Cross-examination by the defence of Con Horan, the former prudential director of the financial regulator, began at 14.33pm yesterday. Mr Horan removed his glasses to focus on documents as they appeared on screen in front of him as Brendan Grehan SC, for former Anglo Irish Bank director Patrick Whelan, introduced them.
Mr Grehan began by saying that Mr Horan's account of what happened in relation to Seán Quinn and Anglo Irish Bank had gained a "lot of detail" over the years from when he had first made a statement to gardaí on the matter in 2009. He noted Mr Horan made his initial statement without reference to any notes, records or diaries.
Mr Grehan focused on the first time that Mr Horan heard that Mr Quinn had taken a very large position in the shares of Anglo Irish Bank.
Mr Horan said there had been "some discussion" in 2007 in the financial regulator's office after media reports. He also remembered his boss Patrick Neary mentioning the matter, but that was it.
Mr Horan said the first time it “registered” with him that Mr Quinn had a 28 per cent stake in Anglo via contracts for difference was on Good Friday 2008, March 21st.
“It was a very very serious situation. The global crisis was well established. Banking structures were under pressure. It was a period of heightened alert for us all and this was an added complication for us,” Mr Horan said. “Can you spell it out, the significance?” Mr Grehan asked.
Mr Horan said there was two problems, one that Quinn Insurance was on an "unstable footing", and the other that a "rapid unwind of CFDs" would affect the "financial strength" of Anglo.
Mr Grehan suggested Anglo faced “meltdown” if Quinn’s CFDs were dumped on the market. “It was a threat to the stability of the system,” Mr Horan agreed.
Mr Grehan then asked Mr Horan about a meeting he attended with Mr Quinn on February 20th, 2008, where the issue of CFDs was discussed and problems in Quinn Insurance were discussed.
Mr Grehan asked Mr Horan why did he not find out from Quinn his exact position in Anglo at this meeting, rather than waiting until March 21st.
“There were no specifics around what the shares were,” Mr Horan said.
Mr Grehan then asked Mr Horan about his membership of the Domestic Standing Group (DSG)– made up from the Department of Finance, the financial regulator and the Central Bank. It was responsible for the financial stability of the State.
Mr Grehan asked Mr Horan was Mr Quinn and his Anglo CFDs discussed at a DSG meeting on February 22nd, 2008. “I don’t think we had specific information about the level of Quinn’s exposure at that time,” Mr Horan said.
Mr Grehan then showed Mr Horan a note of a meeting between the financial regulator and Seán Quinn on February 28th, 2008.
Mr Grehan asked Mr Horan how was it possible Mr Quinn avoided telling the regulator his exact position in Anglo’s shares at this meeting.
Mr Horan said he could not recall exactly but he remembers Mr Quinn said his CFD positions were “broad-based” in more than one company.
“Which was not true?” Mr Grehan asked. “Correct,” Mr Horan replied.