‘Up to Anglo and Morgan Stanley to ensure compliance’, Horan tells court

Witness
Con Horan , a former prudential director at the Financial Regulator's office.

Snapshots
n Mr Horan, who is currently on secondment to the European Banking Authority in London, told the court that on July 8th, 2008, a meeting took place of the Domestic Standing Group – an emergency planning forum that comprised the Department of Finance, the Central Bank and the regulator.

According to minutes of the meeting, if Anglo’s attempts to secure investment in the United States were unsuccessful, “a domestic solution would have to be found”.

This could involve, for example, "the establishment of an investment vehicle by the two main banks [Bank of Ireland and Allied Irish Banks] which would take over the CFD position in Anglo and convert it into a long- term investment in the bank."

Reference was also made to involving “authorities such as the NPRF [National Pension Reserve Fund] if possible.”

n On a phone call the following day, Mr Horan said, Anglo chief executive David Drumm told him the bank had lined up "Irish and international investors" to purchase Anglo shares as part of a plan to unwind businessman Seán Quinn's large CFD stake in the bank

n Brendan Grehan SC asked Mr Horan if, on the July 9th call with Mr Drumm, he asked the Anglo chief executive who the investors were. He replied that Mr Drumm indicated they were “Irish and international investors”, that each would take a share- holding of less than 3 per cent and they weren’t related to each other.

“You say it was you who asked was there lending by the bank,” Mr Grehan said. “I probably did, yes,” Mr Horan replied.

n Mr Grehan asked Mr Horan if it had occurred to him that Morgan Stanley was taking comfort from the fact that he seemed, in a conference call on July 12th, to be positive about the transaction.

Mr Horan said the regulator’s office was “supportive” of the plan, but that he qualified that on the July 12th call, by saying that he did not have any of the paperwork and it was up to Anglo and Morgan Stanley to ensure the deal was fully compliant.

“So they shouldn’t have taken too much comfort from the conversation with the regulator,” Mr Horan said.

n Mr Grehan said none of the six people who were party to that call said Mr Horan put the onus back on Morgan Stanley and Anglo. “I’m sure that I did,” Mr Horan said.

n In evidence on Monday, Morgan Stanley employee David Churton said Mr Horan asked on the call for the identities of the investors. "I can't recall asking that," Mr Horan told the court.

n Mr Grehan put it to the witness that Matt Moran, another former Anglo executive, said the fact that the bank would lend to parties was discussed with Mr Horan. "I have no recollection at all of that being discussed," Mr Horan told the court.

There are now 14 jurors in the case.