Businessman says he was assured Central Bank and regulator knew of shares loan
Seán Reilly says Anglo officials told him everyone was aware of it and wanted it done
Seán Reilly leaving after yesterday’s sitting of the Anglo Irish Bank case in the Circuit Criminal Court. Photograph: David Sleator/The Irish Times
A businessman who took a loan from Anglo Irish Bank in July 2008 to buy 1 per cent of the bank’s shares told the Dublin Circuit Criminal Court he was asked by bank directors Pat Whelan and David Drumm to make the purchase.
Giving evidence in the trial of former Anglo Irish Bank directors William McAteer, Mr Whelan and Seán FitzPatrick yesterday, Seán Reilly said he was invited into Anglo headquarters in Dublin where he discussed the deal with Mr Drumm and Mr Whelan.
Mr Reilly said he got a call from Mr Whelan inviting him to meet Mr Drumm at Anglo headquarters on St Stephen’s Green in Dublin on July 8th and he went in for a meeting the following day. He said Mr Drumm told him the shares were coming under pressure from short-selling and they were “trying to unwind a position”.
They asked if he would purchase 1 per cent of the bank’s shares up to a value of €60 million. He was told the “recourse” on the loan, the amount he would have to pay if the share price collapsed, would be limited to 25 per cent of the value of the loan. “Worst-case scenario if the shares ended up at zero, I would have to pay 25 per cent,” Mr Reilly said.
Mr FitzPatrick (65), Greystones, Co Wicklow, Mr McAteer (63), Rathgar, Dublin, and Mr Whelan (51), Malahide, Dublin, have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals. All three men have pleaded not guilty to the charges.
Mr Reilly, who had been a long-standing customer of Anglo, said he got no legal advice and the meeting lasted 30 minutes. He said he was assured legal advice had been obtained from Matheson Ormsby Prentice and the “financial regulator and the Central Bank were aware of it”.
“Everyone was aware of it and wanted it done,” Mr Reilly said. He told Mr Drumm and Mr Whelan he would consider the offer and, having spoken to his second in command, he agreed to it the following day.
Asked by Úna Ní Raifeartaigh SC, for the prosecution, why he accepted the deal, he said he had been asked by the bank and felt it wanted him to go ahead with it.