Issue of how much Brian Cowen knew never arose

From being a massive concern, suddenly the matter faded off the agenda

Brian Cowen: On March 17th, 2008, the day of the St Patrick’s Day 
m
Massacre when Anglo’s share price fell by 20 per cent, Se
a
án FitzPatrick called him on his mobile in Malaysia. Photograph: Niall Carson/Bloomberg News

Brian Cowen: On March 17th, 2008, the day of the St Patrick’s Day m Massacre when Anglo’s share price fell by 20 per cent, Se a án FitzPatrick called him on his mobile in Malaysia. Photograph: Niall Carson/Bloomberg News

Fri, Apr 18, 2014, 08:22

The Anglo trial answered many questions about the State’s handling of the Seán Quinn/ Anglo Irish Bank debacle, but not all of them. It revealed the failure and forgetfulness of the financial regulator and that the Central Bank was aware of the issue.

What the government knew, and when, however, was not explored in the trial.

Kevin Cardiff, the second secretary at the Department of Finance at the time, gave evidence for just 22 minutes. Unlike his colleagues in the financial regulator’s office, he was always a diligent note taker and his answers to any question asked were clear and convincing.

He recorded that on July 23rd, almost 10 days after the transaction to unwind Quinn’s CFD position had been carried out, according to his notes he was told by the financial regulator: “Generally the deal consisted of high net worth individuals from Ireland and the US . . . some lending to them – likely short term.” In the absence of the jury, Cardiff also said that his department was not aware of the mechanics of the transaction. “There was no benediction from us,” he said.

In the 10 weeks of the Anglo trial, the issue of what Cardiff’s then minister for finance, the late Brian Lenihan and/or his former boss Brian Cowen, by then the taoiseach, knew about Quinn/Anglo did not arise. Cowen was not called as a witness and his name did not feature in the trial. His successor as minister for finance, Brian Lenihan, is dead and his name also did not feature in the trial.

This is not to say, however, that the fact that something was going on was not known at a senior political level. On March 17th, the day of the St Patrick’s Day Massacre, when Anglo’s share price fell by 20 per cent, Seán FitzPatrick called Cowen on his mobile in Malaysia. FitzPatrick recalls in The FitzPatrick Tapes , a book based on interviews with the former banker, that: “I told him [Cowen] that he [Quinn] had it in CFDs, I think. I am not sure. What I said was what was really happening was coming on from the shorters, these guys, the hedge funds, trying to get Quinn.”

The next time that Cowen met Anglo was when he went to a private dinner in its offices on April 24th, 2008. Quinn was not discussed at this meeting.

In May 2008, Lenihan was appointed minister for finance when Cowen finally became taoiseach. Lenihan was briefed by his civil servants in his first month in office that Quinn was a large gambler in Anglo CFDs and this had stability implications for the State.

The trial revealed that the Domestic Standing Group, a high-powered group made up of civil servants in the Central Bank, the financial regulator and the Department of Finance, frequently discussed the Quinn/Anglo gamble from the first quarter of 2008 onwards.

As the Quinn/Anglo crisis deepened, various plans were looked at including asking Bank of Ireland and/or AIB to acquire Quinn’s stake or getting the National Pension Reserve Fund to acquire it. This was high-level big stuff but it is not known to what extent, if any, it was on the political radar at the time.

Then it was all over in July 2008. From being a massive issue that both Cowen and Lenihan were aware of in general terms, suddenly the matter faded off the agenda. The Quinns came out and made a statement, approved by the financial regulator, that they had acquired 15 per cent of the bank. There was no mention of the Maple 10.

On July 28th, two weeks after Quinn’s position was dealt with and five days after Cardiff was told something had happened, Cowen played a game of golf and had dinner with FitzPatrick and other Anglo directors. The issue of what happened only two weeks earlier never arose.

A lack of curiosity descended. When Ireland’s banking inquiry finally begins, Cowen can be expected to be asked about what he knew and when, and what questions he asked or failed to.