Maximum fine of €2.5m 'a slap on the wrist', Quinn hearing told
A fine of €2.5m on Anglo Irish Bank over €2.34bn loans made to Quinn group companies -- to allegedly support the bank's share price -- would be a mere slap on the wrist, the Commercial Court heard yesterday.
The claim was made by a lawyer for the family of businessman Sean Quinn over the €2.5m maximum fine the Central Bank could potentially impose on the bank. The maximum criminal penalty for the bank's conduct was a fine of €10m while the maximum civil remedy was a fine of €2.5m by the Central Bank, Bill Shipsey, for the family, said.
This represented just one thousandth of the sum committed by Anglo to manipulate the market and amounted to the "mildest slap on the wrist", he said.
He was speaking during the hearing of claims by the family that the €2.34bn loans were made to companies in the Quinn group for the unlawful purpose of funding margin calls on Contract for Difference (CfD) positions taken out in Anglo by Sean Quinn via a Madeira-registered company, Bazzely (owned by the Quinn children).
The family is entitled to advance arguments that the bank breached Irish and European laws against market manipulation in making such loans and was therefore not entitled to recover the money from them, Mr Shipsey said.
In the circumstances of this case, it was hard to see how a fine could be proportionate, he said. Anglo had decided it was in its own interests "to break the law" by advancing monies for the express purpose of propping up its share price, he said.
Where a bank engaged in such illegal activity, it was not disproportionate to argue an implied legal prohibition against recovering its money, Mr Shipsey said.
Anglo was also not entitled to be unjustly enriched via having security over assets of third parties in relation to the loans and facilities, he argued.
This was the background against which the family wanted the court to allow them make the case that, under the Market Abuse Regulations 2005 and the Companies Act 1963, the loans are unenforceable against them due to being made for the illegal objective of supporting the bank's share price, he said.
The only issue the court had to decide at this stage was whether the family had the necessary legal standing to rely on the alleged breaches of the law, he said.
The facts of this case gave rise to the family's entitlement to avoid the share pledges and guarantees provided by them on foot of which the bank sought to recover the loans and had appointed a receiver.
The family has pleaded unconscionable conduct and negligence by the bank and also alleged undue influence was exercised on them to sign the various documents, he said.
Mr Shipsey was making closing submissions in the hearing before Mr Justice Peter Charleton of a key preliminary issue of law in proceedings by Mrs Patricia Quinn and her five adult children aimed at avoiding liability for the €2.34bn loans.
The judge said he wanted time to address the issues and reserved judgment to February 29.
Anglo, now Irish Bank Resolution Corporation, contends the family does not have the legal standing to allege abuse of the 2005 Regulations and Companies Act in support of its bid to avoid liability for the loans.
It also argues some €500m loans are unrelated to the alleged loans to fund margin calls on CfDs.