Sunday 25 February 2018

Regulator could plausibly deny it was part of shares deal, court told

Matt Moran
Matt Moran
Sarah Stack

Sarah Stack

The Financial Regulator would be able to plausibly deny being part of a loan-for-shares deal between Anglo Irish Bank and Sean Quinn by not appearing "above the water line", it has been claimed in court.

Matt Moran, Anglo's former chief financial officer, said the regulator did not approve the plan in March 2008, but did not object to it either and had requested to be removed from a draft agreement drawn up between the parties.

He told the trial of three executives the regulator's office was putting "extreme pressure" on the bank to finalise an agreement to unwind Mr Quinn's 29pc stock built up through contracts for difference.

Under cross-examination at Dublin Circuit Criminal Court, Michael O'Higgins, senior counsel for Sean FitzPatrick, asked Mr Moran: "Is there a touch of 'Yes Minister' going on here?", referring to the British 1980s comedy programme.

"I think it's difficult for me to comment on such a remark," Mr Moran replied.

"Have you ever heard the phrase plausible deniability?" Mr O'Higgins said, asking would that mean "being involved in something, controlling it" in some shape or form, but "not appearing to be above the water line" so if questions were later asked it could be said in a plausible way you were not involved.

"That's a good description," Mr Moran said.

"Am I right in suggesting that's a flavour of what was happening here?" asked Mr O'Higgins. "That appeared to be the case," Mr Moran replied.

Sean FitzPatrick (65), from Greystones, Co Wicklow; Patrick Whelan (51), of Malahide, Co Dublin; and William McAteer (63), of Rathgar in Dublin, have pleaded not guilty to 16 charges of unlawfully providing financial assistance to individuals for the purpose of buying shares in Anglo Irish Bank in 2008.

Mr Whelan has also denied seven charges of being privy to the fraudulent alteration of a loan facility letter.

Mr Moran – who was granted immunity from prosecution to give evidence at the trial – said the regulator "was more fulsomely engaged" with the bank to reduce Quinn's position after the "St Patrick's Day massacre" when Anglo share prices plummeted.

Anglo had planned to lend millions of euro to the members of the Quinn family to buy a portion of the Anglo shares from hedge funds, and sell the remaining stock to institutional investors, the court heard.


Mr Moran said there was" huge disappointment expressed" by the regulator when that plan fell through in April 2008 when an investor could not be found.

He said he heard Mr McAteer call Con Horan from the regulator's office to say the bank could not ignore the advice of Morgan Stanley that the market was too fragile to look for investors.

Another plan for the now-collapsed Lehman Brothers bank helping Mr Quinn unwind his control of the bank by financing the purchase of the shares also fell through.

In July 2008, Anglo lent six members of the Quinn family and 10 customers – who became known as a Maple 10 – some €650m to buy the stake.

Mr Moran told the court he contacted Morgan Stanley in January 2008 for advice on how to unwind the Quinn position, and he later learned the financial firm was also one of the counter parties with cfds (contract for difference).

He agreed that the week the Maple 10 deal was executed the financial advisers had specialist staff in "double digits" working out how to do things "professionally, discreetly and lawfully". Mr Moran said if Mr Quinn's position had been unwound in a disorderly way, it could have had a calamitous effect on the whole financial system.

"I think the last roll of the dice or last-chance saloon would be a fair summation of where we were at that stage," Mr Moran said under cross-examination from Patrick Gageby, senior counsel for Mr McAteer.

The trial has been adjourned until Tuesday.

Irish Independent

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