The Department of Finance and Central Bank conspired with Anglo Irish Bank in relation to its advancing over €2bn loans to Quinn companies for the unlawful purpose of propping up its share price, it was alleged at the Commercial Court.
That alleged conspiracy involved the department arranging for documents from Anglo to be “significantly amended” to disguise the extent of the department’s knowledge about what was happening in relation to the loans, the family claim.
Had the regulators done their duty and not encouraged Anglo’s actions, these illegal loans would not have been advanced, Anglo “would have gone to the wall” much more quickly and the Quinns would not be exposed to claims for €2.34bn, said Martin Hayden SC, for the Quinns.
He was applying for orders joining the department and Central Bank, in their capacity as regulators, as co-defendants with Anglo in the Quinns action denying liability for those loans.
Mr Hayden argued documents discovered showed officials in the department were aware from Oct 2007 of the difficulties being experienced by Anglo in dealing with the contract for difference positions built up by Seán Quinn in the bank.
Kieran Wallace, special liquidator of IBRC, form-erly Anglo, opposes the joinder application.
Paul Gallagher SC, for IBRC, said the Quinns were advancing new claims in this joinder application and it was not necessary for the regulators to be joined for the Quinns to advance their case against the bank.
In affidavits, Aoife Quinn claimed the department arranged for documents to be “significantly amended” to disguise the extent of its knowledge that Anglo unlawfully loaned vast sums to support its share price.
Ms Quinn alleged Anglo drafted loan facility letters in an incorrect and false manner to suggest monies were advanced for “working capital” when they were really to meet margin calls on the Quinn CFDs.
Chairman Donal O’Connor wrote to then finance minister Brian Lenihan on Feb 4, 2009, she said. A draft of that letter, dated Feb 3, 2009, had said: “As requested, I enclose a report on the extent of lending for the purposes of share acquisitions and contracts for difference generally and Anglo shares in particular”. This draft represented “a categorical acceptance on behalf of Anglo to having funded the purchase of its own shares”, she said.
The letter sent to the minister, dated Feb 4, read: “The total extent of lending by the bank for the purposes of acquiring publicly quoted shares is €1.777bn. We do not lend for the purpose of taking positions in contracts for difference. Of the total, €918.6m related to lending for the purpose of acquiring shares in Anglo.”
Ms Quinn said she believed such “a significant change in wording” in response to the minister’s request showed the department dictated the terms of the response to its request.
The hearing continues.
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