Cowen's cabinet 'like bystanders' as Anglo crashed
FORMER Finance Minister Brian Lenihan and the government led by Brian Cowen were like "bystanders in a car crash" during the failed plan to save the former Anglo Irish Bank, according to one of the country's most senior civil servants.
Kevin Cardiff, former secretary general at the Department of Finance, said that Mr Lenihan and senior officials were mere "bystanders" in the scheme to unwind businessman Sean Quinn's secret stake in Anglo and had no concerns about its legality. He made the comments in the absence of the jury at the Anglo trial.
Mr Cardiff, now a member of the European Court of Auditors, was one of several people who provided deposition testimony in Dublin's District Court in advance of the 11-week trial.
Mr Cardiff confirmed during legal argument in the Anglo trial that he had testified – under cross-examination at his November 2013 deposition hearing – that he and his officials were "bystanders".
The Anglo trial concluded last week with the conviction of two former directors, Pat Whelan and William McAteer, who were each found guilty of giving €450m worth of illegal loans to 10 high net worth clients of Anglo.
Anglo's former chairman, Sean FitzPatrick, was acquitted by a jury of giving unlawful loans to the so-called Maple 10 and acquitted, by direction of trial judge Martin Nolan, of giving illegal loans to Mr Quinn's wife and five adult children.
Mr Whelan and Mr McAteer, who face up to five years in prison for their role in the Maple 10 loans, were found not guilty by the jury in relation to the Quinn borrowings.
At the height of the 2008 global economic crisis, Mr Cardiff led a cross-party financial emergency body known as the Domestic Standing Group (DSG). He told the Anglo trial he did ask if the plan to save Anglo from the Quinn exposures was legal.
Under cross-examination by Michael O'Higgins, who represented Mr FitzPatrick at the trial, Mr Cardiff said that he did ask the question: is this (the scheme to unwind the Quinn position) legal? Mr Cardiff said that he did not believe that the Irish Financial Services Regulatory Authority (IFSRA), then led by Patrick Neary, would have "brought this deal" to the DSG if the legal advice had been negative.
The question of legal advice was ruled inadmissible at the Anglo trial by Judge Nolan, who deemed it and other matters – including the role of the Financial Regulator – irrelevant.
In the absence of the jury, Mr Cardiff also said that his department was not aware of the mechanics of the now illegal transaction.
But he said Mr Lenihan did not and could not give his blessing to the deal. "Just to be clear, I had no role in giving benediction, nor did the minister," said Mr Cardiff. "There was no benediction from us, nor could there be."
In his short evidence at the Anglo trial, Mr Cardiff told the court the Department of Finance was concerned about the large stake Mr Quinn had built up in Anglo through Contracts for Difference (CFDs) because it could undermine the bank and the whole Irish banking sector.
Mr Lenihan was appointed Finance Minister in May 2008 when Brian Cowen became Taoiseach.
The sentencing hearing of McAteer and Whelan takes place on April 28.