BUSINESSMAN Sean Quinn was a "fool to believe" in Anglo Irish Bank investments that cost his family €3.2bn in just two years, he told a court yesterday.
He said that in 2007-2008 the family lost €3.2bn through "the Anglo fiasco."
"I was a fool. I was a fool to believe. I got a right beating over the last few years," the businessman, who was once the country's richest man, told the court.
Mr Quinn – who once controlled the largest single stake in Anglo Irish Bank – was giving evidence in the trial of three former directors of the bank, each charged with multiple counts of allowing the bank to finance purchases of its own shares illegally.
As late as September 2008 he was offered a "gentleman's agreement" by the bank's then chief executive David Drumm to help deal with the situation and to persuade him against taking a legal action, he said.
Mr Drumm met Mr Quinn at Buswells Hotel in Dublin to propose the offer, he said.
"They were there to appease. They said the bank was in rude health and we shouldn't be pursuing legal proceedings, we'd come to a gentleman's agreement and we'd all live happily ever after."
Mr Quinn was the fifth witness to testify in the trial of Sean FitzPatrick (65) from Greystones, Co Wicklow; Patrick Whelan (51) of Malahide, Co Dublin; and William McAteer (63) of Rathgar in Dublin.
All three men have 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.
The September 2008 proposal alleged to have been made to the Quinns was based on a belief that the remaining 10pc stake in Anglo Irish Bank then held by the Quinns would recover in value.
The 2008 meeting was held after Sean Quinn wrote to then chief executive of the bank, David Drumm, asking why he had been forced to sell his 25pc position in the bank "to the benefit of others," and had gone to a London law firm with his concerns.
He said he feared there had been "a sweetheart deal" when the shares were sold. The sale itself was something he objected to "strenuously", he said.
The stake in Anglo Irish Bank controlled by the Quinn family is central to the trial of the three former Anglo Irish Bank directors.
At one stage it was almost 30pc of the bank's shares.
Mr Quinn outlined how he had built up the holding from 2006 onwards, before, he claimed, being forced by the bank to sell it in July 2008 to six members of his family and the Maple 10 group of investors.
He described how he first revealed the size of the stake to David Drumm at a meeting at the Ardboyne Hotel in Navan on September 11, 2007.
Liam McCaffrey of Quinn Group also attended the meeting, where the Anglo Irish Bank directors were surprised at the then 24pc stake, he said.
He said he had previously discussed his stake in the bank with Mr Drumm at a dinner in the Slieve Russell Hotel earlier the same year.
The bank wanted the stake reduced to a "single-digit" percentage but only when the share price had recovered, he said.
The stake had been built up indirectly through the so-called contracts for difference (CFDs), a type of financial product that meant he did not have to declare his interest in the bank publicly, using nine separate brokers.
"We'd always like to keep under the radar," Sean Quinn said.
The use of CFDs meant when bank shares fell in value, the Quinn's investment vehicle had to find cash to meet "margin calls" from the brokers to make up for the decline.
Cash initially came from the Quinn Group of companies in the form of loans, he said.
By December 2007, however, the "kitty was empty", he said.
The Anglo Irish Bank investment would become known to banks and bondholders that were lenders to Quinn Group, when intercompany loans appeared in Quinn Group accounts, Mr Quinn explained.
Mr Quinn said he rang Mr Drumm and outlined the position.
Mr Drumm then offered to lend the Quinn Group €500m, without being asked, he said.
"You were scaring him into lending you the money, is that not the reality?" asked Brendan Grehan SC, who is representing Patrick Whelan, one of the accused men.
Mr Quinn indicated that he believed loans he got from Anglo Irish Bank in 2007 and 2008 were illegal, but he was committed to repaying them anyway.
He was and is still "furious" at how that happened, he said.
Mr Quinn said the bank, through Mr Drumm, had accepted the Quinns' share position as a security against the loan, during the phone call.
He accepted there was no paper evidence to support that assertion.
Mr Grehan put it to Mr Quinn that loan documentation, including a letter dated January 31, 2008, set out details of properties owned by the Quinn family around the world as security for the loans.
That was described as "sham" by Mr Quinn, aimed at keeping the Financial Regulator happy.
"Are you suggesting that there might be a scrap of paper anywhere that you made ... that Mr Drumm gave you an undertaking or gentleman's agreement that the loans would be secured on the shares?" asked Mr Grehan.
"I'm absolutely sure," Mr Quinn said.
- Donal O'Donovan