Anglo board told of significant Quinn interest in late 2007, trial hears

Wednesday 19 March 2014 12.26
Gary McGann was a non-executive director of Anglo Irish Bank in 2008
Gary McGann was a non-executive director of Anglo Irish Bank in 2008

A former non-executive director of Anglo Irish Bank has said he had conversations with the bank's former chairman, Seán FitzPatrick, about the bank's efforts to find Irish investors to buy shares in the bank.

Mr FitzPatrick and two former directors of the bank, Patrick Whelan and William McAteer, deny giving illegal loans to 16 people to buy shares in the bank.

Gary McGann was a non-executive director of Anglo Irish Bank in 2008.

He said the board of the bank was told in late 2007 about Seán Quinn's significant interest in the bank's shares through Contracts for Difference.

He said the board asked the bank's chief executive, David Drumm, to tell the Financial Regulator about the issue.

He said he was aware of the bank's efforts to unwind Mr Quinn's position and he said the Financial Regulator was also exercised about the issue and pressurising the bank's management to find a solution.

He said in late June 2008, there were three possible investors being pursued to buy shares in Anglo; a US investment group, Middle East sovereign funds and Rabobank.

But he said he became aware afterwards that this had become problematic because the bank's share price was continuing to fall.

He said he then became aware from conversations with Mr FitzPatrick that the focus was moving to "high net worth" Irish investors.

He said this was not formally discussed at board level.

Mr McGann was shown an email he had sent to Mr Drumm on 10 July 2008. In it, Mr McGann said he had been speaking to Seán on a couple of occasions on the plan's execution.

Mr McGann said Mr Drumm and his team were doing a fantastic job in very trying circumstances and he wanted to acknowledge that.

He also told Mr Drumm that they were all rooting for him.

Mr McGann also sent further emails to Mr Drumm on the same evening, urging him to have a "credible explanation" in place in the event that the "worst case scenario" happened and the transaction had to be disclosed in its entirety.

Mr McGann told the court he used the expression "worst case scenario" because total disclosure was always challenging in his view.

He said Mr FitzPatrick called him on 16 July to tell him the transaction had been completed.

He said to his recollection, nothing was mentioned in this conversation about lending to investors to buy shares in the bank.

Earlier, the former head of markets supervision at the Financial Regulator, Martin Moloney, said he only became aware that ten individuals, known as the Maple Ten, had bought some of the shares at a Regulatory Authority meeting in September 2008.

He said he did not know about the funding arrangements for the individuals.

He said he heard about Mr Quinn's CFD position for the first time at a board meeting in April 2008.

He said he was not surprised that he had only been informed in April even though people in the Regulator's office were aware before this, as there was no regulatory role in relation to CFDs and he had very specific obligations under an EU transparency directive.