ANALYSIS:Senior figures in Irish business may have been involved in an exercise that shored up the share price of Anglo Irish Bank, writes COLM KEENA.
THE INFORMATION seeping into the public domain concerning Seán Quinn and Anglo Irish Bank has the potential to cause yet more damage to the reputation of Irish banking and business culture generally.
The owner of the State’s largest privately owned business was betting enormous sums on the share price of the State’s third biggest bank and using a method (contracts for difference) that meant the markets had no entitlement to know what he was up to.
Then, when the financial regulator somehow got wind of the size of Seán Quinn’s involvement in Anglo Irish Bank, the position was unwound in such a way that something in the region of 10 per cent of the bank’s shares changed hands without going on to the market.
Key questions arise from that fact. Who managed this process? To what extent, if any, did Anglo Irish Bank fund the purchasing of the shares by the persons who ended up owning them?
If the bank loaned the money to the purchasers, then did it know the background to the transactions?
Did the bank knowingly give money to business figures who were seeking to shore up the bank’s share price?
Was the market for the bank’s shares being manipulated with the aid of the bank’s money?
As matters stand, it is not unreasonable to suspect that this happened, particularly because of Anglo’s reputation for getting deeply involved in the affairs of those it was lending money to.
Seán Quinn has said very little about the whole affair, other than that he regrets his investment – which is obvious – and can handle the loss. Yesterday his spokesman had no comment to make.
It seems untenable that the public, and the thousands of staff in Mr Quinn’s business empire, should continue to be kept in the dark in this way.
Quinn’s best known companies, including Quinn Healthcare, Quinn Direct and his quarry and concrete businesses, are owned by way of a holding company called Quinn Direct (RoI) Ltd.
On July 9th last year, Anglo Irish Bank took out a charge on preference shares in the holding company that would have given the bank control of the group’s board in the event of default. The preference shares were redeemed on July 28th, which effectively redeemed the charge.
Presumably the charge was created and undone when the bank was advancing a very large sum to the group. At the time the group was advancing funds to the Quinn family to allow it buy its way out of the contracts for difference it had in the Anglo shares.
Quinn had contracts for up to 25 per cent of the bank’s shareholding. He may have had to buy all of this shareholding before selling the 10 per cent stake on, and keeping his 15 per cent stake.
A question now arises as to whether the charge over his business related to some sort of bridging finance from Anglo as he sought buyers for the other 10 per cent?
The Quinn group has written off approximately €1 billion arising from the whole affair and Quinn and his group remain Anglo’s largest debtor.
The bank is now of course owned by the State. The financial regulator has known about Quinn’s involvement in Anglo since early to mid-2008, when pressure was put on him to reduce his involvement and declare his ownership.
On that basis one would think that the Department of Finance, Minister for Finance Brian Lenihan and Taoiseach Brian Cowen must have known about the matter when they were deciding on the fate of Anglo Irish Bank during the evening, night and morning of September 29th/ 30th last.
There was a Bill available on that night providing for the nationalisation of Anglo, but it was decided the inclusion of Anglo in a State deposit guarantee scheme for all the major banks was a better route to go down.
Mr Lenihan has said he did not know at the time about former Anglo chairman Seán FitzPatrick’s hidden loans from the bank.
Did he know the background to the Quinn saga?
