Probe starts into Quinn's €288m loan
THE €288m loan believed to have part-financed a disastrous stock market gamble on behalf of Ireland's richest man is to come under further scrutiny from an Oireachtas Committee.
Sean Quinn's insurance firm was fined a record €3.25m by the Financial Regulator on Friday for releasing a loan to another Quinn company which was ultimately used for stock market investments.
The financial watchdog found Quinn Insurance in breach of the rules for failing to notify the Regulator of the loans, as required under the Insurance Acts. The loan is believed to have financed a range of investments, including the Quinn family's €715m stake in Anglo Irish Bank last summer, which has taken a massive hit as a result of turmoil in the financial markets.
The nature of the loan remained under wraps this weekend. However, in a sign of unease over the transaction, the Oireachtas Committee on Economic and Regulatory Affairs is to seek more details from the Financial Regulator this week.
Michael Moriarty, the chairman of the committee, said this weekend that there were issues to be examined.
"As chairman of the committee, I am reading through the decision of the Financial Regulator to fine Quinn Insurance €3.4m for breaching the insurance regulations and we will be inquiring further into it as a committee," he said.
The Regulator issued a statement on Friday saying that it had "reasonable cause to suspect that breaches of regulatory requirements occurred in relation to Quinn Insurance".
The billionaire founder of the Quinn Group, who also had to pay a personal €200,000 fine, resigned as chairman and director of Quinn Insurance.
The Quinn Group, which is owned by the Quinn family, has taken a massive hit as a result the stock market gamble. The company has had to write off €829m on its equity investments last year, leaving the group recording a pre-tax loss of €425m.
The Quinn family's stake in Anglo Irish is now worth just €210m, according to the bank's latest share price.
On Friday, Mr Quinn said he would pay the fines and move on. He also said he was disappointed with the decision he made in "overexposing ourselves to equities".
Labour Party Finance spokesperson Joan Burton called on Brian Lenihan to make a statement. "I think that this episode needs to be explained in detail, given that the Financial Regulator has certainly regulated with a very large hand. The fact that he has made this level of fine to the company and to the individual must indicate that the matter is very serious.
"Insurance companies are very close to banks in that they take large amounts of cash payments from people to buy insurance and they have to hold very large amounts of reserves in the event that insurance claims are called upon."