanced by it to Quinn companies for the purpose of unwinding Contracts for Difference (CFD) held by their father in the bank.

When the CFDs were unwound into Anglo shares, one portion was purchased by a group of investors known as the "Maple Ten" and the rest by the Quinn Group. The Quinn shares were transferred to six Quinn-owned Cypriot companies which ultimately received €498m from Anglo.

The children’s core claim is the securities provided by them are invalid on grounds including "unconscionable bargain", negligence and breach of duty by the bank to them, especially to advise them. They dispute they have a liability of some €83m each under the guarantees, or any liability in relation to their share pledges.

Today, Mr Gallagher told Mr Justice Garrett Simons the “artificiality” of the case is underlined by an attempt to paint the five adult plaintiffs as having no business experience, an inability to get independent advice and as living on modest salaries.

“The truth is, this is an extraordinary case,” he said.

The children appear to be saying they should have got “enormous” borrowings without giving securities they had previously given countless times, he said.

The Quinn group was wholly insolvent in 2011 and the evidence will be the companies were insolvent at a much earlier stage but that insolvency went unnoticed by banks and bondholders because significant transactions in the accounts were falsified, he said.

The children are claiming they were acting under the influence of their father but had not joined him as a party and he would not be involved in this case.

At all times, the “highly intelligent” Quinn children were the controlling shareholders in Quinn Republic of Ireland (ROI), the core group, and had also signed a shareholders agreement under which they were to get a continuing and important role in the business of the company.

Huge sums, about €1.65bn, were extracted from the core group for the children’s benefit and in relation to Contracts for Difference positions held in Anglo and substantial property acquisitions, he said.

While claims are being advanced now about “cutting and pasting” of the children’s signatures, the bank was not involved in any such practices and maintained the liability under the guarantees and share pledges remained.

When the children initiated their case in 2011, they took the “extraordinary” step of not seeking certain injunctions regarding the share receiver, he also said.

IBRC is now aware they did not do so because they had concentrated their attention and resources in a “most sophisticated and devious fraud” in taking assets from their international property group (IPG) which were meant to go towards repaying the Anglo loans, he said.

Those assets were fraudulently extracted from the IPG companies and he regretted to say that activity has continued "in very recent times" despite a host of injunctions, he said.

The children were being presented as “naive and unsophisticated” but they engaged in complex and sophisticated transactions and orchestrated a dismantling of assets from the IPG when €2.3bn was owed to Anglo, he said.

It was extraordinary the court was being asked to set aside all these transactions and find it was improvident and unconscionable the children were required to give securities to maintain companies that they owned and the CFD borrowings they guaranteed at an early stage.

The hearing is continuing.

KEYWORDS:

Most Read in Ireland