Financial regulator had ‘no objection’ to Anglo transaction
Former head of compliance had asked if regulator had approved scheme
Fiachre O’Neill at court: he said he was instructed to liaise with Morgan Stanley so accounts could be opened at the investment bank in the names of the Maple 10. Photograph: Collin /Courts
The financial regulator had no objection to the scheme to unwind businessman Seán Quinn’s large stake in Anglo Irish Bank, the trial of three former Anglo directors has been told.
Fiachre O’Neill, the bank’s former head of compliance, said that in a conference call two days before the so-called Maple 10 scheme was activated in July 2008, an employee of investment bank Morgan Stanley – which was executing the transaction – asked Con Horan, prudential director at the regulator’s office, if the regulator approved of the deal. To this, Mr O’Neill said, Mr Horan replied “the regulator has no objection to the transaction”.
Mr O’Neill told the court he has been granted immunity from prosecution by the Director of Public Prosecutions. He said he first became aware of businessman Mr Quinn’s CFD stake in Anglo on March 28th 2008, when he attended a meeting with William McAteer and Matt Moran, two senior figures at the bank.
He was asked to review a copy of an agreement between the bank and the Quinn side. This deal involved the Quinn family purchasing about 15 per cent of the bank’s shares and 9 per cent being placed with institutional investors.
He was told the agreement was between the bank and the Quinns and had been fully approved by the regulator.
Mr O’Neill told Paul O’Higgins SC, prosecuting, that he was called to another meeting with Mr Moran and Mr McAteer on July 8th. There, he was informed the agreement signed in March had not been implemented and that Mr Quinn still held his 28 per cent CFD position.
“I was told the financial regulator was putting pressure on the bank to deal with the situation,” he told the court. He was also told that the rumours in the market were “getting louder”.
He said he was also told that the bank was to lend to the Quinn parties to allow them to take a shareholding in the bank and that money would also be lent to 10 investors to purchase Anglo shares. “I was told the board was fully aware of the transaction,” he said.
Mr O’Neill said he was instructed to liaise with Morgan Stanley so that accounts could be opened at the investment bank in the names of the Maple 10. He told Mr O’Higgins that this was not something he had done before. He later agreed with Brendan Grehan SC that there was a logic to the compliance team being involved as it had access to information from across the bank.
Asked if any question of a side letter to borrowers arose, Mr O’Neill said that it had. He said a team in Anglo provided side letters to go into 10 packs of documentation prepared for the Maple 10 individuals.
When he saw the letter on July 10th, Mr O’Neill said, he got the impression that it potentially removed the 25 per cent recourse to the individuals. He said he brought the letter to Mr Moran and outlined his concern. He and Mr Moran then went to Pat Whelan’s office and outlined the concern.
“Both Matt Moran and Pat Whelan made it clear that that was not the intent and the letter would be changed, and it subsequently was changed.”