Department of Finance knew of 'some lending' to Anglo's Maple 10, trial told
THE Department of Finance knew that there was "some lending" by the former Anglo Irish Bank to wealthy individuals to buy shares in the bank but believed the lending was only short-term, a court has heard.
The trial of three former Anglo executives has heard that Con Horan, the former 'second- in-command' at the Financial Regulator, told Kevin Cardiff – former assistant secretary general at the department – that there was some short-term lending to high net worth individuals from Ireland and the US.
Mr Horan, however, has told the trial he did not find out that Anglo had given actual loans to the group that became known as the Maple 10 to buy Anglo's shares to unwind businessman Sean Quinn's 29pc indirect stake in Anglo until January 2009. This was six months after the loan-for-shares deal.
Mr Horan said last Tuesday that he had been told by the bank's former chief executive David Drumm that there was a possibility of some very short-term lending to the Maple 10 if any of them had a cash flow problem but that he was not told there was any actual lending.
Both men have now completed their evidence in the trial of three former Anglo Irish Bank directors accused of allowing the bank to illegally provide loans used to fund the acquisition of the shares in the bank.
The three accused men are Sean FitzPatrick (65), from Greystones, Co Wicklow; William McAteer (63), of Rathgar in Dublin; and Patrick Whelan (51), of Malahide, Co Dublin.
They are charged with 16 counts each of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in Anglo Irish Bank.
The 16 are members of the Quinn family plus the Maple 10, a group of 10 former large-scale Anglo.
Mr Whelan also denies being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
Yesterday, Mr Cardiff read out what he described as a "quite comprehensive" contemporaneous note of a meeting held on July 23, 2008, a day after the phone call with Mr Horan.
Mr Cardiff's note of the Domestic Standing Group (DSG) meeting, carried out some nine days after the Maple 10 deal, included the phrase "Some lending to them (the individual investors) – likely short term".
Mr Cardiff said that he had "a clear recollection" that he was told by Mr Horan during a phone call on July 22, 2008, that any lending would be on a short-term basis.
This recollection, he said, was reflected in his note of the July 23 meeting of the DSG, previously described as "a doomsday committee" set up under European law to look at worst-case scenarios in relation to financial stability.
Earlier, Mr Horan denied a suggestion that the regulator acted as a "cheerleader" to a planned deal to unwind Mr Quinn's stake.
He agreed that the office was "very close" to a deal in March 2008 to unwind the stake which had been built up using contracts for difference (CFDs).
Under cross-examination by Michael O'Higgins SC, representing former Anglo chairman Sean FitzPatrick, Mr Horan agreed the regulator was "engaged" in the deal.
However he disputed Mr O'Higgins's use of the term "cheerleading", adding: " I wouldn't characterise it like that."
Mr Horan replied that the Regulator had been "positively disposed" and "comfortable" towards the deal.
The trial continues.