O'Reilly tells of €60m loan from Anglo to buy its shares
Published 12/02/2014 | 02:30
ONE of Ireland's biggest developers met two Anglo Irish Bank chiefs over Sunday lunch in Portugal and agreed to take a €60m loan to buy its shares, a court heard.
Joe O'Reilly – one of the so-called 'Maple 10' – was on holiday when the bank's then head of lending, Pat Whelan, and its chief executive, David Drumm, jetted out to see him.
He told the trial of three Anglo executives that Mr Drumm did most of the talking over lunch in a Faro restaurant on July 8, 2008.
Mr O'Reilly was offered €60m to buy 1pc of Anglo's shares because a shareholder had amassed a large stake in the bank, mainly through contracts for difference, and this was driving the shares down.
He was one of 10 wealthy builders and developers approached over an alleged €625m plan to unwind the secret stake built up by the then billionaire Sean Quinn.
Mr O'Reilly said the two men claimed they had support for the deal from the Financial Regulator and he was never asked to put forward any of his own money. "At the end of the meeting, I had agreed," said the developer behind the Ilac, Dundrum and Pavilions shopping centres in Dublin, as well as the Grand Canal Theatre.
"This was after they had explained again that they had legal advice from MOP (Matheson Ormsby Prentice), a senior counsel, they had Morgan Stanley, the regulator was on board and there was some other body."
He told the jury at the Circuit Criminal Court in Dublin that there was also some inference to another body which he "believed at the time to be the Department of Finance" but he later agreed that they may have meant the Central Bank.
He stressed he had no qualms with the deal as he believed the bank had "as good a team as you could get" in terms of legal advice and he thought Mr Whelan was "very professional".
Mr O'Reilly (right) – who was worth about €1bn at the time – revealed that he only managed to sell 500,000 of his shares and was left with 9.75 million shares, which were worthless when Anglo was nationalised in January 2009.
Sean FitzPatrick (65), from Greystones in Co Wicklow, Patrick Whelan (51), of Malahide in Dublin, and William McAteer (63), of Rathgar in Dublin, have all pleaded not guilty to 16 charges of unlawfully providing financial assistance to individuals for the purpose of buying shares in Anglo Irish Bank in 2008. Mr Whelan has also denied seven charges of being privy to the fraudulent alteration of a loan facility letter.
A second developer, Sean Reilly, told the court he was approached in the same week by Mr Whelan and met him and Mr Drumm at Anglo's head office on St Stephen's Green, Dublin on July 9. He alleged that Mr Drumm told him the bank's shares were under pressure and asked if he would buy a 1pc stake, €60m of shares.
Mr Reilly continued: "They said they had a legal opinion from MOPs and that the Financial Regulator was aware of it, the Central Bank, everyone was aware of it and wanted it done."
Both men said they signed letters agreeing to the terms of the loans and granting power of attorney over to Anglo to open an account with Morgan Stanley to purchase up to 12 million Anglo shares for €60m at an appropriate time – by which time they had fallen and cost them €45m.
They also agreed to 25pc recourse, meaning they were only on the hook for a quarter of the loan, even if the shares declined in value.
"If the shares ended up at 0pc, I would have to pay 25pc or €15m," said Mr Reilly, before adding: "With 25pc recourse, it was a reasonable commercial deal." He later sold 80pc of his shares and lost €2.5m.