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Anglo board member never knew loan letters were changed

A BOARD member of Anglo Irish Bank did not know loan facility letters to the so-called Maple Ten had been changed – amendments that could have seen the bank have no recourse at all if its shares fell to zero, a court has heard.

A former senior lender at Anglo has told the trial of three former executives that he was asked to amend the loan facility letters that had been issued to the Maple Ten in July 2008.

The first facility letter from July 10, 2008, to the Maple Ten required the borrowers to repay 25pc of the loan amount if the Anglo shares fell to zero.

Yesterday, Michael O'Sullivan, a former director of divisional lending, said Pat Whelan former MD of Lending (Ireland) – came to him on October 11, 2008, and asked him to amend the loan facility letters which had been sent out in July.

One of the changes was the insertion of the amended line: "Recourse to the borrower will be limited to 25pc of the balance outstanding under the facility or to the value of the shares at the expiry of the facility."

Mr O'Sullivan said his understanding of this sentence was "that if the value of the shares were zero, the value of the recourse would be zero".

He asked Mr Whelan, who denies seven charges of being privy to the fraudulent alteration of a loan facility letter, why they were making these changes.

Mr Whelan told him it had been approved by former chief executive David Drumm and the board.

Mr O'Sullivan said he then signed the letter and it was sent out to the borrowers.

But several weeks later he attended an "asset review meeting" with two non-executive directors, as well as Pat Whelan.

Mr O'Sullivan said that during the meeting it became clear to him that one of the non-executive directors, Mr Donal O'Connor, was unaware that the Maple Ten were no longer subject to the 25pc recourse.

He said he was annoyed that the board had not been informed of this and confronted Mr Whelan after the meeting.

Mr O'Sullivan said after unsuccessfully attempting to raise the possible zero recourse issue with Mr Whelan, he approached Niall Tuite in the group risk section and Matt Moran, the bank's then chief financial officer who was negotiating the bank's bailout.

"I felt comprised by what had taken place and in my 26 years in financial services, that had never happened before," said Mr O'Sullivan.

Irish Independent