Regulator official denies ‘cheerleading’ for Anglo deal
UK and Irish regulators discussed negative rumours from hedge funds about Irish banks
Con Horan arriving at the Dublin Circuit Criminal Court yesterday for the trial of three former Anglo bankers. Photograph: Courtpix
An official from the financial regulator’s office has denied he was “cheerleading” for a deal between Anglo Irish Bank and the Quinn Group, but said he was “positively disposed” toward transactions planned between the parties in March and July 2008.
At the Dublin Circuit Criminal Court yesterday, Michael O’Higgins SC, for Seán FitzPatrick, suggested Con Horan, then prudential director at the Irish Financial Services Regulatory Authority, was cheerleading for a deal to unwind the holding businessman Seán Quinn had in the bank.
Mr Horan responded that he would not characterise it like that. Of course they were concerned and glad to see a deal happen and were positively disposed toward it, he said.
“Do people get a dictionary when they go to work in financial services?” Mr O’Higgins asked, accusing Mr Horan of using “bland words”. “Maybe my language is not as colourful as yourself,” Mr Horan responded.
Asked if he had put Willie McAteer, then director of finance at Anglo, under “extreme pressure” to make the March deal work, Mr Horan said he didn’t believe so, but they were “engaging actively on it”.
Mr FitzPatrick (65), Greystones, Co Wicklow, Mr McAteer (63), Rathgar, Dublin, and Pat Whelan (51), Malahide, Dublin, deny 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act. Mr Whelan also denies being privy to the fraudulent alteration of loan facility letters to seven individuals.
Mr O’Higgins suggested that the Domestic Standing Group, made up of representatives from the central Bank, the Irish Financial Services Regulatory Authority and the Department of Finance, was a “doomsday committee”
and that while most doomsday committees never had to fulfil their remit, his one was kept very busy. Mr Horan agreed.
Mr O’Higgins highlighted a note of one of its meetings on February 22nd and said it showed that of the 10 areas of discussion, nine covered either the position of the Quinn Group, Anglo or the Quinn holdings in Anglo. Mr Horan agreed there were a lot of references to both parties.
Mr O’Higgins also opened a note to the court dated March 20th about a conversation between the financial regulator’s office and JJ Justham of the UK financial regulator’s office, following the collapse of US bank Bear Stearns and market volatility.
The note said the Irish office had concerns that London hedge funds may have been spreading negative rumours while short-selling Irish stocks. This was currently focused on Anglo, although recently Irish Life and Permanent had been targeted, it said. It mentioned the names of some hedge funds and Mr Justham said they were all “major players” and they would investigate to see if there had been a criminal offence.
The note went on to say that the Irish financial regulator’s office believed the situation was creating “confidence issues around strong banks” and the behaviour was unacceptable. “It was agreed we would exchange all relevant information and co-operate closely to maximise the regulatory benefits,” the note said.
Mr O’Higgins asked Mr Horan if it was he who spoke to Mr Justham. Mr Horan said he could not remember, but would say that was correct. Mr O’Higgins said it was not surprising Mr Horan was suffering a memory loss at this remove. He would not criticise him for it, he said.
Under cross-examination, Mr Horan could also not recall if the regulator stipulated, in a deal brokered between Anglo and the Quinn Group in March 2008, that cash released in the deal should go into Quinn Insurance instead of back to the bank. However, he said, it would have been “an expectation of ours”.
He also could not recall if the regulator’s office had asked for references to it to be removed from documents related to that deal.
Mr O’Higgins highlighted the lack of contemporaneous notes available for contacts made between Mr Horan and others, including former chief executive of the bank David Drumm, in early July just before the final deal to unwind the Quinn holding in Anglo was completed.
Mr Horan said he did not recall retaining a note on July 8th of a phone call with Mr Drumm. He pointed out that he had written a note for the regulator’s board on July 22nd that included references to it and two other contacts.
Mr O’Higgins asked him if it was normal for him to make a contemporaneous note. Mr Horan said it was, unless there was “an alternative” and he believed his note for the financial regulator board was that alternative. “Come off it!” Mr O’Higgins exclaimed.
The case continues.