Financial Regulator 'supportive' of Maple 10 deal, Anglo trial told
Published 07/03/2014 | 02:30
ANGLO Irish Bank's former head of compliance was granted immunity from prosecution in return for giving evidence in the trial of three executives, a court heard.
Fiachre O'Neill confirmed that he gave statements to gardai after being granted immunity by the Director of Public Prosecutions. His boss, former chief financial officer Matt Moran, was also given immunity.
Mr O'Neill told the trial that the Financial Regulator did not object to a plan to unwind Sean Quinn's secret stake in Anglo through a loan-for-shares deal two days before it was executed.
He said he was part of a conference call involving Con Horan, number two at the regulator's office, and Joel Carter, of investment bank Morgan Stanley, on July 12, 2008.
"The outcome of the meeting was, Morgan Stanley asked was the regulator approving the transaction, to which Con Horan replied 'the regulator has no objection to the transaction'," Mr O'Neill told the Circuit Criminal Court in Dublin.
His belief was that the regulator was "fully supportive" of the transaction, and that the investment bank was happy to proceed.
Mr Carter also told the court he believed the regulator wanted an orderly unwind.
"I do recall him wanting a quick solution," he said.
"I do recall him confirming he was okay with us proceeding. I don't think we ever got a formal approval rather than a 'no objection' to the transaction."
Mr Carter said he was later told by his compliance department that the regulator had spoken to his UK counterpart about the deal.
Within days the international investment bank had executed the deal, which involved Anglo lending €625m to the bank's 10 top customers, known as the Maple 10, and six members of Mr Quinn's family, to buy his 29pc indirect stake built up through contracts for difference (cfds).
Former Anglo chairman Sean 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.
Mr O'Neill said he had raised concerns about his lack of experience in compliance when he was promoted to the post in 2007.
He said he first became aware of Mr Quinn's CFD position in the bank on March 28, 2008, when Mr McAteer and Mr Moran asked him to review a draft agreement between the Quinn Group and the bank.
He confirmed he was instructed to remove any reference to the Financial Regulator approving the deal from the document.
The deal, in which the Quinn family would buy 15pc of the shares and the remainder would be sold to institutional investors, was never carried out.
Mr O'Neill said he was next involved with the Quinn shares issue in July 2008, when he was told the details of the transaction and asked to prepare packs and "net worth" statements on the Maple 10 for Morgan Stanley.
Mr Carter, vice-president of the global capital market department of Morgan Stanley when the deal took place, said he himself thought it was a "neat solution".
"It seemed, on the face of it, to be a very elegant solution," he told court via video link from a London courtroom. He said he felt the rationale behind the transaction was because the regulator's office was concerned about Mr Quinn's stake.
The court also heard confidentiality was an important part of the transactions, with the Quinn family not knowing the identities of the Maple 10 investors, and the 10 not knowing each other.
"It's very normal for us to work under very strict confidentiality rules," Mr Carter added. "We deal with very sensitive information."
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