Thursday 23 October 2014

FitzPatrick 'annoyed' over 25pc recourse on Maple 10 share deal

Sarah Stack and Dearbhail McDonald

Published 20/03/2014 | 02:30

Witness Lar Bradshaw at Dublin Circuit Criminal Court
Witness Lar Bradshaw at Dublin Circuit Criminal Court

SEAN FitzPatrick was annoyed that 10 businessmen were liable for only a quarter of the €45m lent to them to buy shares in Anglo Irish Bank, a court heard.

The bank's former chairman called a fellow director three weeks after the deal was carried out to complain the Maple 10 owed just 25pc recourse on the borrowings if the shares collapsed and were left worthless, his trial was told.

Lar Bradshaw, a non-executive director at the time in July 2008, said Mr FitzPatrick "expressed annoyance" that he had discovered the details of the recourse.

"I was actually surprised. I didn't know until that moment that we had lent the money," said Mr Bradshaw about the call at the end of July.

"But I remember processing in my mind it wasn't that unusual because how many people sat around with €60m in their deposit account waiting to do something like this."

Mr FitzPatrick (65), from Greystones, Co Wicklow; William McAteer (63), of Rathgar in Dublin; and Patrick Whelan (51), of Malahide, Co Dublin, have pleaded not guilty to 16 counts each of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in Anglo Irish Bank.

The 16 are six members of Sean Quinn's family plus the Maple 10 – a group of 10 former large-scale Anglo customers.

Mr Whelan also denies being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.

Mr Bradshaw told the trial he was shocked and surprised in September 2007 when the board was told by Mr FitzPatrick and former chief executive David Drumm that businessman Sean Quinn had built up a secret stake in the bank of 24pc through contracts for difference (CFDs).

POSITION

He said the board instructed Mr Drumm to keep the Financial Regulator informed and was aware of several steps executives took to try and unwind Mr Quinn's position – including attracting investors in the US and Middle East. There were fears there would be a "run on the bank" with customers queueing around St Stephen's Green to withdraw their money.

Mr Bradshaw said four or five days before the Maple 10 deal was executed he was called by Mr FitzPatrick, who told him a solution has been found that involved a number of high net worth individuals who were loyal customers of the bank.

They would take 10pc of the stake and members of the Quinn family 15pc, he recalled.

"It's absolutely fair to say if he (Mr FitzPatrick) said it to me at the time we are lending, I would not have any objection," he added under cross-examination.

He also agreed with Paul Anthony McDermott, junior counsel for the prosecution, that other banks were not "falling over themselves" to lend money at the time, particularly to buy shares in Anglo.

"I think by that stage the credit squeeze had clearly started," Mr Bradshaw replied.

Another former board member, Ned Sullivan, denied he had been called by Mr FitzPatrick before the Maple 10 deal was carried out.

He maintained he was only told after it was completed, but felt "huge relief" because what had been a massive time-consuming distraction for management had been solved.

A third board member, Gary McGann, said Mr Drumm had been instructed to keep the Financial Regulator informed "all the way" about plans to unwind the Quinn stake.

Mr McGann, CEO of Smurfit Kappa, who served as a non-executive director of Anglo until January 2009, also confirmed that he wrote a series of emails to Mr Drumm on July 10, 2008, congratulating Mr Drumm on his efforts to unwind the stake.

"You and the team are doing fantastic work in very trying circumstances," said Mr McGann in the chain of emails, adding "I just wanted to acknowledge that – we are all rooting for you!"

Mr Neary, who has completed his evidence, insists that at a meeting on September 12, 2007 – a day after Mr Quinn disclosed to bankers he had a 24pc holding in the Anglo – Mr Drumm did not disclose the extent of Mr Quinn's stake.

Mr Neary insists that he did not find out about the extent of Mr Quinn's stake until March 21, 2008.

The trial continues.

Irish Independent

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