Anglo director was unaware of lending to investors until after Maple transaction
Former board member recalls ‘alarm bells’ over size of Quinn holding
Witness Lar Bradshaw at Dublin Circuit Criminal Court. Photograph: Collins Courts
A former Anglo board member has said the first he learned that the bank had lent money to the so-called Maple 10 was after the transaction had taken place.
Lar Bradshaw, who joined the Anglo board as a non-executive director in 2004, told the court he was not aware of lending to the investors when the deal went through on July 14th, 2008.
He found out when then chairman Seán FitzPatrick called him in late July or early August that year and expressed “annoyance” that the loans had been given at 25 per cent personal recourse to the investors, which he believed was too low.
He told the court that about September 2007, the bank’s board asked chief executive David Drumm and Mr FitzPatrick to meet businessman Seán Quinn to confront him over rumours he had built up a stake in Anglo through contracts for difference (CFDs).
Mr Bradshaw said Mr Drumm and Mr FitzPatrick reported back to the board that Mr Quinn had built up a substantial CFD position against 24 per cent of the bank’s shares. “My reaction was one of some shock and surprise,” Mr Bradshaw told the court, while Mr FitzPatrick and Mr Drumm were “clearly in a degree of shock themselves”.
He said the board recognised that this was a very serious issue and that it should share the information with all relevant authorities.
The board instructed Mr Drumm to inform the financial regulator of the position.
Mr Bradshaw said he could not recall the date he became aware of the so-called Maple transaction – in which the Quinn CFD position was unwound – but he said it was before July 14th, the day on which the transaction was carried out. He said Mr FitzPatrick called him to say a solution had been found involving high net worth individuals who had “loyalty” to the bank.
Cross-examined by Brendan Grehan SC, for Pat Whelan, Mr Bradshaw said it was his understanding that the financial regulator was kept informed of every step.
He reiterated at board meetings the “mantra” that all relevant authorities should be kept informed and he had “absolutely no reason to believe” that wasn’t done. He sought and received reassurances at board that this was the case.
Another former non-executive director at Anglo, Ned Sullivan, told the jury that when the size of Mr Quinn’s stake was reported to the board by Mr Drumm and Mr FitzPatrick, it “set alarm bells ringing” and the problem became “a fairly high priority for the bank” from then on.
Mr Sullivan, who was on the Anglo board from 2001 to 2009, said the so-called St Patrick’s Day massacre, when the Anglo share price fell by 20 per cent, sparked concerns at board level that “queues of people around Stephen’s Green” could lead to a run on the bank. That didn’t happen.
Mr Sullivan said he was not told about the so-called Maple transaction in advance but recalled receiving a call from Mr FitzPatrick to say he had “good news” and that the CFD position had been resolved. “I took from that that the deal had been done,” he said.
His reaction was relief that “what had been a massive time-consuming distraction for the bank had been resolved” and that management could move on. He said he could not recall when he was told that Anglo was lending to the purchasers of the shares.
Mr Sullivan said he didn’t recall learning a deal was struck between Anglo and Mr Quinn in March 2008 on a proposal to unwind the Quinn CFD holding. The court previously heard that this plan, which involved placing a proportion of Anglo shares with institutional investors, did not go ahead.
Cross-examined by Michael O’Higgins SC, for Mr FitzPatrick, Mr Sullivan said Mr FitzPatrick was an effective and clear communicator who promoted a board culture of openness. He said the board was hard-working and effective.