'State knew about blatant breach of legislation'
THE Maple 10 deal should have been stopped, there was a blatant breach of legislation and the State knew all about it.
That was Judge Martin Nolan's take on the plan to unwind Sean Quinn's secret stake in the bank after the 47-day trial.
But he spared Pat Whelan and William McAteer jail while launching a scathing attack on the role of the then Financial Regulator – Patrick Neary and his number two Con Horan – for giving them "a green light" in July 2008.
"I find it incredible red lights didn't go off someplace 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."
The regulator expected dire consequences if the Quinn position was allowed to fester and Anglo became totally embroiled in it, he added.
The former bankers stood together in the dock at the Circuit Criminal Court in Dublin as the judge outlined the seriousness of the conviction.
Whelan (52) and McAteer (63) were found guilty of giving 10 illegal loans worth €450m to the bank's top clients to buy shares in the now nationalised lender, and cleared of six charges involving the Quinn family.
Their co-accused, Anglo's former chairman Sean FitzPatrick, was acquitted on all counts.
They are the first people in history to be prosecuted under the Companies Act since it was passed in 1963 – but walked free from court when the judge ordered probation reports to assess if the men are suitable for community service.
"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," Judge Nolan concluded.
The judge said it was feared in Anglo the bank would literally go under if the share price was not stabilised, and there was a fear among Anglo executives, and probably the financial regulator, this would have a disastrous affect the health of Ireland's banking system.
Outlining the facts put before him he said it was Sean Quinn's "investment strategy" that caused the problem for Anglo and that it was the bank's former chief executive David Drumm who had "instigated and authored" the Maple 10 loan for shares deal.
By not taking action, and not warning the bank, in March 2008 the regulator gave "a green light" to Anglo to lend money to buy its shares.
Anglo could have, and probably did, come to the conclusion that there was no legal bar to the bank lending for purposes of buying shares, he added.
"It seems the regulator didn't realise there was a breach of section 60 or choose to disregard it. I'm not sure which is the case," the judge said.
"I'm going to give the regulator the benefit of the doubt, but it appeared in March legal advice was not taken by the regulator in relation to this matter."
The judge said he was also surprised no warning was given by Robert Heron, then a senior partner in MOPs who Anglo had called in for legal advice.
The deal was not a victimless crime, the judge continued, as Anglo intruded on the marker and people who bought Anglo Irish shares around that time were misled.
They would have to be punished, nonetheless Whelan and McAteer did not deserve a prison sentence, concluded Judge Nolan.