Anglo Irish Bank: In early October 2005, Sean Quinn started to take positions in Anglo Irish Bank, AIB and Bank of Ireland using a financial instrument called contracts for difference (CFD) as part of a diverse portfolio that also included robust blue-chip firms like Ryanair, Deutsche Telekom, Tullow Oil and Nestle.
CFDs are a high-reward, but also high-risk way of betting on shares. From late 2006, he began to cash out of his better international stocks to focus more and more on Anglo Irish Bank. Eventually he owned over 28 per cent through CFDs in what was the worst-ever stock market gamble by an Irishman. When Ireland's property bubble burst, he and his family lost about €2.5bn on Anglo Irish Bank when it was nationalised. The Quinns say the bank illegally used them to prop up its share price. Either way the taxpayer is facing a hell of a bill.
The stock market
To get more cash to bet on Anglo, the Quinns cashed out of positions they had in other stocks to raise money. They took big losses running into hundreds of millions as they did so. They owned at least 29 per cent of McInerney, a house builder, which was massively exposed to the property market -- and the Quinns lost at least €200m on this stock alone. In total, Quinn has admitted losing €500m on stocks other than Anglo. With Quinn now bankrupt -- again, the bill is with the taxpayer.
Quinn Insurance was a cash cow for the Quinns which was considered, during the boom, the best business he ever ran. However, the reality is Quinn Insurance -- from at least 2007 -- systematically wrote insurance too cheaply and failed to put enough aside to meet claims. To make things worse when the crash began in 2008, the Quinns were desperate for cash to meet their spiralling stock-market losses, and so they expanded like crazy in the UK, writing business that turned out to be fundamentally loss-making. The Financial Regulator was forced to put Quinn Insurance into administration under Grant Thornton, the accountants in 2010. A report, due to be filed in the High Court by Grant Thornton in the coming weeks, is expected to reveal there is a hole of between €800m and €1bn in its reserves. The bill for this will have to be picked up by the general public, who will have to pay a new charge on insurance policies.
tech bubble c2001 on
Sean Quinn borrowed €260m from Anglo Irish Bank to bail his business out when the technology bubble burst. He still owes the taxpayer-owned bank €86m relating to this today.
The Japanese Yen c2008 on and wind farms c2006 on
Sean Quinn bet $200m (€145m) on the Japanese yen. He took the yen position as a way of getting access to funds on a lower interest rate in a sophisticated financial transaction. This backfired when the yen appreciated, costing him tens of millions of euro. Separately, the Quinns own two wind farms along the border. In 2006 Sean Quinn took the high-risk decision not to sell excess power generated that he didn't need for his own plants on a contract basis to energy companies, but instead sell it on a one-off basis whenever prices were high. This initially paid off, but later produced losses as wind energy prices fell because of the recession costing millions of euro. Yet another bill and guess who is paying it? Yes, we are.