FitzPatrick ‘regretted’ not being more involved in loan recourse

Whelan gave ‘assurance’ over letter to reduce all personal recourse on loans, Moran tells court

Anglo Irish Bank’s former chief financial officer  Matt Moran: recounted his conversations with former chairman Seán FitzPatrick.  Photograph: Collins Courts.

Anglo Irish Bank’s former chief financial officer Matt Moran: recounted his conversations with former chairman Seán FitzPatrick. Photograph: Collins Courts.

Thu, Feb 20, 2014, 01:02

The former chairman of Anglo Irish Bank Seán FitzPatrick “regretted” not becoming “more personally involved” in the recourse of the Maple 10 loans, the Circuit Criminal Court heard yesterday.

The bank’s former chief financial officer Matt Moran recounted his conversation with Mr FitzPatrick after the transactions to unwind the Quinn contracts for difference position was executed, on the week of or the week after July 14th, 2008.

Mr FitzPatrick “asked, as if thinking out loud, ‘I wonder was that the right transaction to do?’, specifically in respect of the recourse to the 10 borrowers,” Mr Moran said.

He “questioned” if 25 per cent recourse for the loans “was enough”. “He made a comment to me that he regretted that he didn’t become more personally involved in this issue than he had done.”

Mr FitzPatrick (65), Greystones, Co Wicklow, William McAteer (63), Rathgar, Dublin, and Pat Whelan (51), Malahide, Dublin, are charged with 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. They have pleaded not guilty to the charges

On July 10th, 2008, a few days before the transactions, Mr Moran told the court of an “assurance” he received from Mr Whelan. He said he went to Mr Whelan over concerns that a “side letter” was to be put in place with the loans to remove all personal recourse. He told Mr Whelan that a side letter which took away 25 per cent personal recourse did not seem “appropriate” in “this type of instance”.

Mr Whelan said it “wouldn’t be done” and gave “assurance of that”, Mr Moran said.

The conversation took place when he went to Mr Whelan’s office with Anglo head of compliance Fiachre O’Neill, Mr Moran said.

Days before the transaction was executed, the financial regulator said the loan to businessman Seán Quinn was a possible “stumbling block”.

Mr Moran outlined a “due diligence” conference call with Con Horan, the prudential director of the financial regulator, and representatives of Morgan Stanley on July 12th, 2008. Morgan Stanley wanted to ensure that the regulator had “no objection to the transaction”.

During the call, the proposed bank shares to be taken by the Quinns and the Maple 10 were outlined. “The fact the bank would lend to those parties was highlighted in the call,” Mr Moran said.

Mr Horan said that lending to Mr Quinn “may be a stumbling block”, he added. He believed he said this because loans to Mr Quinn were close to limits for the bank to any party.

Mr Horan had agreed he had discussed the loan with Anglo chief executive David Drumm. Mr Moran told Mr Horan that if he had any points on the matter, he should call the chief executive. He said he later contacted Mr Drumm about the issue .

After the transactions were executed, Mr Horan called Mr Moran and requested that the €170 million be deducted from the bank’s own funds for the purpose of “capital ratio”, Mr Moran said. He told the prudential director that this was “in effect penalising the bank” for “additional funds lent to Seán Quinn”.

Mr Horan “stressed” this would help him with the Financial Regulator’s board, Mr Moran said. In consultation with Mr McAteer, they agreed to “accede to the regulator’s request”, mainly because Mr Quinn’s loan was short term.

The case continues.