BACKGROUND:THE LEGAL battle between Anglo Irish Bank and the family of businessman Seán Quinn is turning into a long war as the two sides fight it out on four fronts.
Legal actions are ongoing in Ireland, Sweden and Russia, and now Cyprus, it emerged yesterday.
The High Court was told the Quinns secured an injunction against Anglo last Sunday in the district court of Nicosia ahead of the bank securing its own injunction against the family in Dublin on Monday. The bank had warned the family the previous Friday that it would seek the injunction over their actions.
The bank lodged fresh legal proceedings in courts in Stockholm and Moscow on Monday to stop further changes to Quinn companies.
Anglo chief executive Mike Aynsley and head of corporate projects Richard Woodhouse, the executive in charge of the Quinn loans, were in court yesterday.
Woodhouse swore an affidavit in Anglo’s case to secure the temporary injunction which has frozen the labyrinthine corporate structure around the Quinn family’s international properties in Russia, Turkey, India and Ukraine. The injunction remains in place until tomorrow.
He claimed that the Quinns were trying to set up a “mirror” corporate structure, the Cranaghan Foundation, to transfer assets from Quinn companies in the property group. Cranaghan is the name of the Co Cavan townland next to the Quinn family home where his Slieve Russell Hotel is located.
Anglo has made the court action a truly family affair. The bank’s proceedings are against Quinn, his son, his four daughters, his nephew and his two sons-in-law – Stephen Kelly, husband of Aoife Quinn, and Niall McPartland, husband of Ciara Quinn.
The bank also claimed that the new structure was being set up for the benefit of the entire family but particularly for his grandchildren.
Attempts to transfer assets into this new structure were “severely hampering” Anglo’s ability to deal with the properties and it was concerned that the assets may “simply disappear”, Woodhouse alleges.
Anglo alleges that the family has taken actions in several countries to change shareholdings and management of various companies, rendering the bank’s security on loans worthless and arguably defrauding the State-owned bank.
In one instance, the bank claims the shareholdings in a company behind the family’s shopping centre in the Russian city of Ufa have been replaced. The previous owner, Quinn Park Sweden, was replaced by a Russian company called Saturn and a man named Gabdrakhimov Alexander Mukhamatschevich, according to Anglo.
The family owes the bank €2.9 billion and the properties at issue are worth about €500 million.
At the top of the international group is Quinn Investments Sweden. Below that are Swedish subsidiaries which in turn own Cypriot companies. They, in turn, own shares in Russian companies that hold the actual properties.
This structure was chosen for legal and tax reasons, Anglo says.
An Irish company, Quinn Finance, borrowed money from the bank and then fed to it down through the Swedish companies to the property-holding companies.
Anglo secured its loans by taking pledges on shares at each level and took guarantees and mortgages over the properties.
The injunction in Nicosia stops Anglo interfering with the family’s properties in Cyprus or Russia, but Anglo’s injunction in Dublin freezes the corporate structure worldwide as it covers Quinn Investment Sweden, the property group’s ultimate parent company, and the various family members.
The Quinns won a court ruling in Stockholm last month that found the removal of the Swedish firm’s directors by Anglo’s Irish receiver was invalid. The bank is trying to appoint a bankruptcy receiver to that company in a case to be determined next Tuesday.
The issue of which court has jurisdiction is still up for debate in this complex dispute.
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