Judge’s excoriating critique of regulator gives trial a remarkable postscript

In 20 minutes they were free. That was how long it took Judge Martin Nolan to give the biggest white-collar trial ever held in this country an extraordinary postscript that will reverberate far beyond the criminal courts.

Former Anglo Irish Bank directors Willie McAteer and Pat Whelan stood in the dock, their hands clasped in front of them, the stress written on their faces.

But within a few minutes it was clear that the two prison officers who had taken up position near the dock would be leaving unaccompanied.

The end of the judge’s speech was greeted with a few handshakes before the large crowd filed out of the courtroom.

The reaction was in keeping with the mood of the day. Even Supt Eamon Keogh, the officer who led the huge and complex investigation, had struck an almost rueful tone in the morning as he outlined the work his team had done and his views of the two accused men.

This wasn’t a story about heroes and villains after all. Incompetence didn’t feature on the charge sheet; if we had laws against that the trial would have run on in perpetuity.

For 11 weeks the trial had posed searching and delicate questions for both sides about fairness and justice, about how we think of right and wrong and the shaded space in between.

While the jury was present, those conversations tended to be closed down. That meant that for the whole trial the backdrop – the big picture – seemed entirely absent.

For the trial to work everyone – the legal teams, the jurors, the media – had to buy into the idea that Project Maple took place in a vacuum, that Anglo was just another bank rather than an institution that brought the country to its knees.

Equally, the jury was told to disregard the accused men’s state of knowledge in July 2008. It didn’t matter to their innocence or guilt whether the bank’s directors thought Project Maple was legal or that the financial regulator had supported it. All of this was written out of the script.

Yesterday, however, these big questions were Judge Nolan’s theme.

He noted that Whelan and McAteer had been found guilty on 10 counts each. What Anglo did in July 2008 was a “blatant affront” to section 60 of the Companies Act which bans companies from lending for the purpose of buying its own shares, and the two men had “signally failed” in their obligations as directors. This wasn’t a victimless crime: people investing in Anglo could have been misled and lost their money.

But against that, the judge said, the two men’s motive was “not avarice or greed or the pursuit of profit”.

They acted to save their bank from an existential threat that was not of their own making.

They believed the transaction to unwind businessman Seán Quinn's stake in Anglo was legal, having been told that the bank had received positive legal advice and that one of the world's biggest financial institutions – the investment bank Morgan Stanley – was on board.

What was most remarkable about Judge Nolan’s speech, however, was his excoriating critique of the financial regulator’s office. “It would be most unjust to jail these two men when I feel that a State agency had led the two men into error and illegality,” he said. It’s a startling indictment.

The judge referred to the "limited recall" of Pat Neary, the man who ran the regulator, and said it was "incredible" that red lights didn't go off in the regulator's office – not least given that it knew that lending to investors had been part of Anglo's plan for the unwinding for months before it actually went through.

Anyone in court for the evidence of the witnesses from the regulator’s office would have been left with the impression of an outfit that seemed at best extraordinarily deferential to the powerful men who controlled the institutions it was supposed to be supervising.

But Judge Nolan went much further than that. The regulator’s “over-arching concern” was to save the bank and save the system, but by not warning Anglo it in effect gave the green light to an illegal scheme. It echoed a line that ran through the defence cases during the trial: here was one arm of the State prosecuting individuals for doing something that another arm of the State had encouraged them to do.

That didn’t absolve them of guilt, but it was enough to keep them out of jail.