Quinn daughter says documents show Finance-Anglo collusion
Aoife Quinn says Anglo chair altered letter to minister at department’s request
Aoife Quinn said she believed “a significant change in wording” in Anglo chairman Donal O’Connor’s letter, in response to a ministerial request, showed the Department of Finance dictated the terms of the response to its own request. Photograph: David Sleator
The chairman of Anglo Irish Bank altered a letter to the minister for finance, at his department’s request, to obscure the extent to which the bank was funding Seán Quinn’s investment in the bank’s own shares, the High Court has been told.
The Quinn family, who are seeking to join the Department of Finance and the Central Bank in an action against Anglo Irish Bank (now IBRC in liquidation), claim that this supports their case that they do not owe the bank €2 billion because the loans were advanced illegally.
According to affidavits of Mr Quinn’s daughter Aoife, the letter in question was written on February 4th, 2009, after Anglo was nationalised, by its newly appointed chairman Donal O’Connor. It related to lending by the bank to individuals to buy its shares, including through complex instruments called contracts for difference (CFDs) which were extensively used by the Quinns.
A draft of the letter, dated February 3rd, 2009, said: “As requested, I enclose a report on the extent of lending for the purposes of share acquisitions and contracts for difference generally and Anglo shares in particular”. This draft represented “a categorical acceptance on behalf of Anglo to having funded the purchase of its own shares”, she said.
However, the letter sent to the Minister, dated February 4th, 2009, read: “The total extent of lending by the bank for the purposes of acquiring publicly quoted shares is €1.777bn. We do not lend for the purpose of taking positions in contracts for difference. Of the total, €918.6m related to lending for the purpose of acquiring shares in Anglo.”
Ms Quinn said she believed such “a significant change in wording” in response to the minister’s request showed the Department of Finance dictated the terms of the response to its own request.
She said that view was supported by a file note discovered by Anglo, dated February 3rd, 2009, containing minutes of a meeting with various people including Ann Nolan of the department and Mr O’Connor.
Under the heading “lending against bank’s shares”, that note stated: “DO’C provided a draft of the letter which is proposed will be sent to the Minister tomorrow in response to his letter received late last week. AN agreed to read the letter and revert with any comments.”
It was clear the department wrote to Anglo about lending secured against its shares, Anglo drafted a letter for the department, the department reviewed the Anglo draft and significantly amended it so it stated the opposite to what was in the original draft, she said.
This led to a heightened concern on the Quinns part that the department, knowing what went on in Anglo, “has actively engaged in seeking to cover up the true state of affairs in the knowledge of likely further legal proceedings”.
The minister’s knowledge of what went on was greater than the documents suggested as it was now clear they did not truly represent matters, she claimed.
A letter from Mr O’Connor to Ms Nolan, dated March 24th, 2009, acknowledged working capital was really a reference to margin calls, she added. Other documents discovered by Anglo made clear the regulator was apprised by Anglo of matters on an ongoing basis and knew it was lending to fund margin calls, she said.
It seemed the regulator was prepared to tolerate this in the short term in the expectation that the Quinn CFD holding would be diluted.
The regulator was also aware of and actively participated in the design and execution of the “Maple 10” transaction involving Anglo making loans to its best customers, she claimed. The hearing continues today.