Regulator sought ‘removal of references’ to it from pact

The financial regulator's office asked that references to it be removed from an agreement drawn up between businessman Seán Quinn and Anglo Irish Bank, Dublin Circuit Criminal court has heard.

The agreement, reached at the end of March 2008, outlined how Mr Quinn’s holding in Anglo would be unwound and originally made reference to the financial regulator.

Matt Moran, former chief financial officer with Anglo, said he got an email from chief executive David Drumm on March 31st saying “he” wanted regulator references to be removed from the agreement between the bank and Mr Quinn.

Brendan Grehan SC, for Pat Whelan, asked Mr Moran who he thought "he" was.

“I believe he refers to Con Horan,” Mr Moran responded. Mr Horan was prudential director at the regulator’s office.

“So the regulator wanted references to the regulator removed?” Mr Grehan asked.

“That’s my understanding,” Mr Moran replied.

Seán Fitzpatrick (65) of Greystones, Co Wicklow, William Mc Ateer (63) of Rathgar, Dublin and Mr 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 individuals.

All three men have pleaded not guilty to the charges.

The court had earlier heard that Mr Moran had been granted immunity from prosecution by the Director of Public Prosecutions for the purpose of the trial.

Mr Moran agreed that there could quite possibly be “other matters in the pipeline” that he would be expected to give evidence on.

The jury was shown an email sent from Mr Drumm to Mr Moran on March 19th, 2008.

“If we had the approval of the regulator would there be any legal issue (company law) with lending against our own shares?” Mr Drumm asked.

“As I understand it we have an out under section 60 if it is in the ordinary course of business. In our case that means lending. Let’s look at this option tomorrow.”

Mr Moran said he did not recall the email or any follow up to it the next day.

Mr Grehan highlighted another email sent by Mr Moran to Mr Horan at the financial regulator’s office on March 31st.

It included the memorandum of agreement between Mr Quinn and Anglo relating to the unwinding of Mr Quinn’s interests in the bank. But it did not include references to the regulator.

Mr Moran requested confirmation from the regulator, “if so required”, in relation to the deal.

Mr Grehan noted there were a lot of emails sent to the financial regulator’s office on foot of conversations but “very little back traffic”.

Mr Moran said he was responding to various requests from the regulator made on the phone. The questions would be asked on the phone and he would share the information with colleagues and respond to the regulator accordingly.

“Does the regulator get back and say ok that’s fine?” Mr Grehan asked.

“That would not be my experience,” Mr Moran responded.

Mr Grehan asked if he got no response, how did he know it was ok to proceed. If there was going to be an issue, “you’d expect a flag”, Mr Moran answered.

The case continues.