Leave prejudice about bankers at door, jury told

Defendants’ ‘belief in legality or illegality of scheme does not matter’, judge instructs

Sat, Apr 12, 2014, 01:53

The jury in the trial of three former directors of Anglo Irish Bank has been sent home for the weekend and will resume deliberations on Monday.

In his address before their departure yesterday, Judge Martin Nolan told the jury it did not matter whether the three men believed the share purchase scheme at the centre of the case was legal or illegal.

“This might seem totally unfair that the belief of the defendants as to the legality or the illegality does not matter, but that is the case and I’m directing you as a matter of law,” he said.

The attitude of the financial regulator to the scheme or his actions were also “totally irrelevant”, as was the involvement of investment bankers Morgan Stanley.

Seán FitzPatrick (65) of Greystones, Co Wicklow; William McAteer (63) of Rathgar, Dublin; and Pat Whelan (51) of Malahide, Dublin, are charged with 10 counts of providing unlawful financial assistance to 10 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.

Quinn family

Mr McAteer and Mr Whelan are also charged with six counts of providing unlawful financial assistance to six members of the Quinn family.

All three men have denied the allegations.

The deal involved unwinding businessman Séan Quinn’s holding in Anglo in July 2008, with businessmen known as the Maple 10 borrowing €45 million each to buy the shares underlying it and members of the Quinn family borrowing €170 million to buy shares.

In his charge to the jury, Judge Nolan said they must leave any prejudice they might have about bankers at the door of the jury room.

He said they were not entitled to visit upon the men what had occurred “since the Lehman Bros crash of October 2008”.

“That would be incredibly unfair and wrong,” he said.

He told the jury Mr Quinn became involved in “gambling” with contracts for difference (CFDs), investment products based on share price, during 2007.

Bank ‘desperate’

The bank became aware of it late in 2007 and “they were desperate”; they had to unwind the position because if the unwind was disorderly “it could have been a catastrophe for the bank and for the Irish banking system”, the judge said.

“They were in a situation not of their own making,” he said. He said it seemed the unwind plan was thought up by then chief executive David Drumm, possibly with others.

Mr Whelan said he knew about the scheme and made a statement of admission, the judge said. He said he was acting under the direction of Mr Drumm, who was his boss and seemed to be a man who “knew his own mind” and was “pretty dynamic”.

From the evidence it appeared Mr McAteer knew about the scheme, the judge said, as he had conversations with Matt Moran, chief financial officer, and Fiachre O’Neill, head of compliance, about it on July 8th or 9th.

“The scheme was executed with the purpose of stabilising the share price of Anglo,” the judge said.

Mr FitzPatrick’s position was somewhat different, he said. The only evidence of his understanding was his conversation with gardaí.

When he was asked if he knew about lending to the Maple 10 his answer was “yes, yes”, the judge said.

Judge Nolan said he was impressed by the Maple 10. They stood to lose money if things went wrong but were prepared to do it because they were asked.

“They were certainly good men and acting with good motives,” he said.

Steps to stop scheme

Judge Nolan told the jury they had to decide if there had been lending in the case and if there was lending if it was in “the ordinary course of business”.

If it was not, they had to decide if all three men knew about the scheme and if they did know, did they take steps to stop it, as the legislation required.

Before the jury was sent home, the registrar of the court drew from a drum the names of the 12 jurors who would consider the verdict.

Additional jurors had been sworn in because of the length of the trial.

The judge thanked the two jurors who were not chosen and said he was sorry to see them go. He exempted them from service for 10 years.