Court orders stockbroking firms to discover 'crucial' Quinn data
Two stockbroking firms have been ordered by the Commercial Court to discover “crucial” documents related to controversial transactions by companies linked to the family of jailed businessman Seán Quinn to allegedly meet margin calls on shares in Anglo Irish Bank in the run up to its collapse.
The documents are being sought from NCB Stockbrokers Ltd and JE Davy by Irish Bank Resolution Corporation, formerly Anglo, for its defence of the forthcoming action by Patricia Quinn and her five children denying liability for some €2.34 billion loans made by Anglo to Quinn companies. Both firms had indicated they were not opposing the discovery orders.
The Quinn children, the beneficial owners of the companies, claim the loans were intended to meet margin calls on Contracts for Difference (CfD) made in Anglo by Mr Quinn via a Madeiran-registered company, Bazzely, and were for the unlawful purpose of propping up Anglo’s share price.
The bank denies that but contends, if the family proves its claims, that it is entitled to be indemnified by Mr Quinn and two senior Quinn group executives – Dara O’Reilly and Liam McCaffrey – against any judgment awarded against it. IBRC claims the three men were central to a strategy to buy shares in Anglo via CfDs.
A solicitor for IBRC, Karyn Harty, said in an affidavit yesterday the bank made loans of some €2.34 billion from September 2007 to the Quinn Group and had confirmed loans advanced after March 14th, 2008 were to meet margin calls on CfDs but that was not the purpose of the lending before that date.
The bank denies senior management of the bank supported and encouraged, or were authorised to support or encourage, the CfD investments, she added.
IBRC says NCB acted for the Quinn side in relation to the CfD transactions while Davy was a counterparty to some of the transactions. If either firm has documents signed by the Quinn plaintiffs, those documents were likely to be “crucial” and “core” documents in the trial, fixed for next April, Ms Harty said.
Brian Murray, for IBRC, asked Ms Justice Mary Finlay Geoghegan to direct NCB and Davy to discover a range of documents related to the CfD transactions. Both firms had indicated they would make discovery if the court made orders to that effect.
Niall McPartland, for the Quinns, said they were not objecting to the discovery application but were anxious the trial date of April next should not be delayed by the matter.
Making the discovery orders sought, the judge said it was indicated the discovery would take six weeks and that appeared unlikely to delay the trial.
In her affidavit, Ms Harty said the Quinns in their action allege Mr Quinn began investing in CfDs in 2005 through Bazzely and the CfD transactions continued until January 2009 with nine CfD providers.
The Quinns contend they were unaware of the CfD investments and took no part in them, she said.
They also claimed very substantial sums were loaned by Anglo after September 2007 to meet margin calls on the Bazzely transaction so as to prop up Anglo’s share price. IBRC denied the Quinns were unaware of the Bazzely investments.
If the bank provided funding ultimately used to meet margin calls, it denied funding was made for maintaining the bank’s share price, she said.
The bank also denied it forced Bazzely to unwind its CfD position in Anglo or that it had effective control over CfD margin calls from December 2007.
In those circumstances, the precise nature of the CfD transaction was of critical relevance.
NCB acted with eight of the CfD providers in respect of the Bazzely transactions on behalf of Bazzely, Quinn Insurance Ltd and/or the Quinn family.