| 11.9°C Dublin

Quinn nephew 'withdrew funds from bankrupt Russian bank'

THE Russian property company at the heart of a legal battle between Anglo Irish Bank and the Quinn family filed for bankruptcy weeks before Sean Quinn's nephew transferred €4.5m from its coffers, the High Court heard yesterday.

The claim from Anglo Irish Bank came as the court agreed to adjourn the international property row until tomorrow and the Quinn family broke their silence to protest Anglo's attempt to "further smear the family's reputation".

Anglo is asking the court to permanently prevent the Quinns from putting the proceeds of the family's international property empire out of the bank's reach and from diluting the bank's stake in the property companies.

The bank also wants the Quinns to desist in efforts to set up a "mirror" structure that would assume assets owned by the Quinn international property portfolio for the benefit of Sean Quinn's grandchildren.

Anglo also claimed Sean Quinn's nephew Peter Quinn withdrew €4.5m from a Russian property company in early June -- even though that money should have gone towards the family's €2.9bn Anglo debts.

Yesterday, Anglo's senior counsel Paul Gallagher told the court his client had just found out that the company involved, dubbed 'Finansstroy', had filed for bankruptcy in May.

Anglo is now poised to argue that Peter Quinn, who headed up the Quinns' international property arm, knew of the bankruptcy petition.

This assertion will be used to further the bank's efforts to challenge the legitimacy of the transfer. The Quinn family's senior counsel was in court yesterday but made no comment on the latest claims.

Hours later, the Quinn family hit out at the nationalised bank's accusations.

"Of most concern are the recent reported allegations of impropriety on the part of certain Quinn family members," the family said in a statement.

"These are part of a concerted attempt by Anglo to further smear the family's reputation and are being vigorously defended."

Yesterday's court sitting also revealed for the first time that the Quinn family had secured an injunction in Nicosia barring Anglo's receiver from interfering with Quinn family assets in Russia and Cyprus.

In a statement, the Quinn family last night said the action would "serve to continue to preserve the value of the Quinn property portfolio and allow those companies to retain the capacity to repay their debt".

The Cyprus case will come before the courts again later this week.

Sources said that Anglo, which only learned of the case yesterday, would "certainly" be contesting the injunction.

Anglo and the Quinns are also awaiting Monday's verdict from a Stockholm court on whether a Swedish company that owns many of the international properties should be declared bankrupt.

Yesterday, the Quinns' senior counsel, Brian O'Moore, stressed that he was "reserving his position" in relation to whether the Irish High Court had jurisdiction in the case given the international legal manoeuvres.

In their statement, the Quinns said they remain "confident that they will be ultimately vindicated in the Irish courts", suggesting they accept the jurisdiction of the legal authorities here.

Anglo also argues that the Irish courts should have jurisdiction because a number of the contested actions were instigated in Ireland.

The bank is arguing against the issue of new shares by Quinn international property companies which Anglo believes it should control after it sent in a receiver over most of the Quinn empire in April.

The new shares serve to "reduce the value" of the shares Anglo holds in those property company, the bank's receiver Kieran Wallace told the court.

Indo Business