Sean FitzPatrick cleared over Quinn loans
Ex-banker still faces 10 other charges as trial continues
Former Anglo Irish Bank chairman Sean FitzPatrick has been cleared of illegally lending Sean Quinn's family €169m.
A judge said the ex-banker was not guilty of six charges relating to a loan for shares deal that involved the former billionaire’s wife and five children after the prosecution admitted there was no evidence against him.
Senior counsel for the prosecution, Paul O’Higgins, told the jury they did not have to consider the charges.
“You will see in evidence before you there is no evidence that Mr FitzPatrick actually knew about the lending to the Quinns as distinct from the Maple 10,” the State prosecutor said in his closing submission.
Mr FitzPatrick (65), from Greystones, Co Wicklow, still faces a further 10 counts of providing unlawful financial assistance to net-worth Anglo clients – known as the so-called Maple 10 – in July 2008 to buy shares in Anglo. He denies each charge.
Anglo’s former chief risk officer William McAteer (63), of Rathgar in Dublin, and former head of lending in Ireland Pat Whelan (51), of Malahide, Co Dublin, also deny 16 counts each of providing unlawful financial assistance to 16 people to buy shares in Anglo Irish Bank.
The loan-for-shares deal involved unwinding Mr Quinn’s secret 29pc stake in the bank, built up through contracts for difference (CFDs).
Judge Martin Nolan also directed that Mr Whelan was not guilty of seven counts which had alleged he was privy to the fraudulent alteration of loan facility letters to seven individuals.
The prosecution claimed there was “ample evidence that lending took place” and that this was outside Anglo’s ordinary course of business, breaching section 60 of the Companies Act – which prohibits a company lending money to buy its own shares.
The lending in this case, according to the prosecution, was to bring about a financial event to unwind the Quinn CFD position and the loans were for the specific purpose of affecting the share price, using the company's assets.
“The purpose of the loans makes it crystal clear it was not ordinary for the bank,” Mr O’Higgins said, referring to the size and scale of the €625m deal.
“They were exceptional for the bank. They only occurred because the bank found themselves in an extraordinary situation.”
If convicted, the co-accused face up to five years in prison and/or a €3,000 fine on each count.
Mr O'Higgins claimed not only did the men not try to prevent the lending, but he alleged Mr Whelan and Mr McAteer were instrumental in carrying it out either themselves or through other people.
He also maintained there was no distinction in law between them as executive directors and Mr FitzPatrick as a non-executive director, who he said was “on clear notice” that the company “was acting in flagrant breach of the companies act”.
Mr O’Higgins told the jury there had been some admissions by two of the men, but that some of these admissions were more in the nature of saying “I admit I'm not guilty at all”.
The barrister also said there
had been no “special prosecution witnesses” and warned there was scarcely a detached witness.
The Maple 10 – described as heroes by Mr Whelan – were chosen for the loans because of the relationship they had with the bank, he warned.
Others were former employees or directors of Anglo, while the Quinns “don't come without an agenda, having had complex legal proceedings taken against them and they plainly have issues with Anglo”, Mr O’Higgins said.
“None of these were singing from the prosecution hymn sheet and in some cases none were singing from the same hymn sheet as each other,” Mr O’Higgins said.
The Regulator also “had a corner to protect” while the Department of Finance “is not without views or without involvement in what happened”, he said.
He also called it ironic that the same Morgan Stanley which was held up to the jury was also one of the biggest holders of Mr Quinn’s cfds which were supposed to be “unscrupulously” leant out.
Mr O’Higgins outlined several issues the jury were to ignore, including if the three defendants thought the bank would have collapsed if they did not act.
“Good calls or bad calls, whatever . . . these are not things which have any bearing on the case and don't fall for your consideration,” he said
The trial continues.