News Courts

Monday 22 September 2014

Frantically busy weekend at Anglo as bank prepared to unwind CFD position

Published 15/02/2014 | 02:30

  • Share

NOT long after Anglo banker Elma Kinane returned to her job from maternity leave in August 2007, she was sent on a six-day trip to inspect Sean Quinn properties in Russia.

  • Share
  • Go To

She went because he was seeking "significant monies" from the bank and she had to check out the investment.

"It was a pretty intense trip, but worthwhile," she said.

On the eighth day of the Anglo trial, things had firmly settled down. Gone were the swarms of international press and the drifts of the curious who had descended during the opening week. With boxes and files of legal documents neatly stowed, the legal teams had quietly settled in for the long haul, Judge Martin Nolan at the helm.

Three abreast in their bench, so too had the defendants, Sean FitzPatrick, Pat Whelan and Willie McAteer, listening intently and showing no sign of flagging attention spans.

This was the beginning of the nitty-gritty, the detailed minutiae which make for scant headlines but which are crucial in building a true sense of what happened.

Ms Kinane was explaining to the trial how she had taken "numerous flights" across Russia to inspect the Quinn assets, which included an office block and another smaller property.

When she came back, she began to hear the rumours. Colleagues had mentioned that there was talk in the market that Sean Quinn had "amassed a CFD position".

Until that point, she did not know what CFDs were, she later admitted in court.

Nor did many other people in this country before this trial began. We now know that it stands for Contracts for Difference, having heard it described in the opening statement of Paul O'Higgins, SC for the prosecution, as an "extraordinary form of gambling" which, instead of buying shares, saw speculators gamble on the future of shares.

Ms Kinane was head of Team 91, the Anglo banking team which handled a number of clients, notably Sean Quinn, and so she was understandably concerned.

Putting the query to a manager, she was assured that it had to do solely with shares bought by Quinn Insurance. But a couple of days later, her director advised her that the rumours were true. Sean Quinn had held CFD shares and needed €150m for the Quinn group.

In December, she learned that Sean Quinn required €500m because the Quinns had been using their cash reserves and it was coming up to the year end.

"Let's find a way to do it," David Drumm had declared during that meeting.

Had she felt like she was operating in a vacuum? Ms Kinane was asked by Una Ni Raifeartaigh for the prosecution.

She conceded that she had.

"We didn't have an understanding of the CFD position and what it meant for the Quinn group," she said.

By May, she was receiving daily reports from the Quinn group regarding its CFD status and into June, the Quinn group was seeking a €200m cash injection. The bank agreed – in exchange for a power of attorney over the CFD position.

On July 10, she was asked to come down to Pat Whelan's office and was handed a list of 10 names and addresses and asked to prepare credit applications for them.

Ms Kinane recognised those names as being some of the bank's largest customers. She did not handle their financial affairs but was warned not to speak to the teams that did. The knowledge of the CFD situation was to be kept within her own team.

"Do you remember the weekend coming up to July 14," Ms Ni Raifeartaigh had earlier asked Brian Gillespie, Anglo's former head of compliance, Ireland.

His voice was firm and clear as a bell. "I do," he said.

The youthful-faced banker had been working over that weekend in 2008 – more so on the Saturday than on the Sunday, as he later clarified.

It was, by all indications, a frantically busy weekend for the team at Anglo Irish Bank, with paperwork being finalised for the "unwind" of Sean Quinn's stake.

That weekend, Mr Gillespie had overheard a conference call between the bank, Morgan Stanley – the major international firm that was to implement the deal – and Anglo's solicitors, Matheson Ormsby Prentice.

HE also overheard another call between Morgan Stanley and Con Horan, second in command at the Financial Regulator's office.

Asked later how he had managed to hear these telephone conversations, Mr Gillespie sounded surprised: "It was on speakerphone," he explained simply.

On the tone of the call between the Financial Regulator and Morgan Stanley, he was colourfully adamant in a way which made the barristers smile. The tone had been "very, very, very positive about the transaction".

Cross-examining, Brendan Grehan, SC for Pat Whelan, asked Mr Gillespie of his previous experience with the Central Bank before Anglo.

"A gamekeeper?" Mr Grehan gently ribbed him.

Mr Gillespie smiled a little stiffly. He was "reluctant" to use those words himself, he said.

Irish Independent

Read More

Editor's Choice

Also in Irish News