News Courts

Thursday 28 August 2014

‘Loan letters were to protect Maple 10 in case of Anglo takeover’, court hears

Sarah Stack

Published 25/03/2014 | 12:38

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AN Anglo Irish Bank executive claimed letters changing the terms of loans to the so-called Maple 10 were prepared to protect them if the bank was taken over by another institution, a court heard.

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Pat Whelan, Anglo’s former Managing Director of Lending (Ireland) told gardai he believed the loan for shares to unwind Sean Quinn’s secret stake in the bank in July 2008 were given in the normal course of business.

The trial of three Anglo executives saw a review of the deal penned by Mr Whelan in January 2009.

He reported that Anglo chief executive David Drumm instructed the new facility letters be prepared to protect the Maple 10 and give them some "breathing space" in the event of an "aggressive acquisition".

“On reflection the concept of the 'protection' letter was an error of judgement and they should not have been issued," he wrote in the review.

"Despite the approval of David as CEO they should have been brought to the Boards attention for discussion before they were issued."

The new back-dated facility letters to Anglo's top 10 high net worth customers - who received loans to buy shares in the lender - meant they were no longer liable for 25pc recourse if the share price collapsed or if they were left worthless.

Mr Whelan reported that six of the ten letters were posted out in error by the lending team and were meant to remain on file pending authorisation or a takeover.

“The main reason for issuing these letters was to give these clients, who were willing to support the bank at a very difficult time, time for the share price to recover and our main concern was how they could be dealt with by another institution," Mr Whelan continued in his review.

“We did not want a situation where they would be treated unfairly and we wanted to protect them.

“The letter created a grey area which may allow them to buy some time in dealing with the debt."

New letters reinstating the 25pc recourse were later issued.

Sean FitzPatrick (65), from Greystones, Co Wicklow; William McAteer (63), of Rathgar in Dublin; and Mr Whelan (51), of Malahide, Co Dublin deny 16 counts each of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in Anglo Irish Bank.

The 16 are members of the Quinn family plus the Maple 10, a group of 10 former large-scale Anglo Irish Bank customers.

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

The trial continues before Judge Martin Nolan and a jury of seven men and seven women.

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