News Courts

Tuesday 23 September 2014

Financial Regulator did not approve Maple 10 deal, Anglo trial hears

Jury told Sean FitzPatrick 'regretted' not being more involved

Dearbhail McDonald and Sarah Stack

Published 20/02/2014 | 02:30

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FitzPatrick (Sean): Three bankers pleaded not (NOT) guilty to fraud offences, Dublin Circuit Criminal Court, 19-2-14 
Pic shows: Former Anglo Chairman Sean FitzPatrick (65), of Whitshed Road, Greystones, Co Dublin, leaving court  yesterday (Wed.) where he has pleaded not (NOT) guilty to 16 charges of fraud offences. 
Pic: Courtpix
Former Anglo Chairman Sean FitzPatrick

The Financial Regulator did not approve or advise upon the so-called 'Maple 10 Deal' to unwind businessman Sean Quinn's secret stake in the former Anglo Irish Bank, a court has heard.

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Jurors in the trial of three former Anglo executives have also been told that the bank's former chairman, Sean FitzPatrick, regretted his lack of involvement in the loan-for-shares deal.

Matt Moran, former chief financial officer (CFO) at the lender, told the Central Criminal Court that Mr FitzPatrick made the comment a week or two after the transactions had been executed in July 2008.

STAKE

The trial has heard that the Maple 10 was a group of high-net-worth individuals – some of Anglo's 'well-regarded' customers – to whom €45m was lent in July 2008 as part of a plan to unwind Sean Quinn's stake, which he had built up through contracts for difference (CFD).

"Some time after, Sean (FitzPatrick) visited my office," Mr Moran said. "He asked me about the transaction. He asked, as if talking out loud, 'I wonder was that the right transaction to do', specifically in respect of the recourse to the 10 borrowers.

"He made a comment to me that he regretted he had not become more personally involved in this issue than he had done." Mr Moran added: "He questioned if 25pc was enough."

Mr Moran is giving evidence in the trial of Sean FitzPatrick (65), from Greystones, Co Wicklow; Patrick Whelan (51), of Malahide, Co Dublin; and William McAteer (63), of Rathgar in Dublin.

The men 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 has also denied seven charges of being privy to the fraudulent alteration of a loan facility letter.

Mr Moran was later asked by Paul O'Higgins, senior counsel for the prosecution, what he knew about Mr FitzPatrick's involvement in the plan to unwind Sean Quinn's stake.

"I don't believe I have any direct knowledge of Mr FitzPatrick's involvement, save for the matter that we discussed earlier," Mr Moran replied.

On day 11 of the trial, the jury was also shown a letter from a senior official in the Financial Regulator, sent to Anglo's then head of risk, Willie McAteer, months after the deal.

The letter was sent to Mr McAteer by Mary Burke, head of banking supervision in the Financial Regulator's office, and was dated November 8, 2008.

In the letter, Ms Burke wrote: "I refer to the legal opinion dated 22 July, 2008, provided by Matheson Ormsby Prentice (then Anglo's legal advisers).

"With regard to the comment in the letter that Anglo 'kept the Financial Regulator informed of the transaction', I would point out that the Financial Regulator did not advise as to whether the transactions required approval, nor was it in a position to do so, given the information available to it."

Mr Moran said that he believed the letter from Ms Burke seemed to show that the regulator had "resiled from the position" that he had previously taken on the transaction.

TRANSACTIONS

In the same letter, Ms Burke referred to a press release issued by the Quinn Group after the Maple transaction and asked Mr McAteer if Anglo believed the Quinn family were acting in concert.

She wrote: "Matheson Ormsby Prentice states that it's unaware of any arrangements between the Quinn family shareholders in relation to acquisitions, voting or disposal of their shares.

"In view of the comments attributed to Sean Quinn, does Anglo continue to believe that the Quinn family members are not acting in concert?"

Mr Moran said the letter was "in variance" with his experience with Con Horan, who was the second-in-command at the regulator's office, a month earlier.

Mr Moran was CFO of Anglo at the time. He told the court the Financial Regulator raised concerns over the level of lending to members of Sean Quinn's family to buy out his secret shareholding on the weekend prior to the deal.

He said during a conference call between Mr Horan and Morgan Stanley, the investment firm executing the transactions, it was outlined that Mr Quinn's family members would acquire 2.99pc of shares each, with 10 of the bank's clients acquiring 1.3pc each.

"The fact that the bank would lend to these parties was highlighted in the call," Mr Moran said.

"Mr Horan raised the issue of lending to Quinn. He said, 'this may be a stumbling block for the authority.'"

Mr Moran said he believed this was raised as Anglo was close to lending the Quinn Group the maximum 25pc of funds permitted to any connection. The trial continues.

Irish Independent

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