Monday 22 January 2018

Oil holding used to limit family liability

Emmet Oliver

Sean FitzPatrick and Lar Bradshaw, both former directors of Anglo Irish, took out a loan from the bank in June 2005 to purchase a stake in a company which owned the Ekeh oil field in Nigeria.

The field, off the coast of the African country, is owned by a company called Movido Exploration and Mr Bradshaw and Mr FitzPatrick took a share in this venture. Like most exploration projects it has taken several years to bring the field into production.

In January 2009, after he had left the bank, Mr FitzPatrick was dealing with major debt problems after taking loans from Anglo and other lenders to finance a series of investments.

His adviser, accountant Bernard Somers, wrote to the bank in January 2009 to discuss the outstanding loan for the Nigerian investment worth about $40.5m (€30m).

Mr Somers said Mr FitzPatrick was confident this investment would be successful and proposed that Anglo take over the investment and any profits.

Normally a bank only gets repaid the value of the loan, not the additional benefit of the profit share-out or the ownership of the entire investment. The bank agreed to this because it said its security over the loan had been "enhanced''.

In exchange for this, the bank agreed Mr FitzPatrick's wife and children would only be liable for the worth of their properties -- not for the total amount borrowed on them.

Legal papers filed by Anglo state that on February 4, 2009, the bank "did limit its recourse as against the family" and in return Anglo's security over the Nigerian field was "enhanced''. Essentially the bank reduced its ability to recover from the family loans in exchange for a greater share of the Nigerian oil investment.

Scrutinised

It is this transaction that is now being scrutinised by the High Court.

It has also emerged that a deposit owned by Mr FitzPatrick was moved during 2008. It was used as collateral to back up the FitzPatrick family loans.

However, it is understood that the FitzPatrick family loans were paid down significantly after the family sold properties in London and also shareholdings in Irish companies.

Irish Independent

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