€500m loan was agreed over phone within an hour, Sean Quinn tells court
Former businessman Sean Quinn outlined how he secured a €500m loan over the phone in less than an hour from Anglo Irish Bank in December 2007.
The bank offered the loan without being asked and it was arranged directly with then chief executive David Drumm, Mr Quinn said yesterday.
That was after Sean Quinn explained to David Drumm that his then investment in Anglo Irish Bank was set to become widely known, once audited accounts for the Quinn Group were prepared.
"I rang David Drumm in the first or second week in December 2007. He asked me what it would take to sort it out. I said about €400m and he was back within the hour, and he'd give me €500m to tidy it up," Sean Quinn told the court.
"I never asked him for any money, but I was pleased that he offered me money."
The exchange was contained in evidence given by Sean Quinn in relation to his investment in so-called contracts for difference (CFDs) linked to shares in Anglo Irish Bank, and how that led him to borrow close to €2bn from Anglo Irish Bank.
The loan from the bank was made to Quinn Group, which was running low on cash because of loans it was making to the Quinn's investment company, which in turn needed the cash to meet losses on the Anglo Irish Bank share bets.
The CFD position meant the Quinn family controlled almost 30pc of Anglo Irish Bank shares by the spring of 2008, Quinn said.
CFDs are indirect investments, but the brokers that sell them buy real shares in order to protect themselves if the investor is right, and prices rise.
Quinn invested in the bank because he believed in it, he said.
"I thought it was a marvellous institution, it had grown its profits by 30pc compound over 30 years," he explained.
He even believed the investment, which led to losses of €3.2bn, was low risk because of the amount of collateral being put up at 25pc.
"We thought, we are on our own obviously, no one else thinks it, we thought we took a very conservative approach," he said.
He remained convinced of the value of the investment even after the share price went into decline, he said
"The logic in that was very clear. The share price had reduced by around 40pc, the profits had increased by 46pc in the year 2007. It was a phenomenal result.
"Where I come from those mathematics don't add up."
The fact that accounts were signed by auditors, and assurances he got that the bank was in good shape, convinced him to boost the stake, he said.
"There were brokers left right and centre talking about Anglo being the best bank in the world. I could see no reason why you would see selling shares in Anglo would be a good idea. It turned out I was wrong."
Mr Quinn said he was responsible for decisions, such as the one to invest in the Anglo Irish Bank CFDs but did not get involved in actually carrying out the transactions involved, which were done through staff at his businesses.
"I have never been involved in the administration of the business. I'm involved in spending money stupidly. I finished school at 15. I never got involved in this aspect of the business," he said.