News Lise Hand

Thursday 2 October 2014

Lise Hand: Frantic bid to unwind Quinn shareholding emerging in court

Published 18/02/2014 | 02:30

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'IF THE bank went, I went." This was the simple summation offered by property developer Brian O'Farrell to explain why he agreed to join the Maple 10 consortium in July 2008.

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Mr O'Farrell was the sixth of the Maple 10 businessmen to take the stand at the trial of the three former Anglo executives, Sean FitzPatrick, William McAteer and Patrick Whelan, and elements of his evidence had a familiar ring to them.

Like other Maple 10 members, Mr O'Farrell had been abroad on holidays when he received a call in early July from Patrick Whelan who told him "there was a problem with the bank".

The developer had been a client of the bank for 15 years and had what he described as "a very successful business relationship" with Mr Whelan.

And so a couple of days after he returned from holidays, Mr Whelan and the bank's CEO David Drumm called to his Malahide home for an 8.30am meeting.

"They said the bank was under attack," Mr O'Farrell told the court.

Mr Drumm asked him if he knew what Contracts for Difference (CFDs), short-selling and hedge fund were.

When the businessman said he didn't, Mr Drumm spent an hour explaining the terminology. He also told Mr O'Farrell that "a major client of the bank had amassed CFDs" and this had "put the bank in a very bad position".

From the stand, Mr O'Farrell calmly described the urgency conveyed to him by the two bankers.

"David Drumm told me that if this hole wasn't plugged immediately, Anglo would be gone within a week and after that would have dragged down AIB and Bank of Ireland," he said.

Mr O'Farrell agreed "there and then" to borrow money to invest in shares in the bank, as part of the plan dubbed 'Project Maple'.

"I would have been dependent on the bank for loans in the future," he said, explaining that Mr Drumm told him that he would probably make no money from the transaction "but I'd be a friend to the bank".

Day-by-day in the Anglo trial, now in its third week, a picture is building of the intense activity in the bank to formulate a plan to unwind the CFD shareholding of Sean Quinn which peaked at a 29.3pc stake.

In the afternoon, Anglo's longest-serving non-executive board member, Michael Jacob, who served on the bank's board from 1988 until 2009, was asked by counsel for Mr FitzPatrick, Michael O'Higgins SC, about other plans other than Maple 10 to save the failing bank which were under discussion.

A couple of them had been given odd monikers: there was 'Project Sleeve', which would have given bank customers priority to buy new shares; and the bizarrely-named 'Operation Dribble' which was promoted by international financial advisers Morgan Stanley, who had worked out a formula to place a number of shares on the market without destabilising the share price.

Mr O'Higgins referred to the relationship between Anglo Irish Bank and Mr Quinn. He said the bank's "fate was in the hands of one man, Sean Quinn".

He also put it to Mr Jacob that "Anglo was a helpless spectator when all this was happening, wasn't it?" – referring to the bank's position during continued attacks on its share price by international hedge fund speculators.

He elaborated further on the point, comparing the bank to an "aircraft carrier" being under attack by "someone alongside in a rowing-boat, but someone who had the capacity to sink the aircraft carrier".

Irish Independent

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