Former Anglo executive says Maple Ten loan letters 'very unusual'

Tuesday 11 February 2014 21.42
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Sean FitzPatrick, Pat Whelan and Willie McAteer are on trail at the Dublin Circuit Criminal Court
Sean FitzPatrick, Pat Whelan and Willie McAteer are on trail at the Dublin Circuit Criminal Court
Seán Quinn Jnr gave evidence for a second day
Seán Quinn Jnr gave evidence for a second day

A former Anglo Irish Bank executive has told the Dublin Circuit Criminal Court that the preparation of identical loan facility letters for the so-called Maple Ten in July 2008 was "very unusual" and "never happened before or since at the bank".

The trial has continued for a fifth day at the Dublin Circuit Criminal Court of the former chairman of Anglo Irish Bank and two former Anglo executives charged with providing unlawful financial assistance to 16 people to buy shares in the bank.

Seán FitzPatrick, 65, from Greystones in Co Wicklow, 51-year-old Patrick Whelan of Malahide in Dublin and 63-year-old William McAteer of Rathgar in Dublin have pleaded not guilty to the charges.

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

A former Anglo Irish Bank executive today told the Court that the preparation of identical loan facility letters for the so-called Maple Ten in July 2008 was very unusual.

Former Associate Director of lending Lorcan McCluskey was giving evidence about loans to ten developers and businessmen to buy shares in Anglo Irish Bank.

Mr McCluskey said the preparation of identical loan facility letters for the so-called Maple Ten was very unusual and never happened before or since at the bank.

He told the trial he was called to Mr Whelan's office in July 2008 and told to prepare the letters. The Maple Ten loans gave hundreds of millions of euro to investors to buy Anglo shares – those loans are now the subject of the criminal trial.

Mr McCluskey also told the trial he later refused to sign a letter altering the terms of the loans as he believed it weakened the bank's position.

He said he voiced his discomfort about it because it effectively meant the loans would be non-recourse.

That instruction came in October but the letters were dated 17 July.

Mr McCluskey said they were signed by his superior Michael O’Sullivan and Pat Whelan but he kept the original instruction as proof that it was not his or Mr O’Sullivan's creation.

After a high level review, the change to the terms was later rectified in another letter the following January.

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

Anglo Irish Bank Trial: Day Five

Maple Ten pair give evidence on loans

Two of the so-called Maple Ten told the trial they were told the Financial Regulator and the Central Bank were aware of loans now at the centre of criminal charges.

Developers Sean Reilly and Joe O'Reilly gave evidence about loans taken out to buy shares in Anglo Irish Bank in July 2008.

Mr Reilly gave evidence about a €45 million loan taken out to buy shares in Anglo Irish Bank in July 2008.

He had been a customer of the bank for many years and decided to take up the offer because he felt the bank wanted him to and he saw it as an opportunity to make money.

He was told the offer was part of a scheme to unwind a share position held in the bank but was not told it was Seán Quinn's stake.

At meetings with David Drumm and Pat Whelan, he was told the bank had taken legal advice about the loan from Matheson Ormsby Prentice and that the Financial Regulator, the Central Bank "and everybody" was aware of it and wanted it done.

Mr Reilly was told Morgan Stanley would carry out the transaction to buy the shares.

He was told there would be personal liability for 25% of the loan. 

Mr Reilly said there was nothing unusual in a loan being offered with 25% recourse or personal liability.

He said the terms of loans at the time ranged from no recourse to 30% for investment loans and Anglo was particularly "sticky" about enforcing such recourse, more so than other banks.

He agreed that in 2008 he would have been considered a wealthy man and could negotiate terms of loan agreements.

He said at one stage after taking out a loan to buy Anglo shares he was up by €7m.

However, he later lost €2.5m on the shares when the bank was nationalised.

He was also questioned about a loan facility letter sent after the original loan agreement in July 2008, which appeared to change the terms to no recourse.

He agreed that he had subsequently received a letter in January 2009 to correct that letter and restore the terms of the loan to 25% recourse.

Loan proposal made at meeting in Portugal

Mr O'Reilly said Mr Whelan and Mr Drumm travelled to Portugal to make the same proposal to him over a lunch meeting.

They said a major shareholding had to be unwound as it was causing turbulence in the markets and driving down the share price.

He immediately agreed to buy the shares and said he was told they had legal advice, the Financial Regulator was on board along with the Department of Finance.

Mr O’Reilly said he had no qualms about the legality of the loan to buy Anglo shares.

He said he believed the bank had "as good a team as you could get" in terms of reputable legal advice and the company carrying out the transaction, Morgan Stanley.

The developer said he trusted the bank and took comfort from the fact they said they had sought legal advice from Matheson Ormsby Prentice and had Morgan Stanley engaged for the transaction and the fact that the Financial Regulator was on board.

During cross-examination, he said he got the impression another body was aware and he believed that to be the Department of Finance but he said he "could have got that wrong" and it could have been the Central Bank.

Seán Quinn Jnr completes his evidence

Earlier, Seán Quinn Jnr continued his evidence about how loans were taken out in his name to buy shares in Anglo as part of a plan to unwind the position held by his father through high-risk Contracts for Difference.

Mr Quinn Jnr said his family were of the view that the loans were illegal and the security obtained and enforced by the bank was obtained in a fraudulent and illegal manner and should not be enforced.

His sister Colette Quinn said she had absolutely no awareness about the purpose of the loans at the time.

She said she was told by her solicitors a couple of years later that she had taken out a loan to buy shares.

She said she would have signed documents given to her to sign at the time but was not aware of the purpose.

The documents would have been given to her to sign by staff at Quinn companies.

She never met anyone from Anglo Irish Bank nor did she discuss anything.