ANALYSIS:The affairs of the Quinn group are intimately tied up with and affected by the business affairs of the Quinn family, writes Colm Keena

THE CLOSENESS of the connection between the Government and Seán Quinn is illustrated by the weekend’s deliberations about placing restrictions on withdrawals from Anglo Irish Bank.

The Government is obviously concerned about the extent to which the State is now exposed by way of its involvement, through Anglo Irish Bank, with some of the wealthiest figures in Irish business

Quinn and his group are known to owe the bank more money than any other individual or group of companies and it can be assumed that Quinn and his group have very large sums on deposit with the bank. The amount involved must be very large indeed, no doubt in the hundreds of millions and possibly a billion or more.

The Government’s desire to place restrictions that would stop debtors reducing their deposit balances below the amounts owed to the bank is understandable given the sums involved. However, as of yesterday, it seemed counter-arguments may have prevailed.

Quinn Group (RoI) Ltd is the Quinn group company that owns the Quinn businesses best known to the general public. These include Quinn Healthcare, formerly Bupa, and Quinn Direct, the insurance company that introduced added competition into the car insurance sector.

It also owns building products companies, container glass manufacturing companies, a wind farm business, a plastics manufacturing division, a packaging division, and a radiator manufacturing division. It owns pubs and hotels both here and abroad.

At the end of 2007, according to the latest set of accounts of Quinn Group (RoI) Ltd, “related companies of the group are also active in the emerging real estate markets of the world, including the central and eastern European region and the Indian subcontinent. A number of high-profile construction projects in these regions are currently under way.”

The Quinn family made massive investments in Anglo Irish Bank during recent years, using “contracts for difference”. Such investments involved heavy borrowing and exacerbate losses if the share price falls. The Anglo share price plummetted.

The Quinn family then bought themselves out of the contracts by buying shares in the bank. Loans were advanced to the family, or family companies, by group companies, to assist them in this. Group loans totalling close to €1 billion have or will be written off as a result. The total amount lost by the family from the entire venture is not known. The family currently own 15 per cent of Anglo’s shares, though the shareholding may now be worthless.

When news of the write-offs was disclosed in October of last year, Seán Quinn said they would “not put undue financial strain on our business”. Earlier this month he said he very much regretted the investments but that his group “will comfortably generate cash profits of between €400 million and €500 million before exceptional items” in each of the years 2007, 2008 and 2009.

The group and the Minister for Finance have referred to the fact that it has net assets of €3.4 billion, and so, while it has suffered a huge blow, and is weathering a severe downturn in market conditions, it remains in a robust state.

However, as well as the Quinn group of companies, the Quinn family has a maze of related companies that also belong to it but do not belong to the group. These companies have been involved, in turn, in a huge range of very significant investments in property and other ventures over the past number of years. They have been making use of Anglo Irish Bank, just as the group companies have, and the net position of the Quinn family businesses, group and otherwise, is simply not known.

Furthermore, the nature and size of Quinn’s investment in Anglo by way of contracts for difference, creates valid reasons for being concerned about the level of risk he and his businesses, group or otherwise, may have exposed themselves to in recent years.

The risks that were taken on property ventures here and abroad, as well as on other matters, may prove profitable to Quinn and his family if they work out. If they don’t, they could prove costly for the Irish taxpayer.