Anglo director told Maple 10 loans were on ‘normal terms’
Morgan Stanley employee gives evidence by video-link
Donal O’Connor: he said that when he heard about the zero recourse he informed the Anglo board and the Department of Finance. Photograph: Collins Courts
A former Anglo Irish Bank director has said he was told in 2008 by the bank’s then chairman Seán FitzPatrick that the so-called Maple 10 loans were on “normal terms” and subject to 100 per cent recourse.
Donal O’Connor, who joined the Anglo board as a non-executive director in June 2008, told the trial of three former Anglo directors that Mr FitzPatrick, one of the accused, called him in the week of July 7th that year to say he had good news.
Mr FitzPatrick told him the stake in the bank held by businessman Seán Quinn would be taken up by 10 customers of the bank. “The gist of it was that this was on normal terms, 100 per cent recourse,” Mr O’Connor told the court. The witness said he asked if it was okay and was given “various confirmations”.
One of these confirmations was that Willie McAteer, another of the accused, had checked it out thoroughly and all was fine with the financial regulator, said Mr O’Connor.
At an informal dinner with the board the following month, Anglo’s then chief executive David Drumm said the loans had only 25 per cent recourse. “I remember that Mr FitzPatrick appeared to show surprise,” said Mr O’Connor.
He agreed with Michael O’Higgins SC, for Mr FitzPatrick, that this was his subjective impression of the expression on Mr FitzPatrick’s face.
Seán FitzPatrick (65) of Greystones, Co Wicklow; Willie McAteer (63) of Rathgar, Dublin; and Pat Whelan (51) of Malahide, Dublin, have been charged with 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 has also been charged with being privy to the fraudulent alteration of loan facility letters to seven people. All three have pleaded not guilty to the charges.
Mr O’Connor told the court he was appointed chairman of Anglo on December 18th, 2008, after Mr FitzPatrick stepped down. The next day he took on the duties of chief executive David Drumm after Mr Drumm resigned.
A week later, on December 23rd, he said, Mr Whelan approached him and said he needed to share some information with him.
Concern over transaction
Mr O’Connor said Mr Whelan told him the recourse arrangements had been adjusted on the loans to the Maple 10 borrowers and that steps had been taken to reduce the recourse to nil.
Mr O’Connor said that when he heard about the zero recourse he informed the Anglo board and the Department of Finance.
Mr O’Connor said that in December 2008 Mr Whelan prepared a report on the Maple transaction. When Mr O’Connor was shown a draft of this report, he made an observation that a reference to the involvement of non-executive directors was incorrect.
“My concern when I read the first draft was that it indicated non-executive directors had more knowledge than I believed they had, and which I had,” he told Paul O’Higgins SC, prosecuting.
The jury also heard evidence, via video link from London, from a Morgan Stanley employee.
William Chalmers detailed how the investment bank was involved in various efforts to unwind Mr Quinn’s stake in Anglo.