Neary did not ask Quinn about Anglo stake

Thursday 13 March 2014 21.51
Patrick Neary was 'worried' about Seán Quinn's CFD holding in Anglo Irish Bank shares
Patrick Neary was 'worried' about Seán Quinn's CFD holding in Anglo Irish Bank shares

The former chief executive of the Financial Services Regulatory Authority has said he did not ask Seán Quinn about the extent of the position he had built up in Anglo Irish Bank because it was not appropriate to ask a private citizen about their investment portfolio.

Patrick Neary was giving evidence at the trial of Anglo's former chairman, Seán FitzPatrick, and two former directors of the bank, Pat Whelan and William McAteer, who deny giving illegal loans to 16 people to buy shares in the bank.

Mr Neary said the first he knew of Mr Quinn's stake of almost 30% in Anglo Irish Bank through Contracts for Difference was on 21 March 2008.

He said the bank's former chief executive David Drumm came to see him in autumn 2007.

He said he now understood that Mr Drumm was aware when he came to see him that he knew Mr Quinn had a significant stake in the bank but he said Mr Drumm did not declare it to him.

Lawyers for Mr Whelan put it to him that there was evidence the board of Anglo had directed Mr Drumm to inform the regulator as soon as Mr Quinn's position became clear in September 2007. 

Mr Neary said Mr Drumm did not tell him the level of the position.

He agreed there were no notes of the meeting.

Mr Neary was asked if he asked Mr Quinn the extent of his CFD position when he met him in January 2008.

Mr Neary said he did not ask him directly as Mr Quinn was entitled, as a private citizen, to have any investments he wished.  

He said he did not think it would be appropriate to tackle a person about their own investment portfolio.

Mr Neary said he did not remember a meeting at the end of February 2008 with Mr Quinn on his own.

It was put to him that Mr Quinn spoke about himself in the third person and said: "Seán Quinn needed to be reined in and had been greedy in relation to his involvement in CFDs."

Mr Neary said Mr Quinn was quite a character so he would not be surprised if he said something like that but it did not ring any bell with him.

Mr Neary said the first he knew about details of the transaction in July 2008 to unwind Mr Quinn's holding in Anglo was at a meeting of the Regulatory Authority on July 23 2008, nine days after the transaction took place.

He said his colleague Con Horan went through the deal in detail.

He said the authority was told lending had been provided to the Quinns for the deal but that it was to be refinanced within two weeks.

He said nothing else was mentioned about lending that he remembers.

He said Mr Horan did not mention the possibility of any other lending.

He said he could not recall with any clarity a particular date on which he became aware of the transaction.

Senior Counsel Brendan Grehan for Mr Whelan said some might find it strange that Mr Neary had no recollection of a Eureka moment, given that this was such a huge problem.

Mr Neary said the regulatory authority was relieved but his eureka moment came at the 23 July meeting.

He said he had no notes or records of any conversations with Con Horan in the run up to the meeting.

He said he did not know if a file had been kept at the Financial Regulator's office about the whole Quinn CFD issue.

He agreed there was no record whatsoever of what he was told at any stage by Con Horan.

Lawyers for Seán FitzPatrick asked Mr Neary if it was possible he was terribly confused about a lot of things in this case.

Mr Neary said he hoped he did not give that impression, but he was not as directly involved in the issue as his colleague, Mr Horan.

Michael O'Higgins asked him if it was possible he was confused about his recollection of a meeting with Mr Drumm on 12 September 2008.

Mr Horan has given evidence that Mr Drumm did not tell him the scale of Mr Quinn's CFD position at this meeting.

Mr Neary said it was a very low-key special meeting.

He said Mr Drumm had asked him to meet privately and that it was a meeting of a personal nature.

He said he had no idea beforehand what it was about.

It could have been problems at home.

Mr O'Higgins asked him if he thought it could possibly have been about finance.

Mr Neary said he did not take a note of the meeting.

Mr Neary said he did not ask Mr Quinn about his CFD position at a meeting in February to discuss regulatory breaches at Quinn Insurance.

He said Seán Quinn was the chairman of Quinn Insurance and if there was a threat to a regulated entity or financial system would have felt it was up to him to disclose it to Mr Neary.

He said CFDs were a secondary issue.

The regulator's main focus was restoring the position of Quinn Insurance.

Mr O'Higgins put it to Mr Neary that Anglo was being leaned on to facilitate Quinn's continued existence until his gambling problem could be resolved.

He put it to him that this was the regulator's approach - it pushed the Anglo deal right through the system to get the problem solved - but once the problem was solved, he distanced himself from it.

Mr Neary said he was not distancing himself but would not disagree with Mr O'Higgins' outline.

He said the Authority wanted the problem resolved.

Mr Neary is due to be cross examined by lawyers for William McAteer next.

The case will resume on Tuesday afternoon.