Quinn says he did no wrong in Anglo share deal. For the moment, I am sceptical
Speculation commencing in last Sunday's newspapers concerning a possible share support scheme to prop up the share price of Anglo Irish Bank placed intense pressure on Sean Quinn.
He is famous for his privacy. Clearly feeling the pressure, he broke his silence yesterday, in a rare interview with RTE's Tommie Gorman.
Three events have led to this -- the Quinn family's huge investment in Anglo Irish Bank, the large fine by the Financial Regulator last October, and now speculation concerning a possible secret share support scheme.
Sean Quinn and his family built up 'contracts for difference' for 25pc of the shares in Anglo Irish Bank. During last summer, these contracts for difference (CDFs) were unwound and converted into a 15pc shareholding in the Bank.
That left the remaining 10pc to be sold off. Disposing of such a large shareholding could have led to further falls in the Anglo Irish share price. To stop this happening, it is now alleged that a group of businessmen were assembled by Anglo's chairman Sean Fitzpatrick to secretly buy the shares with funding from the bank.
Shareholdings of 3pc or more must be disclosed to the stock exchange. To keep the share purchases hidden, no one purchased over this threshold.
Share support schemes of this nature are not unknown. Four convictions were obtained in 1995 in respect of illegal share price-fixing that helped Guinness succeed in its takeover of Irish Distillers. Convictions were also obtained in the London and County Securities case involving directors and managers buying shares in the bank using loans from the bank. This was contrary to legal requirements that loans be "in the ordinary course of business".
Then in October 2008, the Financial Regulator fined the Quinn Group €3.25m and Mr Quinn personally €200,000 for breaching regulations in failing to notify the Regulator of a €288m loan from the Quinn Group to Mr Quinn and his family.
In fairness to Mr Quinn, he accepted complete and personal responsibility for the breach, and he resigned as chairman of the Quinn Group. However, he was somewhat churlish in relation to what he considered to be the excessive levels of the fine, stating that there was no risk to policy holders or the taxpayer. Yesterday, using language I found hard to make sense of, Mr Quinn referred to this as "a breach" not an "an impropriety".
Yesterday, Mr Quinn denied any of his activities were wrong -- "I tell you one thing, there was no impropriety in anything we've done in that bank or anybody in any other bank."
Time will tell but for the moment I remain sceptical. My experience is that when corporate misdemeanours come to light, the standard catchphrase of those involved is "I didn't do anything wrong".
Niamh Brennan is Michael MacCormac Professor of Management and Academic Director of the Centre for Corporate Governance at University College Dublin