Quinn Insurance's former general manager, Kevin Lunney, told an inquiry on Thursday he was not informed in 2005 that company subsidiaries would be used to guarantee loans to its ultimate parent, Quinn Group, and threaten the insurer's financial position.
Mr Lunney, who stepped down as general manager of Quinn Insurance in early October 2005 but remained a director as he took on a role with the wider Quinn Group, is one of two men under investigation for allegedly being involved in Quinn Insurance subsidiaries providing guarantees against €1.2 billion of group loans between October 2005 and April 2007.
The guarantees undermined the ability of Quinn Insurance to rely on the subsidiary assets to form part of a reserve of money set aside to meet insurance claims, if necessary. Quinn Insurance fell into administration in March 2010 after a hole was discovered on its balance sheet, and was taken over a year later by Boston-based Liberty Mutual Group.
Mr Lunney, the last person to give testimony in seven days of public hearings by the inquiry, said he had “no knowledge” as general manager that the guarantees were being offered in the months leading up to the initial refinancing in October 2005.
He was named as being party to a Quinn Insurance board meeting that month that would commit to the guarantees. The minutes of the meeting were signed by then Quinn Group chief executive and Quinn Insurance director, Liam McCaffrey, the second person subject to the inquiry.
Mr McCaffrey gave evidence on Wednesday that he had no recollection of signing the minutes. The inquiry heard no evidence that the meeting took place.
Separate meeting
Mr Lunney acknowledged that he signed the minutes of a separate Quinn Insurance meeting in 2006 that he is recorded as having attended, which committed subsidiaries to guaranteeing Quinn Group loans. However, he said he does not recall signing the minutes. It is also “unlikely” that such a board meeting took place, he said in response to questions from Eoin McCullough SC of the legal team assisting the inquiry.
Asked by chairman of the inquiry panel Mr Justice Iarfhlaith O'Neill, a retired High Court judge, if he read notes in accounts of Quinn Insurance subsidiaries that referenced the guarantees, Mr Lunney said the references "did not spark my attention". Mr Lunney was a director of four of the eight relevant subsidiaries during the period under investigation.
Mr Lunney said that "a lot of people took significant comfort" in the fact that both Quinn Insurance and four subsidiaries subject to the guarantee were audited by PwC, which raised no issues.
PwC Ireland audit partner Kevin Egan told the inquiry last week that his firm was aware of the guarantees from the notes of the four subsidiaries that referred to the pledges as contingent liabilities.
However, Mr Egan said PwC was not aware of the existence, or effect, of the guarantees on Quinn Insurance when carrying out separate audits of the insurance company.
The inquiry is due to receive oral submissions from the legal team helping the investigation on June 24th, to be followed by replies from Mr Lunney and Mr McCaffrey on July 11th. It is expected that oral submissions from various parties will follow on July 15th.
