Fatal attraction between Quinn and Anglo led to court drama
Businessman wanted a free each-way bet.
Published 18/04/2014 | 02:30
I don't recall much of the finer details of my law degree. But a few maxims have lodged in my brain, including the venerable "he who comes into equity must come with clean hands".
The ancient maxim holds that a person or company who petitions a court for a remedy must be in a position free of fraud or other unfair conduct.
What is the past conduct of the parties, the principle begs, what role did you play, are your hands clean?
As I sat through day after day of the Anglo trial, as the dirty deal to unwind businessman Sean Quinn's secret stake in Anglo was parsed in evidence, I thought a lot about equity and clean hands.
Sean Quinn's hands.
And now I visualise the outstretched hands of the Quinn family, seeking €2.3bn in their civil case against the State whose limbs are twisted in the global race against time to find the Quinns' missing millions.
Hundreds of millions.
Sean Quinn, whose record as an entrepreneur and an employer in the Border region can never be taken away from him, built up a secret stake in Anglo, unknown to the bank or the market.
Not for Sean Quinn the act of actually buying Anglo's shares or disclosing his position – at one stage reaching an eye-watering 30pc – in a transparent fashion.
Instead, he deployed nine financial institutions to build up a secret stake in a spectacular punt using contracts for difference (CFDs), known simply as gambling instruments.
I feel that Quinn, no doubt motivated by superb intentions to provide for his family's enduring wealth, wanted a free each-way bet.
But would he have issued press releases, I wonder, announcing his super stake had the punt paid off?
When it didn't, he raided his insurance wing, Quinn Insurance Limited, removing monies from the company to fund his CFD position as Anglo's shares fell.
This ultimately led to a €3.5m fine against QIL and a €200,000 fine against Quinn personally.
Ironically, because he has already received an administrative sanction under the Central Bank Act, Quinn now cannot ever face prosecution over this particular matter.
Quinn eventually came clean and put his hands up at a meeting in the Ardboyne Hotel in Navan – where he revealed to Sean FitzPatrick and David Drumm that he held 24pc of the bank.
The Quinn Group, owned by Quinn's five adult children, was under ferocious pressure, needing working capital to replenish monies foisted out to fund his margin calls
It is worth repeating, lest we forget, that Anglo loaned €1.97bn in six separate tranches to fund Quinn's margin calls between November 2007 and July 2008 as the bank's share price plummeted.
That's nearly €2bn.
The trial of three former Anglo executives heard from Mr Quinn that his gamble was a mistake, a mistake that no one – including Anglo – had invited.
But the fate of the bank and its biggest lender was akin to a fatal attraction and soon came to the attention of the Office of the Financial Regulator, led by Patrick Neary.
The role of the regulator could not be considered by the jury following directions from trial judge Martin Nolan.
But the State dropped what was described as "a bombshell" in the closing speeches of the trial when prosecutors said that a March 2008 agreement to unwind the Quinn position, approved by the Regulator, was probably fraudulent and unlawful.
This agreement did not proceed because investors could not be found to offload Quinn's bet.
But it is significant that the DPP raised the spectre of market abuse at the end of the case and cast doubt on the legality of the earlier agreement.
Back to clean hands, and the complex civil case the Quinns are waging against the State. Would it be equitable for the Quinns to win in circumstances where Sean Quinn's bet led to loans being issued to the Quinn Group?
The task of deciding equity facing our judiciary is not an easy one: sometimes I'm glad I don't remember the finer details of the law.