Two former Anglo directors found guilty of unlawful financial assistance

Two former directors of Anglo Irish Bank were found guilty of providing unlawful financial assistance to buy shares in the bank to 10 businessman at the Dublin Circuit Criminal Court yesterday.

After almost 17 hours of deliberation, the jury found William McAteer (63) of Rathgar, Dublin; and Pat Whelan (52) of Malahide, Dublin, guilty of 10 counts of providing unlawful financial assistance to 10 individuals, the Maple 10, in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.

McAteer and Whelan were found not guilty of six counts of providing unlawful financial assistance to six members of the Quinn family.

Former chairman of the bank Seán FitzPatrick (65) of Greystones, Co Wicklow, was acquitted of all allegations brought against him on Wednesday. And additional charges against Whelan related to the fraudulent alteration of loan facility letters were dropped on the direction of the judge earlier in the trial.

The case lasted 47 days and was the first time anyone was tried under section 60. It was also the first time an enlarged jury of 15 was used.

Judge Martin Nolan thanked the jury for their service, told them they were a credit to the jury system and exempted them from duty for 10 years.

Sentencing
He remanded the two men on bail pending sentencing on April 28th. Judge Nolan said he would be unlikely to give a decision at the sentence hearing.

The trial centred on a deal to unwind businessman Sean Quinn’s holding in Anglo. The court had heard that by July 2008 Mr Quinn’s contracts for difference (CFDs) – investment products based on share price – were equivalent to more than 28 per cent of the bank’s shares. This was a serious concern for the bank as it was feared if the CFDs were unwound in an uncontrolled manner it would have a negative effect on the bank’s share price.

A deal was devised which involved providing loans to 10 of the bank’s customers, known as the Maple 10, to buy just over 1 per cent each of the shares underlying the CFDs with six members of the Quinn family buying 15 per cent of the shares. The Maple 10 borrowed €45 million each while the Quinns borrowed €169 million. The deal was executed on July 14th, 2008.

Neither McAteer nor Whelan gave evidence during their trial. But their interviews with gardaí were read in court. In interviews at Irishtown Garda Station in 2010 and 2011, McAteer had said he was “not instrumental” in the Quinn unwind deal.

And he told gardaí he could not remember if he was in his office on July 14th to sign off on the loans.

Did not recall
He also did not recall a series of emails that carried details of the deal sent to him and others at the bank, though the tracking on the emails showed they had been opened.

In his closing statement, Patrick Gageby SC, for McAteer, said his client passed instructions to Matt Moran, Anglo’s chief financial officer, in relation to executing the transaction.

“It was not an instruction to do it at all costs or to do it without compliance,” Mr Gageby said. The court had also heard that Whelan told gardaí in April that former chief executive of the bank David Drumm had a “hotline” to financial regulator Pat Neary.

Under questioning from gardaí, Whelan said in the first week of July 2008 Mr Drumm returned from the States and told him he’d discussed with McAteer and Mr Moran that they would place some of the shares with bank clients. Asked by gardaí if the regulator had been contacted about the investors, Whelan said he understood he had been “fully informed”.

Brendan Grehan SC, for Whelan, argued that with the “crystal clear prism of hindsight”, everyone could say that the lending had been a bad idea, but at the time, it was a “perfectly valid commercial transaction”.

The Maple 10 borrowers saw it as such and his client acted on the basis of the belief that what he did was in accordance with the bank’s ordinary course of business. In his closing address to the jury, Judge Nolan had said in order for the men to be convicted the loans must not have been in the ordinary course of business, they must have known about them and they must not have done anything to stop them.