News Courts

Friday 29 August 2014

I didn't give positive advice on Maple deal, says lawyer

Sarah Stack and Dearbhail McDonald

Published 29/04/2014 | 02:30

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Witness Robert Heron arriving at Dublin Circuit Criminal Court
Witness Robert Heron arriving at Dublin Circuit Criminal Court
Anglo Irish Bank
Anglo Irish Bank
Willie McAteer
Willie McAteer

A LAWYER has denied giving positive legal advice to Anglo Irish Bank about lending €450m to the so-called Maple 10 to unwind Sean Quinn's secret stake in the bank, a court heard.

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Robert Heron told the sentence hearing of two Anglo directors, convicted of giving illegal loans, that he was never told the money would be borrowed by 10 clients of the bank.

He also told the Circuit Criminal Court in Dublin that he had no clear recollection of a Saturday afternoon due diligence conference call he had with Anglo chiefs and two executives from investment bank Morgan Stanley, the weekend the deal was executed in July 2008.

"I don't recall the call," he repeated under cross-examination from Brendan Grehan, senior counsel for Pat Whelan.

Mr Heron, a former equity partner at commercial law firm Matheson Ormsby Prentice Solicitors, now Matheson, gave evidence at the sentencing hearing of Mr Whelan, Anglo's former head of lending in Ireland, and the bank's then director of finance William McAteer.

The men face up to five years in jail after been convicted of 10 charges each of breaching Section 60 of the Companies Act 1963 by lending €45m to 10 investors to buy shares in Anglo for a share support scheme. Each loan had 25pc recourse.

The jury acquitted them both on six further charges each of lending €169m for the same purpose to Sean Quinn's wife Patricia and their five children. Those loans were processed with 100pc recourse.

Their co-accused, former Anglo Chairman Sean FitzPatrick, walked free from court when he was acquitted on all 16 charges.

The three men had denied all charges.

The loans-for-shares deal was designed to unwind the 29.4pc stake Mr Quinn had built up in Anglo through investment tools known as Contracts for Difference (CFDs).

Mr Heron revealed he was told about the Quinn issue in March 2008 by Mr McAteer, who said the Financial Regulator wanted a solution.

He drafted an agreement on how to unwind the stock held through Mr Quinn's investment firm in Portugal – with shares expected to be sold to the Quinn family and international investors, Mr Heron said.

He was later made aware of lending to the Quinn family and believed that it may have been in the ordinary course of business, but he denied being given the details of the Maple 10 lending until weeks after the deal.

"There was no reference to people other than Quinn children," said Mr Heron, who took the stand following legal argument between prosecution and defence barristers.

Mr Heron said he had little or no notes from telephone calls with Anglo's head of compliance, Fiachre O'Niall, and then chief finance officer, Matt Moran – who were both granted immunity from prosecution to give evidence – particularly on the day of a major conference call with Morgan Stanley.

GO-AHEAD

The investment bank's executives had previously told the court they have notes indicating Mr Heron gave the go-ahead for the Maple 10 transaction.

"I did not give positive legal advice," replied Mr Heron, who discovered the words "9 cfd", "28pc", "Maple 13pc", and "ten ind 14.9pc" jotted in his diary from the date.

The sentencing hearing continues before Judge Martin Nolan today.

The prosecution disagrees with defence barristers that the bank believed the loans were legal, as Anglo's compliance department had secured positive legal advice from Mr Heron and had the backing of the Financial Regulator.

During the trial, Judge Nolan told the jury they must disregard any evidence of legal advice as irrelevant, but later said he would consider it and the role of the Financial Regulator in sentencing.

Mr McAteer (63), of Rathgar, Dublin 6, and Mr Whelan (52), of Malahide, Co Dublin, remain on continuing bail.

Irish Independent

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