Court told of ‘complete shock’ over Quinn’s CFD stake in Anglo
‘It was one of those moments that you never forget in life’, ex-director says
Lorcan McCluskey leaving after yesterdays sitting of the Anglo Irish Bank trial in the Circuit Criminal Court. Photograph: David Sleator/The Irish Times
A director at Anglo Irish Bank said that he was left “speechless” after a representative from the financial regulator’s office suggested that the bank consider releasing the Quinn Group from a € 250 million guarantee.
Michael O’Sullivan, who was divisional lending director at the bank from 2005, told the trial of three former Anglo directors that he didn’t think it was “total coincidence” that the suggestion came six days after Sean Quinn had made a similar request to the bank.
In other evidence, he described the moment he learned of the size of the Quinn Group’s shareholding in the bank, through Contracts For Difference (CFDs), saying “It was one of those moments that you never forget in life”.
He said that the CFD holding could potentially destabilise the bank and agreed that this could have “potentially disastrous consequences for the entire Irish financial system”.
The prosecution allege that three former Anglo executives, Pat Whelan, William McAteer and chairman, Sean FitzPatrick, were involved in a plan by Anglo to loan money to the Quinn family and the so called “Maple Ten” group of investors so that they could buy shares in the bank and guarantee the stability of the share price.
The three men have been charged at Dublin Circuit Criminal Court with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
Mr O’Sullivan said that he learned of the CFD situation in November 2007 when David Drumm, then CEO of Anglo, told him the Quinn Group had built up a 28 per cent share position in the bank, through CFD and shares.
He said he was responsible for the Quinn relationship with Anglo, having brought them into the bank when it took over his former employer, Smurfit Paribas, in 1999.
He said his reaction on learning of the Quinn share holding was “one of complete shock”, adding “It was a huge surprise, not something I expected”.
At this point, in November 2007, the Quinn Group were looking to replenish funds which had been depleted from margin calls on the CFDs.
Mr O’Sullivan said: “David Drumm asked me to look at Quinn facilities. What could be unlocked from the system, meaning what undrawn facilities were there and what could be advanced.”
He said they were able to provide the group with €150m, saying that the Quinn business had “substantial security at the time”. Mr O’Sullivan said at this time he understood that the Financial Regulator was aware of the Quinn CFD position.