Day 12: Anglo Irish Bank Trial

Thursday 20 February 2014 16.15
The three men deny the charge
The three men deny the charge

Key Points:

- Day 12 of the Anglo Irish Bank trial at Dublin Circuit Criminal Court

- Former chairman Seán FitzPatrick and former executives Patrick Whelan and William McAteer have pleaded not guilty to providing unlawful financial assistance to 16 people to buy shares in the bank

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

15.30 The trial has ended early today after a juror had to go home because of a personal issue.

In the proceedings that followed the lunch break, Matt Moran gave evidence regarding what was described at the time as "huge pressure" being exerted by the Financial Regulator in relation to the Quinn family's take up of the Maple Transaction.

The jury has heard that unwinding of the Quinn CFD shares would involved the bank lending money to the Maple Ten borrowers and six members of the Quinn family in order to allow them to buy Anglo shares, turning the CFDs into actual shares.

Mr Moran said he understood that it was agreed with the Regulator that the borrowings would be deducted from the banks own funds, its capital base, until they were refinanced.

He said this was definitely a "penal provision" which could be removed once refinancing was done.

In an email sent from Mr Moran to Pat Whelan on Wednesday 23 July, Mr Moran wrote: "Pat I called LM (Liam McCaffrey from Quinn Group) today after chatting with MOS (Michael O'Sullivan from Anglo) to let him know FR (Financial Regulator) putting us under huge pressure. Said they are threatening to treat most recent increase in lending (to allow facility to go long c.170m) in a very penal manner and that it may have disclosure implications."

On 25 July,  Mr Horan wrote back to Mr Moran. In reference to a loan of €169m to finance Mr Quinn's holding in Anglo shares Mr Horan wrote “as discussed the FR considers it appropriate that Anglo take a deduction from Total Own Funds”.

Mr Moran said that the banking rules meant that total borrowing had to be kept at a certain percentage of the bank's capital.

Mr Moran told the court: "An important matter was having it sorted by 30 September because  that's the banks' year end – so the capital was refinanced before you release your results."

He said he wanted the capital to be at the highest at the end of September when the bank released its results.

The court heard that the refinancing of the Quinn Group, which was proposed to come from Credit Suisse and Lehman Brothers, never happened.

13.20 Before breaking for lunch the jury was shown an email sent from Mr Moran to Con Horan, who was with the Financial Regulator, on 31 March 2008, regarding attempts to unwind the CFD holding by the Quinn Group and a Memorandum Of Agreement in connection with this.

The email states: "Con, I have just forwarded to you a copy of agreement. I would also like to request confirmation from you, if so required by the Financial Regulator, approval that the shareholdings to be held by entities each owned separately by Mr Seán Quinn's children, be an Approved Person if deemed to be acting in concert only from a regulatory perspective."

An email sent the next day to Mr Horan states that additional lending will be made available by the Quinn family to fund them going long or buying the shares that were linked to the large CFD position.

The email states that the lending "will be very short term in nature and will be collateralised by the assets of the Quinn Group".

Mr Moran testified that this email followed a conversation he had with Mr Horan who asked him about the potential lending to Seán Quinn in order to purchase the shares.

He said he referred the conversation to David Drumm and Mr Drumm instructed him to write back to Mr Horan and "say in effect, if the bank did lend, it would be short term and bridging in nature."

The jury is back at 2pm. 

12.15 Day 12 of the Anglo trial and the cross-examination has begun of Matt Moran, Anglo's Chief Financial Officer in 2008.

Mr Moran began by telling Brendan Grehan SC, defending Pat Whelan, that it is possible he may have to give evidence in what Mr Grehan described as "other matters in the pipeline".

The trial has previously heard that Mr Moran has been granted immunity by the DPP for the purpose of this trial and in respect of other matters for which prosecutions may arise.

The jury have been shown an email sent from David Drumm to Mr Moran on 19 March 2008 in which the former CEO wrote: "If we had the approval of the regulator would there be any legal issue (company law) with lending against our own shares.

"As I understand it, we have an out under section 60 if it is in the "ordinary course of business". In our case that means lending. Let's look at this option tomorrow."