Thursday 22 February 2018

Ex-Regulator Patrick Neary wasn't told about size of Quinn stake 'for months'

Former financial regulator Patrick Neary at Dublin Circuit Criminal Court
Former financial regulator Patrick Neary at Dublin Circuit Criminal Court

Sarah Stack and Dearbhail McDonald

THE former Financial Regulator has denied knowing the size of Sean Quinn's secret stake in Anglo Irish Bank for months despite a "steady stream" of emails updating officials of the businessman's losses.

Patrick Neary told the trial of three Anglo executives that he was also unaware of the extent of the businessman's stake through contracts for difference (CFDs) – while the "top echelons" in Irish finance discussed how the derivatives could impact on share prices.

Mr Neary, former chief executive of the Irish Financial Services Regulatory Authority (IFSRA), said it was March 21, 2008, when he heard about the extent of the former tycoon's 28pc stake. He denied that he deliberately started a statement to gardai over the Anglo loans-for-shares deal based on only what he knew from March 2008.

"I began the statement in good faith based on the information I had on March 21," he said.

Patrick Gageby, representing former Anglo director Willie McAteer, suggested to Mr Neary that this was not an accident.

"If it was not an accident, what is it?" asked Mr Neary.

"It is deliberate," replied Mr Gageby.

"I completely reject that," Mr Neary answered.

Former Anglo bankers Sean FitzPatrick (65), from Greystones, Co Wicklow; William McAteer (63), of Rathgar in Dublin; and Patrick Whelan (51), of Malahide, Co Dublin, deny 16 counts each of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in Anglo Irish Bank.

Under cross-examination, Mr Neary told Mr Gageby he was unaware of a "steady stream" of emails sent to three other senior officials at the regulator's from Shane Morrison in the Quinn Group.

The schedule of emails, dated from February 2008 and shown to the jury, detailed the extent of the CFD position built up by Mr Quinn and outlined his €2bn "gross exposure".

"Did you practise the art of not being told difficult things?" asked Mr Gageby, to laughter in the courtroom.


"I did not think there was an art form in not being told," the former regulator replied.

Mr Neary repeatedly denied any knowledge of Mr Quinn's secret CFD position before Good Friday in 2008 – despite a private and unplanned meeting with Mr Quinn two months earlier.

He said he was "not alarmed" when the businessman personally called to his office and told him he had CFDs in Anglo and Ryanair, and "took him at his word" it was a small stake that he planned to sell.

He told the court that Mr Quinn was free to invest in CFDs without being questioned by regulators.

"I had to believe what Mr Quinn told me, I had no other source (of information) at that time," Mr Neary said.

He also confirmed he attended a meeting of the Domestic Standing Group on February 22, 2008, with his number two Con Horan, the former Governor of the Central Bank John Hurley, and other high-ranking officials, whom Mr Gageby described as "the top echelons of Irish financial institutions".

Mr Neary said he had no knowledge of the CFD problem at the time, despite a memo of the meeting showing they discussed CFDs, how they would work out, and the effect it would have on the share process.

Mr Neary, who resigned from his position as financial regulator in January 2009 – the same month Anglo was nationalised – also told the court he could not remember any contact between himself and Anglo's former chief executive David Drumm following a meeting in September 2007 and July 2008 when a loan-for-shares deal was executed.

The case continues.

Irish Independent

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