The Commercial Court has been hearing about the background to a claim by Seán Quinn's wife and five children that the former Anglo Irish Bank lent them more than €2 billion for the illegal purpose of propping up its own share price.
The court has to decide whether or not Patricia Quinn and the Quinns' five adult children have the legal standing to argue that the bank breached Market Abuse Regulations and company legislation.
Senior Counsel Brian O'Moore outlined how in 2007, Seán Quinn began to invest in Contract for Difference positions in Anglo Irish Bank shares.
This built up until a company incorporated to conduct these investments - Bazzely Limited - had an interest around a quarter of Anglo's entire issued share capital.
He said Patricia Quinn and the five Quinn children were not aware that this was being done.
He said David Drumm and Sean FitzPatrick became aware of the Quinns' interest in the bank at a meeting on 11 September, 2007 at a hotel in Navan.
He said within days of that meeting a system was set up where there would be regular contact between Anglo executives and Quinn executives about the CFD position.
The Anglo share price continued, in general, to decline, during this period, the court heard. And therefore the Quinn companies had to keep paying out money to sustain their CFD position.
The Quinns say the bank was aware of this and was afraid that the consequences for the bank would be "catastrophic" if the Quinns tried to get rid of their interest.
They say the bank then advanced huge sums of money to them in order to maintain the Quinns' CFD positions and the share price of the bank.
Lawyers for the Quinns say Anglo advanced millions of euro to Quinn companies, knowing that the money would be used to pay "margin calls" on the CFD positions.
These funds were described in some cases as funds for property acquisitions.
The Quinns say the bank took illegal actions on a persistent and ongoing basis.
Lawyers for the Quinns say there were discussions in December 2007 between Séan Quinn Senior and David Drumm about a fall in the Anglo share price and difficulties faced by the Quinn group.
The court heard that Séan Quinn indicated that they would need €400m to pay money back to Quinn companies that had been used to pay for the CFDs.
The court heard Mr Drumm was told by Séan Quinn senior that this would ensure that the annual accounts would not draw attention to the fact that these CFD positions were held by Mr Quinn.
The court heard that Mr Drumm offered Mr Quinn €500m and said the extra €100m could be used to "tidy up matters".
Mr O'Moore said the bank was fully aware of what the money was being used for.
The €500m loan was then given in the entirely false guise, the court was told of "gearing up the property portfolio of the Quinn Finance group".
During 2008, the court heard, the Anglo share price did not stabilise. And Bazzely faced frequent "margin calls".
The Quinns claim Anglo effectively controlled and managed the CFDs. They say Anglo "ran the show" because it was "paying for the show" and "keeping the show on the road".
Court told of 'unforgettable developments'
The court was told that during four days in March 2008, there were "unforgettable developments".
The Anglo share price dropped by almost €2 between the March 14 and March 17.
The court heard enormous amounts of money flowed between the bank and Quinn companies.
Around €350m was made available by the bank between March 14 and 19 to pay money owing on the CFDs because of the drop in the share price.
Because one tranche of money had to be paid on March 17 which was a bank holiday here, money had to be drawn down from an Anglo branch in the UK and made available to a Quinn company in the UK.
Lawyers for the Quinns said this showed the bank's "wild willingness" to meet the margin calls to maintain its share price.
Mr O'Moore said no one in Anglo appeared to have stood back and said why are we shovelling all this money into our own share price.
He said the scale of the payments, their purpose and the knowledge that all this was going on makes it an egregious and deliberate breach of Market abuse regulations and company legislation.
In early March- late April 2008, Quinn's Northern Ireland company was coming under pressure from bondholders and other financial institutions to repay loans.
There was a fear that the Quinn interest in Anglo would be revealed, the court heard.
Anglo advanced €200m to Quinn Finance to prevent this from happening.
But a precondition of this loan was that the Quinn children had to provide share pledges in relation to their shareholding in the Quinn holding company based in the Republic.
7 comments:
Will be interesting to see how the media pick this up this evening. David Murphy lying that the ROI bankruptcy versus the Northern bankruptcy would financially benefit the taxpayer a couple of weeks ago doesn't bode well for RTE's coverage.
No doubt we'll be told that the loans were for Quinn Group's benefit, not Anglo's and we'll all be crying into our cup-a-soups for poor David Drumm and Anglo that they were duped into providing them. Sickening
Let the truth come out. let them be shown as the crooks they are
Anglo - rotten to the core!! They were propping up their own share prices. Rediculous. And only in this country would a rotten bank be able to ruin a good man's name and hide behind its government's shirttails while doing it.
If Anglo controlled the shares, and decided to prop them up, how in the name of God can the Quinns be responsible for Anglo's actions? Gonna enjoy Anglo's answers to that. Have a feeling the media and biased journalists are now going to have to report the Quinn side, instead of just regurgitating what Anglo and the Government tell them to print. Roll on the carnival
What have our elected representatives to say about the fact that Anglo was managing the Quinn account?
What has to happen before this Government intervenes to end this farce? They were quick to interfere in the Ukraine Quinn properties but are happy to facilitate Anglo misappropriating billions of euros of our money.
So much for Anglo's PR that they were investing in Russia and the Ukraine, it was all for bloody share support. €2.3 billion to prop up their defunct bank, at the expense of the Quinns. This is getting better and better, cant wait for the Quinns to take the stand, will be better than an episode of Dallas. Where have our investigative journalists been for the last 10 months, being lazy, sittng at their desks, printing everything Anglo,or their PR told them thats where. Irish media should be ashamed, why didnt they ask the very basic questions ?
It seems clear now that there can be little doubt that Anglo were involved in market manipulation. As more and more information finally makes it through to the main stream media regarding these loans it would become obvious to even the most blinkered Sean Quinn detractor that Anglo were using these loans not for the benefit of the Quinn group but for the benefit of Anglos share prices. On that basis there was a clear breach of Market Abuse regulations and therefore Mr Justice Peter Charlton should be left with an easy decision regarding the legal standings of the Quinns cases. It would seem impossible that he would be able to reach a decision against the Quinns in this matter unless the control of Anglo has indeed reached farther than just its political allies!!
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