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Monday 15 September 2014

'I was told I'd be a friend to bank if I took Anglo loan': developer Brian O'Farrell

Sarah Stack and Dearbhail McDonald

Published 18/02/2014 | 02:30

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Witness Brian O'Farrell at Dublin Circuit Criminal Court yesterday
Witness Brian O'Farrell at Dublin Circuit Criminal Court yesterday

ONE of the so-called Maple 10 borrowers said he was told he would be "a friend to the bank" if he took part in a loan-for-shares deal.

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The Maple 10 was a group of high net worth individuals – some of Anglo's "well regarded" customers – to whom the bank lent money as part of a plan to unwind Sean Quinn's stake.

Property developer Brian O'Farrell said former chief executive David Drumm also claimed Anglo would be "gone in a week" if the hole in the bank was not plugged immediately.

"He told me that you will probably make no money in this transaction, but you will be a friend to the bank," Mr O'Farrell told the trial of three former Anglo executives.

He said Mr Drumm – who is in the US and not on trial – and former Anglo director Pat Whelan came to his Malahide home on Monday, July 14, 2008, and explained the plan in detail for more than an hour.

They said the bank was "under attack" by hedge funds because an unnamed investor had amassed a 25pc holding of the bank through contracts for difference, he said.

The developer said he was assured that Anglo had legal advice from MOPs (the Dublin law firm) and was satisfied everything was above board. "I asked who knew about it and he told me the Financial Regulator, Central Bank and Department of Finance were aware," he said.

Mr O'Farrell, of Headland Property Holdings, said all his loans were performing at the time, but that if that bank went, he went. He also believed he would have to depend on Anglo for future loans.

"David Drumm told me that if this hole wasn't plugged immediately that Anglo would be gone within a week and that after they would probably drag down AIB (Allied Irish Banks) and Bank of Ireland," said Mr O'Farrell.

"I made the decision there and then," said the sixth member of the Maple 10 to give evidence.

"I signed the acceptance," said Mr O'Farrell, who was left with €38m worth of shares when the bank collapsed.

The trial has heard that Morgan Stanley placed the potential market abuse implications of unwinding businessman Sean Quinn's stake in Anglo in 2008 on the agenda for a legal call days before the transaction selling a stake in the bank to the 10 borrowers.

Chartered accountant Dermot Kieran told the court that he understood that Anglo took legal advice on "Project Maple" – the name given to the unwinding of Mr Quinn's Contracts for Difference position – and that Morgan Stanley had completed full legal due diligence on the transaction.

Mr Kieran, who said he provided "logistical support" for Anglo when the bank sought to unwind a stake held by Mr Quinn, has told the Circuit Criminal Court he was not involved in sourcing the 10 borrowers to invest in the bank's shares.

The trial continues.

Irish Independent

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