Analysis: Quinn family papers show role played by regulator
Involvement of the regulator in events that led to Anglo’s collapse is revealed in court documents
Sean Quinn . Photograph: Julien Behal/PA
Documents filed with the High Court relating to an action being pursued by members of bankrupt businessman Seán Quinn’s family against Irish Bank Resolution Corporation cast a light on the actions of the financial regulator in the events that led to the collapse of Anglo Irish Bank in 2008/2009.
IBRC comprises the former Anglo and Irish Nationwide Building Society and was placed into liquidation in February this year by the Government.
The Quinns allege that it advanced them unlawful loans of up to €2.34 billion.
The family plans to issue separate proceedings against the Department of Finance and the Central Bank of Ireland.
In an affidavit relating to the IBRC case, Aoife Quinn, Quinn’s daughter, claims the regulator and the department “participated in, facilitated and compounded the wrongful acts perpetrated by Anglo” against the family.
A key document in their case, and one seen by The Irish Times, is the so-called “O’Connor report”. This was prepared by former Anglo senior executive Pat Whelan for the bank’s then chairman Donal O’Connor.
It is dated January 6th, 2009. It details how Anglo’s relationship with Quinn began in December 1998, following its acquisition of the Smurfit Paribas loan book. The loan to Quinn was initially €8.26 million.
Up to November 21st, 2007, “all accounts in the Quinn connection operated in an exemplary manner”. Things began to unravel in late 2007 as Quinn built up what would ultimately become a 28 per cent stake in Anglo through contracts for difference (CFDs), a structure that meant he could hide his stake from the bank, regulators and other investors.
The report details the level of engagement with the regulator and the extent of its knowledge of the dealings between Anglo, Quinn and the 10 investors who were persuaded by the bank to buy some of Quinn’s shares to help reduce his holding without destabilising the institution.
“A meeting took place around September 2007 and SQ [Seán Quinn] confirmed that he had a substantial position in Anglo through CFDs. After this meeting the board was informed of SQ’s CFD positions and it was decided that the regulator should be informed immediately. David met and advised Pat Neary [chief executive of the Financial Regulator] of this situation,” the report states.
To hide his stakebuilding, Quinn used nine separate institutions to acquire 215.8 million at an average price of €14.
Between December 2007 and March 2008 a number of discussions took place with Quinn regarding his CFDs.
‘No powers available’
“We (and the regulator) wanted him to close out these positions, but he was unwilling to do so because he was ‘under water’ on the price and he still believed there was good upside or profit. There were no powers available to the bank or the regulator to force him to exit, as technically he was not a shareholder in the bank,” the report states.