Anglo: Regulator and bank 'had daily contact' on share deal
Published 25/03/2014 | 02:30
There "seemed to be a hotline" between former CEO of Anglo Irish Bank David Drumm and the former Financial Regulator Patrick Neary about the so-called Maple 10 deal, a court has heard.
Pat Whelan, Anglo's former managing director of lending (Ireland), told gardai that the regulator's office was in daily contact with the bank in the run-up to the deal and that it was given "full details" of the transactions – including the identities of the 10 high-net-worth individuals who received loans to buy shares in the lender.
"They (Drumm and Neary) seemed to have a hotline to each other," Mr Whelan told gardai during an interview on April 9, 2010.
Mr Whelan managed a €70bn loan book for Anglo before it was nationalised in 2009.
Mr Whelan told gardai that Anglo officials were in daily contact with the Regulator's office and that the office was told the bank would be lending to the investors as part of the deal.
Mr Whelan's remarks to gardai are at odds with evidence given by senior officials at the Irish Financial Services Regulatory Authority (IFSRA).
Pat Neary, former CEO of IFSRA, previously told the trial he was only informed that 10 domestic or international investors were buying the shares.
His second in command, Con Horan, gave evidence that it was not until the following year that he learned there was lending to the Maple 10 by Anglo.
Notes of Mr Whelan's interviews were read into the court record yesterday by Detective Sergeant Brian Mahon of the Garda Bureau of Fraud Investigation.
Det Sgt Mahon, on secondment to the Office of the Director of Corporate Enforcement (ODCE), is giving evidence in the trial of three former directors accused of allowing the bank to illegally provide loans used to buy shares in the bank.
The three accused are Sean FitzPatrick (65), from Greystones, Co Wicklow; William McAteer (63), of Rathgar in Dublin; and Mr Whelan (51), of Malahide, Co Dublin.
They are charged with 16 counts each of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in Anglo Irish Bank.
The three men have denied all the charges.
Mr Whelan also denies being privy to the fraudulent alteration of loan facility letters to seven individuals.
Mr Whelan told gardai that both he and Anglo were comfortable with the lending to the Maple 10 as it was "in the ordinary course of business" and the bank's compliance department had raised no objection.
Section 60 of the Companies Act 1963 contains a clause that permits lending if it is in the ordinary course of the company's business.
Det Sgt Mahon told prosecuting counsel Una Ni Raifeartaigh that the interview revolved around a report, titled "A review of Quinn group and related transactions", which had been prepared for Anglo's board by Mr Whelan in January 2009.
The report repeatedly states that the Financial Regulator was kept "fully informed" about the deal and was anxious for it to proceed.
Mr Whelan's report stated that the bank intended loaning €60m to each of the Maple 10 so they could buy the shares.
It said Mr Drumm felt "uncomfortable" asking them to agree to any personal recourse on these loans because they were being asked to come to the bank's assistance. Mr Whelan said it was eventually agreed that they would be subject to 25pc personal recourse.
The trial continues.