Tuesday 21 October 2014

Anglo trial judge cuts to the chase with vital questions

Published 12/04/2014 | 02:30

The three accused, from left, Pat Whelan, Sean FitzPatrick and Willie McAteer. Photo: PA
The three accused, from left, Pat Whelan, Sean FitzPatrick and Willie McAteer. Photo: PA

FOOTBALL, as the old saying goes, is a game of two halves. The charge to the jury in the historic Anglo trial could also be described as a game of two halves.

Yesterday, trial Judge Martin Nolan energetically cut through 10 weeks of at-times overwhelming evidence and complex legal arguments to provide jurors with a five-step legal roadmap that could lead to the acquittal or conviction of Sean FitzPatrick, Pat Whelan and William McAteer.

Like a referee in a game of soccer, Judge Nolan afforded equal 45-minute segments to two key themes that go to the heart of the prosecution's and defence's arguments.

There were plenty of red cards, or legal warnings, issued to the jury.

In the first half, Judge Nolan addressed what might be described as the macro issues that gave rise to a €650m loan-for-shares scheme executed by the former Anglo Irish Bank in July 2008 to unwind businessman Sean Quinn's secret stake in the bank.

He said that Anglo's former chief executive David Drumm, who is not before the courts, appeared to be the author of the plan.

He spoke eloquently of the "terror" within Anglo if all the shares came on to the market together as a result of Quinn being knocked, a move that would have a calamitous effect on the share price.

What was needed by the bank was an orderly unwind, the judge observed.

"The collapse of the share price would have a huge effect on the bank and probably the entire Irish banking system and that's what the orderly unwind was there for," he said.

Stopping well short of Mr Whelan's description, in a 2008 letter, that a group of high-net-worth borrowers were "heroes", the judge nonetheless expressed his admiration for the so-called Maple 10. "I'm impressed with these 10," he said.

The sadly all-too-familiar narrative of events that led to Anglo's demise as outlined by Judge Nolan stood in sharp contrast to the second half of his charge when the chaos of the global financial crisis collided with the terminology of section 60 of the Companies Act 1963.

This is a provision that makes it unlawful for a company to finance the purchase of its own shares on pain of a jail term of up to five years.

This is also the first time the law, entering its 51st year on the statute books, has ever been prosecuted.

In his second half, Judge Nolan put to one side his description of "the financial calamity of the country" which he said would be incredibly unfair and wrong to visit upon the Anglo trio.

He directed the jury that the attitude of the Office of the Financial Regulator, the involvement of stellar international bank Morgan Stanley in the deal and any mention of legal advice were matters that are "totally irrelevant".

Any steps taken by the three accused in relation to whether the scheme was legal or not, as well as their belief as to the legality or illegality of the lending scheme, are also totally irrelevant.

The judge acknowledged the potential harshness of his directions.

They may seem "very unfair", he conceded, as he directed the jurors as a matter of law to ignore these factors.

Judge Nolan told the jury there was no question that loans had been given out and no doubt the plan was executed for the purpose of stabilising the share price of Anglo.

He then outlined five questions in a quasi flow chart for the jurors to follow.

Was there lending to buy shares?

If so, was the overarching purpose to stabilise the bank's share price, a core mischief – the judge said – that section 60 is designed to prevent?

If yes to one and two, the third question they must ask is whether the lending was in the ordinary course of the bank's business?

If the answer to three is no, the jury is almost bound to convict, subject to two residual questions about the men's knowledge of the scheme and what steps, if any, they took to prevent a breach of section 60.

However, Judge Nolan described the burden placed on the jury as a heavy one as a criminal conviction has huge consequences for any party.

No side, winning or losing, could argue with that conclusion.

Irish Independent

Read More

Editor's Choice

Also in Irish News