ANGLO TRIAL: Quinn Group was "doing what they were told"

By Conor Gallagher

Mr Sean Quinn

The Quinn Group was “doing what they were told” by Anglo Irish Bank when unloading their 29 per cent control of the bank in July 2008.

The trial of three former Anglo executives accused of illegally loaning money to unwind the Quinn stake has heard from a senior Quinn Group official that Sean Quinn was forced to dispose of his stake.

Dara O’Reilly, who was Group Finance Director of the Quinn Group, told the court that the Cavan businessman was not happy with the plan as he believed the Anglo stock, which was falling rapidly at the time, could recover at some stage.

“I don’t think it was voluntary no,” Mr O’Reilly told prosecuting counsel Paul Anthony McDermott BL. “Quinn was doing what they were told to do.”

Mr Quinn, who was the richest man in the country at the time, built up the control of the bank in secret through Contracts for Difference (CFDs), which are investment tools that gamble on a share price rising or falling. The court heard these CFDs had the potential to impact the stability of the entire banking system.

Former Anglo Chairman Sean FitzPatrick and fellow ex-directors William McAteer and Pat Whelan, are accused of providing funding for the purchase of Anglo’s own shares in an effort to unwind the Quinn position in contravention of the 1963 Companies Act. 

The three men have been charged at Dublin Circuit Criminal Court with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank. The 16 individuals are six members of the Quinn family and the Maple Ten group of investors.

Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.

Mr FitzPatrick (65) of Greystones, Co Wicklow, Mr McAteer (63) of Rathgar, Dublin and Mr Whelan (51) of Malahide, Dublin have pleaded not guilty to all charges.

Mr O’Reilly told the jury that he was also the director of a Quinn subsidiary known as Bazzely. This was a company set up in 2005 for the sole purpose of trading in CFDs. Its function was to create a source of independent wealth for Mr Quinn’s children and the plan was they would ultimately take it over.

Mr O’Reilly said the company was based in Madeira, Portugal for “tax efficient reasons”. The witness said Bazzely operated under the direction of Mr Quinn and that the initial funding came from the Quinn Group.

In 2007 “that markets took a turn” and Bazzely had  put more money into the CFDs to maintain them. Mr O’Reilly said some of this money came from the Quinn Group and some came from closing CFD positions in other companies.

The witness said he was aware Anglo was lending the group money for this purpose. He said at the end of March 2008 Anglo and Quinn representatives met and pressure was put on Mr Quinn to reduce his CFD position.

This culminated in the Maple deal where ten wealthy individuals would buy 10% of the shares and six members of the Quinn family would take 15%.

Mr O’Reilly said it was his understanding that Anglo was loaning about €175 million to the Quinn family to buy the shares. These shares were then placed in a trust account called Morston.

The witness said the Quinns then took tax advice and the account was moved to Cyprus, also “for tax efficient reasons”.

 The trial also heard evidence from Colin Morgan who held a number of senior positions in Quinn Insurance. He was responsible for organising the press release sent out by the Quinn family after the CFDs were unwound.

Mr Morgan said it was his job to incorporate feedback into the press release from Anglo and Morgan Stanley, who had been recruited as advisors on the deal.

Judge Martin Nolan has sent the jury of seven men and seven women home until Monday to allow time for legal argument. The prosecution have only a handful of witness left to call in the case.