News Courts

Wednesday 1 October 2014

Dearbhail McDonald: Frailty looms large in watchdog's questioning

Published 19/03/2014 | 02:30

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HUMAN frailty loomed large in courtroom number 19 as the Anglo trial entered its seventh week, with the continued cross examination of former Financial Regulator Patrick Neary.

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Frailty can happen to the best of us, including the failure of memory due to the passage of time and breakdowns in communication at times of crisis.

Yesterday Mr Neary was interrogated on his insistence that he had no knowledge of the extent of businessman Sean Quinn's stake in the former Anglo Irish Bank until Good Friday (March 21) 2008.

Mr Neary was CEO of the Irish Financial Services Authority (IFSRA) in late 2007 when market and media rumours raised the prospect that Quinn had built up a large stake in the bank using contracts for difference (CFDs).

The regulator met David Drumm at least once after the bank's then CEO discovered on September 11, 2007 that Mr Quinn (at that stage) had built up a 24pc stake in the bank.

It is Mr Neary's evidence that Mr Drumm, who is not before the courts, did not tell him during a meeting the next day about the extent of Mr Quinn's stake.

Mr Neary has also testified that he did not interrogate Mr Quinn about the extent of his stake during an "unannounced visit" by Ireland's former richest man to the regulator's office in January 2008.

Mr Neary said yesterday that he was "not alarmed" when Mr Quinn told him during that meeting that he had CFDs in Anglo and Ryanair, because he was assured by Mr Quinn that they were small and he (Quinn) intended on getting rid of them.

The now retired regulator insisted that the first he knew of Mr Quinn's 28pc stake in Anglo Irish Bank through CFDs was a meeting with Anglo officials on March 21, 2008.

But this position was challenged by Patrick Gageby, representing former Anglo director Willie McAteer, who queried whether Mr Neary could stand over this position when a "stream of information" outlining Mr Quinn's €2.3bn exposure to Anglo shares through CFDs was sent via email to several senior IFSRA officials long before the Good Friday meeting.

The "rolling series" of emails began on February 26, 2008, and outlined figures such as the gross and equity values of the Quinn group as Anglo's share price fell.

Mr Neary said he had never seen these emails and had been unaware of them.

He said there was no rational explanation why no one in his office had told him about the astronomical sums of money Mr Quinn was losing.

Nor could he explain how, as a member of the Domestic Standing Group (DSG) composed of the "top echelons" – including representatives of the Department of Finance, the Central Bank and the Regulator – he was not aware of the extent of Mr Quinn's stake.

This was despite references in the minutes of the February 22, 2008 DSG meeting to CFDs and "ramifications in the market should the current positions become publicly known".

"Did you practise the art of not being told difficult things," asked Mr Gageby, drawing laughter from the court.

When the laughter subsided, Mr Gageby repeatedly asked Mr Neary if he was still maintaining at this stage – and having attended the DSG meeting – that he had no knowledge of the extent of the Quinn stake.

Mr Neary insisted that he was not blaming anybody.

"You have to," suggested Mr Gageby.

The trial continues.

Irish Independent

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