Financial regulator raised ‘no red flags’ about Anglo share deal

No discussion about bank lending to investors during call with regulator, court hears

 Pat Whelan (51) of Malahide, Dublin, Willie Mc Ateer (63) of Rathgar, Dublin and Sean Fitzpatrick (65) of Greystones, Co Wicklow 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.

Pat Whelan (51) of Malahide, Dublin, Willie Mc Ateer (63) of Rathgar, Dublin and Sean Fitzpatrick (65) of Greystones, Co Wicklow 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.

Mon, Mar 10, 2014, 14:09

In a phone call between the Irish financial regulator and investment bank Morgan Stanley about the Anglo Irish Bank share deal, the regulator raised “no red flags”, the Dublin Circuit Criminal Court heard this morning.

David Churton, a director at Morgan Stanley’s legal and compliance department when the Anglo deal took place in July 2008, also said there was no discussion about the bank lending to investors to purchase its own shares.

The investment bank handled the unwinding of the Quinn holding in Anglo Irish Bank.

Mr Churton told the court Morgan Stanley was not seeking formal approval from the Irish or UK financial regulators but wanted to offer them an opportunity to “raise a red flag”.

If the regulators had done so, Morgan Stanley would not have gone ahead with the transaction unless it could have “mitigated” the concerns.

Mr Churton was the sixth witness to be questioned about the phone call to the financial regulator on July 12th 2008, two days before the transaction took place.

Sean Fitzpatrick (65) of Greystones, Co Wicklow, Willie Mc Ateer (63) of Rathgar, Dublin and Pat Whelan (51) of 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 Churton told Una Ní Raifeartaigh, for the prosecution, that there were non-standard elements to the Quinn transaction.

It involved the unwinding of businessman Sean Quinn’s 28 per cent interest in Anglo held in contracts for difference (CFDs)- investment products based on share price. The Quinn children were to purchase 15 per cent of the shares and businessmen known as the Maple 10 were to purchase 1 per cent each using money loaned by the bank, the court had heard.

Mr Churton said the “non-standard elements” included the involvement of the financial regulator and of Anglo. Morgan Stanley also “became aware that financing was going to be provided to purchasers of Anglo shares” and “that gave rise to some concerns”, he said.

He told the court there were also concerns regarding the timeline on which the transaction would be carried out. Morgan Stanley became aware of it on Thursday 10th of July and it was to be completed by the evening of Monday 14th.