Seán FitzPatrick acquittal: defence rested on his hands-off role at Anglo

Court heard no evidence former Anglo chairman was aware of lending to Quinn family

Former chairman of Anglo Irish Bank Sean FitzPatrick, after being been acquitted on all charges against him. Photograph: Eric Luke/The Irish Times 16/04/2014    NEWS  Former chairman of Anglo Irish Bank Sean FitzPatrick, after being been acquitted on all charges against him, pictured leaving the Dublin Circuit Criminal Court this evening (Wed). Photograph:  Eric Luke  /  The Irish TimesAnglo Irish Bank Sean FitzPatrickSean FitzPatrickStock File Archive Staff

Former chairman of Anglo Irish Bank Sean FitzPatrick, after being been acquitted on all charges against him. Photograph: Eric Luke/The Irish Times 16/04/2014 NEWS Former chairman of Anglo Irish Bank Sean FitzPatrick, after being been acquitted on all charges against him, pictured leaving the Dublin Circuit Criminal Court this evening (Wed). Photograph: Eric Luke / The Irish TimesAnglo Irish Bank Sean FitzPatrickSean FitzPatrickStock File Archive Staff

Thu, Apr 17, 2014, 08:48

Seán FitzPatrick was on holiday in the south of France on July 9th, 2008, when, just before lunch, he received a call from David Drumm.

For the previous 10 months, Anglo Irish Bank had been grappling with a crisis ignited by the discovery, in September 2007, that the businessman Seán Quinn held a 24 per cent stake in the bank through contracts for difference (CFDs) – high-risk investment tools that involve betting on the performance of a share.

Anglo feared Quinn’s holding was destabilising the bank’s share price and worried that a disorderly unwind of the position would cause huge damage to the bank and the wider Irish financial system. The efforts to unwind the Quinn stake had grown increasingly frantic after St Patrick’s Day 2008, when – in what subsequently became known as the St Patrick’s Day Massacre – the Anglo share price fell 20 per cent in a single day.

In the Anglo board room, there were concerns there could be a run on the bank. Various schemes had been attempted, but so far none had succeeded.

By July 2008, Anglo was flashing red. It had lent so much money to Quinn to cover his “margin calls” – deposit top-ups demanded by his CFD providers to make up for his losses on Anglo’s share price – that the bank was reaching the limit of its permitted lending to one customer. The financial regulator’s office, meanwhile, was putting pressure on the bank to deal with the Quinn situation.

On the phone call to France, according to an interview FitzPatrick later gave to gardaí, Drumm – then Anglo’s chief executive – told FitzPatrick a plan had been devised to unwind the Quinn stake for good. The plan involved 10 individuals who would each buy a tranche of the bank’s shares. There would be some lending from Anglo for this.

FitzPatrick said Drumm told him the regulator would be “very happy” with the deal; overall, FitzPatrick thought it was “kosher” and “above board”. FitzPatrick told gardaí he asked Drumm if the investors were “people of substance”, whether they were good for it, and was told they were.

According to FitzPatrick’s statement to gardaí, he was not told the names of the individuals – subsequently known as the Maple 10 – whose identities Drumm was keeping tight. Nor was he told of the terms of the lending.

In his closing speech to the jury, Michael O’Higgins SC, representing FitzPatrick, said it was “absolutely clear” on the evidence that his client didn’t know anything about the limited recourse of 25 per cent on the loans. FitzPatrick thought the lending was at 100 per cent, he said, and a number of witnesses gave evidence which tended to support this. In any case, O’Higgins argued, there was no evidence that the recourse had even been settled on at the time of the Drumm-FitzPatrick phone call. As for whether FitzPatrick should have made more effort to press Drumm on the detail, O’Higgins argued that there was a duty on Drumm, as the executive director who was dealing with the transaction, to inform.