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Wednesday 27 August 2014

Ex-Anglo director 'horrified' by size of Quinn's secret stake, court told

Sarah Stack

Published 05/03/2014 | 02:30

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File Pics Five directors resign from Anglo Irish board...File Pics Five directors resign from Anglo Irish board 16/1/2009. Anglo Irish Bank EGM. Chairman of Nomination and Succession Committee at Anglo Irish Bank, Anne Heraty, pictured at the bank's EGM at the mansion House today. Shareholders have criticised undisclosed loans given to former chairman Sean FitzPatrick as well as the role of the auditors. Chairman Donal O'Connor said there were 179m of loans to directors, including 87m to Mr Fitzpatrick. Mr O'Connor also said the non disclosure of Mr FitzPatrick's loans was wrong and unacceptable and apologised to shareholders. Picture Laura Hutton/Photocall Ireland.
Anne Heraty

A former Anglo Irish Bank director was horrified when she heard bankrupt tycoon Sean Quinn held a quarter of the bank through secret shares, a court heard.

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Anne Heraty told the trial of three Anglo executives that a deal which resulted in 10 "high net worth individuals" buying some of Mr Quinn's holding may not have been the "most ideal" solution to the problem.

Ms Heraty said she believed the Maple 10 issue – the name given to 10 businessmen lent €45m to buy Anglo shares – had been dealt with satisfactorily with the support of the Financial Regulator and the Central Bank.

"There was a lot of pressure to find a solution. It probably wasn't the most ideal," the non-executive director told the Circuit Criminal Court.

Ms Heraty said she first heard rumours and read newspaper reports that Mr Quinn held a 10pc or 11pc interest in the bank in the summer of 2007, but was told his stake was close to 24pc at a board meeting that November.

"I was horrified when I heard it," said the founder chief executive of recruitment firm CPL Resources.

"There was some discussion. The decision was made to encourage Sean Quinn to sell down his shares or to try and figure out what his intention was."

Ms Hearty said that by early March 2008 the board had been told the Financial Regulator and Central Bank were anxious to find a solution to the Quinn shareholding, built up through contracts for difference.

After the so-called St Patrick's Day massacre, when the share price fell by 15pc, the board held six conference calls and were aware of a plan to try and sell some of Quinn's stake to international investors or a sovereign wealth fund and him.

She was told about the Maple 10 in July 2008 by former Anglo chairman Sean FitzPatrick, but only discovered their identities when the names appeared in newspapers after the bank was nationalised in 2009, she added on day 18 of the trial.

Mr FitzPatrick (65), from Greystones, Co Wicklow; former head of risk William McAteer (63), of Rathgar in Dublin; and Patrick Whelan (51), of Malahide, Co Dublin, have pleaded not guilty to 16 charges of unlawfully providing financial assistance to individuals for the purpose of buying shares in Anglo Irish Bank in 2008

Mr Whelan, Anglo's former head of lending in Ireland, also denies seven charges of being privy to the fraudulent alteration of a loan facility letter.

Ms Heraty also claimed Financial Regulator Patrick Neary previously asked Anglo executives to "help him out" with an issue with the Quinn accounts.

She described the 20-minute discussion at his office on April 30, 2008, as "confusing" and said he indirectly asked them for help with an issue with the Quinn group.

"It wasn't clear what the purpose of the meeting was," she said. "It wasn't a meeting that had a real clarity to it."

The regulator's second-in-command, Con Horan, Anglo's former chief executive David Drumm, former chairman Sean FitzPatrick and two other board members were also there, she said.

She revealed that Mr Neary did most of the talking, but spoke "opaquely".

PORTFOLIO

"My recollection was he didn't directly say he had an issue with the Quinn account," said Ms Heraty, who has served on the boards of the Irish Stock Exchange, Bord Na Mona and Forfas.

"But he talked around the subject and he said he wanted Mr Drumm to help him out. To help the regulator out in terms with an issue he had with the account of Quinn insurance."

The court has previously heard that Anglo later released a €200m guarantee after the bank had taken possession of the Quinn family's shares.

The 15-person jury also heard Mr Quinn directed staff to build up his secret stake in Anglo in early 2008 despite losing €560m on investments the previous year.

Shane Morrison, former head of financial planning with Quinn Insurance, said Mr Quinn set up a Madeiran-registered company, Bazzely Ltd, in 2005 to invest in contracts for difference and was in touch several times a week about where he wanted to invest.

Quinn's investment portfolio also included stakes in oil firm Total, Tullow Oil, Ryanair and Deutsche Bank, he said.

By the end of 2005, Mr Quinn held a position of €256m and made a €27m profit, which rose to a €298m profit by the end of 2006, the court heard.

The trial continues.

Irish Independent

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