Former Anglo official recalls ‘heated exchange’ with manager

Lending director says he raised concerns with Whelan over changes to ‘Maple 10’ loan terms

Michael O’Sullivan. Photograph: Courtpix

Michael O’Sullivan. Photograph: Courtpix

Thu, Feb 13, 2014, 10:28

A former Anglo Irish Bank official had a “heated exchange” with his line manager after reporting concerns about the terms of loans to the “Maple 10” being amended to the bank’s chief financial officer, the Dublin Circuit Criminal Court heard yesterday.

Michael O’Sullivan, a former divisional lending director at the bank, said he repeatedly raised concerns with managing director of lending Pat Whelan about the fact that the bank’s ability to recover the loans, which initially amounted to some €600 million, had been weakened.

Mr O’Sullivan said he became “annoyed” about the matter during an asset review in October 2008 as it appeared the board of the bank was not aware that the terms of the loans had been altered earlier that month.

The initial terms of the loans, signed off the previous July, had been changed from the bank having a claim to recourse on 25 per cent of the value of the loans, used to buy shares in the bank, to the recourse potentially being the value of the shares.

He said he approached Mr Whelan about the matter and that Mr Whelan told him he would speak to chief executive David Drumm about the matter the following day.

Mr O’Sullivan said that in December he spoke again to Mr Whelan about the amended loans not being properly authorised and got “no satisfaction” regarding his concerns.

He told a member of the bank’s group risk division about the matter on December 16th, 2008, and said he again raised the issue with Mr Whelan three days later.

Mr O’Sullivan then told the bank’s chief financial officer Matt Moran, who was at that stage in discussions about the recapitalisation of Anglo, about his worries on December 21st.

He said he subsequently received a call from Mr Whelan and that they had a “heated exchange” about his move.

Mr O’Sullivan told the court Mr Whelan was disappointed he had not come to him about it, to which he responded that he had done so “five or six times”.

“I felt compromised by what had taken place and that hadn’t happened in my 26 years in financial services,” he said.

Mr O’Sullivan said a fresh set of facility letters were issued the following month and that he believed nine of the “Maple 10” had signed. He said he visited several borrowers directly to get the revised letters signed.

The trial relates to three former Anglo executives – Seán FitzPatrick (65) of Greystones, Co Wicklow; William McAteer (63) of Rathgar, Dublin; and Mr Whelan (51) of Malahide, Dublin – who have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in Anglo Irish 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 people.

All three men have pleaded not guilty to the charges.