Anglo chiefs ‘surprised’ to learn of Quinn’s 24% stake
Second day of trial hears bank’s share price dropped from €17.53 to 17 cent in 18 months
Pat Whelan, William McAteer and Seán FitzPatrick leaving the Circuit Criminal Court in Dublin yesterday. Photograph: PA The trial of former Anglo Irish Bank directors Pat Whelan (left), William McAteer (centre) and Seán FitzPatrick is continuing at Dublin Circuit Criminal Court.
The trial of three former Anglo Irish Bank directors has heard from its first witnesses including the former chief executive of The Quinn Group.
Liam McCaffery detailed his involvement with the group and its dealings with Anglo Irish Bank in 2007 and 2008.
He described how in September 2007, Anglo chairman Sean FitzPatrick and chief executive David Drumm were concerned and surprised to find out that businessman Seán Quinn controlled 24 per cent of the bank’s shares.
The court heard that the bank approached Mr Quinn with a plan for him to get rid of his control of the shares but that the businessman rejected it because he was sure the share price would rise again.
Mr Quinn was eventually forced to accept Anglo’s plan and get rid of the shares by having his family buy them outright. It was agreed that Anglo would fund this deal by loaning them the money to buy the shares.
The prosecution allege this plan was illegal under the 1963 Companies Act and the Pat Whelan, William McAteer and Mr Fitzpatrick, as directors, either took part in it or permitted it to go ahead.
The three men have been charged with 16 counts of providing unlawful financial assistance to 16 individuals to buy shares in the bank. Each charge relates to a specific person, who allegedly received loans between July 10 and July 30, 2008. Mr Whelan also faces seven charges of being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
Mr FitzPatrick (65) of Greystones, Co Wicklow, Mr McAteer (63) of Rathgar, Dublin and Mr Whelan (51) of Malahide, Dublin have pleaded not guilty to all charges.
Earlier in the day, the jury of seven men and eight women heard from UCC economics lecturer Seamus Coffey who explained Contracts for Difference (CFDs).
Mr Quinn controlled the Anglo stock by using CFDs. Mr Coffey compared them to horse racing. A punter can decide to buy a share of a horse or they can decide to put a bet on the horse. If the horse wins the punter makes a profit but does not own any of the horse. This is similar to CFDs.
Mr Quinn did not own the shares but instead bet on them increasing in value.
Mr McCaffery told prosecuting counsel Una Ní Raifeartaigh SC that when Mr Quinn told Mr Drumm and Mr FitzPatrick about his 24 per cent CFD stake they were concerned. Mr Quinn assured them that his stake was purely for investment purposes and that he would sell it when the share price got better. He said he had been building it up since 2006.
The witness said that Mr Quinn continued to build up CFDs in Anglo and at one point controlled 28 per cent of the bank. He agreed Mr Quinn was “eternally optimistic” that the share price would recover and commented “how low can they go?”