The financial regulator had a "hotline" to chief executive of Anglo Irish Bank David Drumm, a former director of the bank, Pat Whelan, told gardaí during interviews carried out in 2010, the trial at the Circuit Criminal Court was told yesterday.
Mr Whelan, one of the accused in the case, had told gardaí in April the regulator’s office was in contact with Anglo “every other day” about finding a solution to the Quinn family’s holding in Anglo, the court heard yesterday.
Asked how he knew the regulator was in contact, Mr Whelan said he was told by William McAteer, director of finance with the bank; Matt Moran, its chief financial officer; and Mr Drumm. Mr Whelan said he recalled specifically "David mentioning Pat Neary", then the financial regulator. "They seemed to have a hotline to each other," Mr Whelan said. He understood there was daily contact "between those individuals".
Quinn holding
He also told Garda interviewers that he heard one side of a phone call between Mr Drumm and Con Horan, prudential director at the financial regulator's office, in the week that a deal was done to unwind the Quinn holding.
He said Mr Drumm mentioned the names of some of the Maple 10 to Mr Horan.
The Maple 10 businessmen agreed to buy 1 per cent each of shares in the bank using bank loans as part of a deal to unwind the Quinn contracts for difference (CFDs) – investment products based on share price – the court had heard. As part of the deal, the Quinn children agreed to buy 15 per cent of the bank shares between them, using bank loans.
Seán FitzPatrick (65) of Greystones, Co Wicklow; Mr McAteer (63) of Rathgar, Dublin; and Mr Whelan (51) of Malahide, Co Dublin, have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals. All three have pleaded not guilty to the charges.
Det Sgt Brian Mahon, seconded from the Garda Bureau of Fraud Investigation to the Office of the Director of Corporate Enforcement, confirmed to Úna Ní Raifeartaigh SC, for the prosecution, that he had been present for Garda interviews with Mr Whelan, which began on April 9th shortly after 10am.
Mr Whelan began the interviews by confirming he had been with the bank from October 1989 to December 2009, and was head of lending in Ireland at the time of the CFD unwind in July 2008. He reported to Mr Drumm, he said. He confirmed he had prepared a report, Review of Quinn Group and Related Transactions , over Christmas 2008 for Anglo's then incoming chairman, Donal O'Connor.
It detailed the history of the bank’s dealings with the Quinn Group, including the deal to unwind the CFD holding in Anglo and how the bank had sought institutional investors to buy some of the shares underlying the CFDs. It also said the bank decided to place shares with clients. A list of clients was drawn up who “would have the strength and appetite to support the bank”.
Bank clients
Under questioning from gardaí, Mr Whelan said in the first week of July Mr Drumm returned from the States, having failed to attract an investor, and told him he'd discussed with Mr McAteer and Mr Moran that they would place some of the shares with bank clients. Mr Drumm wanted people he would feel comfortable with, Mr Whelan said, and advised him to speak to the lending team at the bank.
Asked by gardaí if the regulator had been contacted about the investors, Mr Whelan said he understood he had been “fully informed”. He said it would have been the regulator’s and the bank’s preference the shares be placed with a sovereign wealth fund.
The case continues.
