Quinn personally guaranteed loan for Kiev investors
Published 19/02/2012 | 05:00
Family and friends insulated from any losses
Bankrupt ex-billionaire Sean Quinn personally guaranteed his friends, associates and family when they piled into the €75m acquisition of a high-risk office building in Kiev in the Ukraine in 2006.
The guarantee, which the Central Bank last year told the Quinn Group it must honour, means that investors in the fund are guaranteed a steady return on their money and insulated from any potential losses incurred in relation to their investment in the 27,000sqm building.
The Sunday Independent understands that an attempt was made at the start of last year to change the ownership structure of the building in a move which might have made it more difficult for IBRC, formerly Anglo Irish Bank, to control 15 per cent of the building which is owned by Sean Quinn's family.
IBRC, however, stopped this move by challenging it in the Ukrainian courts.
Investors -- which include Quinn family members, former Quinn senior executives, Quinn Group employees and various Quinn family associates -- are, however, ring-fenced from any risk of change of ownership by Sean Quinn's blanket personal guarantee.
Some of the investors put zero cash into the no-risk fund (called the Quinn Geared Property Unit Linked Fund) but instead borrowed their entire investment in the building from Anglo Irish Bank.
Among these was Liam McCaffrey, Quinn Group's former chief executive, who borrowed €750,000 to invest in the building which was only secured on the investment itself and 27,000 shares he owned with his wife in Anglo Irish Bank. These shares became worthless after the bank was nationalised.
Mr McCaffrey took a 5 per cent stake in the building, with other Quinn senior executives, associates and friends owning another 35 per cent.
Clients of Quinn Life, primarily employees of the Quinn Group, own another 45 per cent stake, with the Quinn family itself believed to hold the remaining shares in the building.
The Quinn Group declined to respond to questions on the fund or its potential exposure to Quinn's guarantee.
In a separate development, IBRC threatened Sean Quinn with jail last Friday after the bank launched contempt proceedings against him, claiming he was blocking it from seizing international properties worth hundreds of millions that include a giant €60m shopping centre in Kiev.
IBRC accused Quinn of stripping assets from various overseas companies to prevent it from securing money it is owed.
It accused members of his family of facilitating the transfer of two assets -- the Kiev shopping centre and the €140m Kutuzov Tower in Moscow -- into the control of Belize and the British Virgin Islands companies of unknown ownership.
Paul Gallagher, senior counsel for IBRC, said: "The effects of what we say is the contempt, is continuing to happen, it's happening very quickly and the damage we are trying to stop will have happened in other jurisdictions."
The application for a contempt order also named Quinn's nephew Peter Quinn and his son Sean Jnr. IBRC claimed last year that the Kutuzov Tower was sold by Sean Quinn's five children to their cousin Peter for €1,000.
The Quinn family's legal representatives said in court they denied breaching the injunction. If the bank's motion succeeds, Sean Quinn, Sean Jr and Peter Quinn could be jailed until they purge their contempt.
The IBRC claims it is owed €2.88bn by the Quinns.
The family denies this and is counterclaiming the bulk of the loans were advanced to illegally support Anglo's share price when it began to collapse after Ireland's property bubble burst.
Sunday Indo Business