Quinn retraces decisions that led to demise of business empire

Businessman says he was a ‘fool’ over Anglo dealings

 “At the time we only spoke about putting a toe in the water, but I’m afraid the whole head, feet and neck went into the water,” Mr Quinn told the court of his dealing with Anglo. Photograph: Frank Miller

“At the time we only spoke about putting a toe in the water, but I’m afraid the whole head, feet and neck went into the water,” Mr Quinn told the court of his dealing with Anglo. Photograph: Frank Miller

Tue, Feb 11, 2014, 01:01

On the stand yesterday in day four of the Anglo trial, Seán Quinn’s striking gold tie and neat dark suit was a reminder that he once ran a vast business empire.

Senior counsel Brendan Grehan, defending former Anglo executive Patrick Whelan, took this as his starting point.

Grehan asked Quinn to recall his group’s slogan “Strength through diversity”, which he did.

When did Quinn move from buying shares to using contracts for difference, a way of betting on share movements, Grehan asked.

Quinn could not recall.

“At the time we only spoke about putting a toe in the water, but I’m afraid the whole head, feet and neck went into the water,” Quinn said.

He added he didn’t see his investments in CFDs as “speculative at all”– they were part of a wider business strategy.

“That was me, that was Seán Quinn,” Quinn said, when asked who gave the instruction to invest in Anglo.

Quinn admitted he sold out of “good” companies to put more on Anglo. By March, 2008, “we had thrown the kitchen sink at [Anglo]”.

Quinn was asked when he had first told Anglo of his sizeable position in its shares. He said he done so over dinner with David Drumm, Anglo’s chief executive, in the Slieve Russell some time in 2007. Grehan said this fact was not previously known.

Quinn was then asked about his meeting with Drumm and Seán FitzPatrick, Anglo’s former non-executive chairman, in the Ardboyne Hotel in Co Meath on September 11th, 2007.

Quinn said it was correct to say he felt the two men were not happy about his then 24 per cent position in Anglo shares.

“They made it very clear that if our shares went on the market, the share price would collapse.”

Grehan put it to Quinn that by building such a large position on Anglo he had created an “artificial market” and created a situation where people could “do the opposite” and bet against Quinn and Anglo.

Hedge funds
“That did happen,” Quinn acknowledged. “Yes,” he replied, when Grehan asked him if hedge funds had bet against him because of his “vulnerable” position in holding such a large stake in one stock.

“With perhaps catastrophic effects for the bank?” Grehan asked.

“Yes,” Quinn replied.

Grehan asked Quinn what was the “logic” behind his decision to increase his stake by 4 per cent to 28 per cent in the months after Ardboyne.

“I thought it was an opportunity to buy shares,” he said.

Grehan asked Quinn to detail how he had borrowed €500 million in December 2007 from Anglo. Quinn agreed he had rung Drumm and told him he had a “hole” in his company accounts and had lost €1 billion on Anglo’s shares. Quinn said this “hole” was €400 million. He said he did not ask Drumm for any money.

A “hole” in the Quinn Group accounts, he admitted, would have led to questions from its other banks and bondholders.

Grehan described this as a “canny strategy”. “You had Anglo to a certain extent over a barrel,” Grehan claimed.

“[Drumm] had me over a barrel,” Quinn replied.

Grehan then introduced a letter dated February 25th, 2008, from Anglo to Liam McCaffrey, the chief executive of the Quinn Group.

Sell properties
The letter sets out how Quinn had agreed to sell properties worth €500 million to repay borrowings.

Quinn said despite this letter he made “no” effort to sell any properties, and that Drumm had agreed to this in a conversation. Grehan said this “gentleman’s agreement” was not backed up by any documentary evidence.

Quinn said that Anglo “took control”.

“[Drumm] wanted to run the show and impress John Hurley [the governor of the Central Bank] and Patrick Neary [the financial regulator],” Quinn claimed.

‘Not happy’
Grehan then asked Quinn about a meeting he had with the financial regulator on February 20th, 2008, where the businessman agreed the banking and insurance watchdog was “not happy”.

Grehan said a sentence in the financial regulator’s notes said Quinn said at this meeting that from “now” on he would tell it the truth.

“What does that suggest?” he asked. Quinn replied: “I’ve no idea. In all my dealings with everybody over the last 40 years I dealt honestly.”

A further meeting Grehan said took place on February 28th between Quinn, Neary and Con Horan, the regulator’s prudential director.

Quinn said he asked at this meeting for reassurances on Anglo.

“It was me they were worried about and had no issue with Anglo,” he recalled.

Quinn said he handed over the “family silver” to Anglo.

Pledged shares
He said he did not know about a letter where his second-in-command Liam McCaffrey pledged shares in the Quinn Group to Anglo in return for loans.

Grehan outlined the terms of a March agreement between Quinn and Anglo that would involve his family buying 15 per cent of the bank’s shares and place another 10 per cent of his position with others.

Grehan said the reason he agreed was he had “run out of money”.

“We’d emptied the kitty,” Quinn replied.

Grehan said the “breaking point” came in July 2008 when Anglo reached the maximum it could lend Quinn.

“We were running out of road,” Quinn said.

He described what it was like to lose billions. “I was furious and I still am furious ,” he said.

“We lost €3.2 billion between 2007 and 2008,” Quinn said on Anglo.

“I was a fool, I was a fool,”he added.