Cardiff was told Anglo deal involved some lending

Con Horan denies changing evidence about mention of Credit Suisse during phone call

Kevin Cardiff at Dublin Circuit Criminal Court yesterday: said he would generally not like any individual having a large stake in a bank, “particularly not this individual, because he was a large borrower from the bank”. Photograph: Collins/Courts.

Kevin Cardiff at Dublin Circuit Criminal Court yesterday: said he would generally not like any individual having a large stake in a bank, “particularly not this individual, because he was a large borrower from the bank”. Photograph: Collins/Courts.

Thu, Mar 13, 2014, 01:00


A former secretary general of the Department of Finance has said he was told shortly after the so-called Maple transaction was carried out in 2008 that there had been some “likely short-term” lending to wealthy investors who were buying Anglo Irish Bank shares as part of the deal.

Kevin Cardiff, who was second secretary at the Department at the time, said he first became aware of the scale of businessman Seán Quinn’s large stake in Anglo, which was held through derivatives called contracts for difference (CFDs), in February-March 2008.

Mr Cardiff said Mr Quinn’s stake was a concern because such a large holding “could be a target of speculation”. That could drive down Anglo’s share price and affect confidence in its bondholders and deposit holders, causing wider problems in the financial sector.

Moreover, Mr Cardiff said, one would generally not like any individual having a large stake in a bank, “particularly not this individual, because he was a large borrower from the bank.

“In this particular case, the individual concerned had been using funds from his insurance company to finance his positions,” Mr Cardiff told Paul O’Higgins SC, prosecuting. “That seemed an inappropriate thing to do.”

Mr Cardiff told the court he attended a meeting of the Domestic Standing Group, an emergency planning body comprising senior officials from the Department of Finance, the Central Bank and the Financial Regulator, on July 23rd, almost 10 days after the transaction to unwind Mr Quinn’s CFD position had been carried out.

According to Mr Cardiff’s contemporaneous note of that meeting, which he read in court, “generally the deal consisted of high net worth individuals from Ireland and the US . . . some lending to them – likely short term.”

The trial has previously heard that any share purchase that brought a single individual’s shareholding in Anglo over 3 per cent would have to be disclosed to the market. The so-called Maple 10 investors ultimately each bought 1 per cent of the bank’s shares as part of the July 2008 deal.

Earlier yesterday, Con Horan, the former prudential director at the Financial Regulator’s office, agreed with Patrick Gageby SC, for William McAteer that he spoke to an official from the UK Financial Services Authority, or regulator, about the transaction to unwind Mr Quinn’s position, but could not recall any reference to lending on that call.

Mr Horan previously told the trial he was not aware that Anglo was going to lend to the investors to buy the bank’s shares as part of the deal, except for a contingency to lend to any investor who had cash-flow problems for a period of a few weeks.

On July 12th, 2008, two days before the transaction, a conference call took place between Mr Horan and the investment bank Morgan Stanley, which was executing the deal. Mr Horan said in evidence yesterday that on that call he mentioned Credit Suisse, which he understood would be financing the purchase of Anglo shares by members of the Quinn family.

Mr Gageby put it to Mr Horan that in evidence on Tuesday, he said it was on a subsequent call to Matt Moran of Anglo Irish Bank that he mentioned Credit Suisse and that Credit Suisse wasn’t discussed on the Morgan Stanley call. “Are you changing your evidence?” Mr Gageby asked. He denied this.

“The Morgan Stanley people were actually taking notes and there doesn’t seem to be any mention of it,” Mr Gageby said. Mr Horan said he had to mention Credit Suisse on the Morgan Stanley call to set up the subsequent call with Mr Moran on that issue.