Neary off the hook despite damning criticism by judge
* No penalty for watchdog chief now on €120k pension
* No jail for Anglo pair convicted over illegal loans
FORMER Financial Regulator Patrick Neary is unlikely to face any sanctions despite a judge's scathing criticism of his role in Anglo Irish Bank's loan-for-shares deal.
Judge Martin Nolan said Mr Neary and his second-in-command Con Horan "led" former Anglo directors Pat Whelan and William McAteer into "error and illegallity" by failing to stop Anglo's lending scheme in July 2008.
For this reason he said it would be "unjust" to send the two Anglo men to jail even though they were found guilty of a "blatant breach" of company law.
They walked free from court yesterday afternoon after an 11-week trial and will instead be assessed for community service. The case is due back before the Circuit Criminal Court in Dublin on July 31.
The now-retired Mr Neary, who is paid a public sector pension of €119,000 a year, will not face any legal or professional sanctions, although he was in charge of market abuse regulation in Ireland in 2008 when the so-called Maple 10 deal was executed.
Last night, Mr Neary told the Irish Independent he had "no comment" to make on the matter and refused to be drawn on his reaction to the judge's comments.
"Thanks very much lads for coming out. I have no comment," the former regulator said at his south Dublin home.
In his ruling yesterday, Judge Nolan said it was incredible the regulator did not seek advice from colleagues in other state agencies as to the legality of a loan-for-shares deal when "huge" lending to the Quinns was raised four months before the Maple 10 transactions.
"I find it incredible red lights didn't go off some place in the regulator's office and the appropriate legal advice was not sought," he said. "It seems Mr Horan and Mr Neary were more anxious to solve the problem than to comply with the technicalities of law.
"I think the regulator felt their overarching purpose was to save the bank and the banking system."
Judge Nolan said the attitude and behaviour of the Financial Regulator had complicated the issue of sentencing.
Mr Neary – who will be a key witness for the State in a forthcoming trial – was head of the regulatory authority at the height of the boom as banks, including Anglo, engaged in the reckless lending practices that contributed to Ireland's economic collapse. He was tasked with investigating market manipulation before he retired in January 2009.
The Office of the Director of Public Prosecutions (DPP) has confirmed that it will not bring any prosecutions over alleged market abuse, including any claims of insider dealing and market manipulation.
Whelan (52) of Malahide, Co Dublin, and McAteer (63) of Rathgar, south Dublin, were both convicted of giving illegal loans to the Maple 10 to buy shares in Anglo as its share price collapsed.
Anglo broke the law when it lent €450m to 10 developers to buy its own shares as it unwound a secret stake built up in the bank by businessman Sean Quinn.
The men – who were cleared of giving six illegal loans to the Quinn family – faced up to five years in jail and/or a €6,348 fine. But Judge Nolan ruled that Mr Neary and Mr Horan "gave a green light" to the bank by not stopping the transaction. They and solicitors failed to give explicit warnings to the bank that its scheme was illegal, he said.
"It would be most unjust to jail these two men when I feel that a state agency had led the two men into error and illegality," he ruled.
"It seems the regulator didn't realise there was a breach of section 60 or chose to disregard it. I'm not sure which is the case."
The judge said former Anglo chief executive David Drumm, who is living in the US where he works as a consultant, instigated and authored the Maple 10 deal.
Despite both having a "large" shareholding, Judge Nolan found there was no venal motive on the part of Whelan, Anglo's former head of lending in Ireland, or McAteer, the bank's then chief risk officer, for executing the loan deal.
But he noted "a genuine if misguided attempt to save their bank" was not a privilege to break the law.
The judge congratulated the senior officer in charge of the case, Superintendent Eamon Keogh, and his team on "this difficult and unusual investigation" which has spanned five years and an 11-week trial.
Interim garda commissioner Noirin O'Sullivan said last night that a review of the garda resources dedicated to tackling white-collar crime was under way.
The commissioner said the force was determined to combat the white-collar criminals and she was taking another look at the garda numbers deployed in that area.
She made the remarks at the annual conference of the rank and file Garda Representative Association in Killarney.
She described the Anglo Irish Bank inquiries as being part of a very complex and complicated investigation.
And she noted that during the trial yesterday Judge Nolan had recognised the "excellent professional work" of members of An Garda Siochana.