What happened yesterday in the Anglo trial?

Day 8: At A Glance

Witness Brian Gillespie at Dublin Circuit Criminal Court yesterday. Photograph: Collins Courts

Witness Brian Gillespie at Dublin Circuit Criminal Court yesterday. Photograph: Collins Courts

Sat, Feb 15, 2014, 08:14

Witnesses

- Niall Tuite, former head of credit risk (Ireland and United States) at Anglo Irish Bank.

- John McCabe, developer.
- Brian Gillespie, former head of compliance (Ireland) at Anglo Irish Bank.

- Elma Kinane, former manager on “Team 91” in the lending division at Anglo Irish Bank.


Snapshots

Mr Tuite told the court the Anglo credit committee did not formally meet to approve the Maple 10 loans.

Mr Gillespie was one of three Anglo employees who dialled into a conference call between the investment bank Morgan Stanley and the financial regulator in July 2008. The subject matter was the Maple 10 transaction. Mr Gillespie told the court his impression was that Con Horan, the prudential director at the regulator’s office, was “very, very, very positive” about the transaction.

Mr Gillespie was also present when Anglo dialled into a call between Morgan Stanley representatives and Robert Heron of Matheson Ormsby Prentice Solicitors . Asked for his overall view of Mr Heron’s stance on the transaction, Mr Gillespie said he was “pro”. As far as he understood, there was “no question” of Morgan Stanley being dissatisfied.

In July 2008, Mr McCabe told the court, he received a call from Pat Whelan of Anglo, who said he had a “proposition” to make and was anxious to see him. At a meeting the next morning with Mr Whelan and David Drumm, then the bank’s chief executive, Mr Drumm said a “major investor” held 25 per cent of the bank’s shares and was willing to redeem only 15 per cent. “They were looking for four to five long-term clients at the bank to help in buying a portion of the 10 per cent. So they wanted me to buy 1 per cent,” Mr McCabe said.

Mr McCabe said he asked “all the relevant questions” and was told the transaction was “totally legal”. He was told the financial regulator, the Central Bank, the department of finance and Matheson Ormsby Prentice Solicitors were aware of it, and that the regulator was “anxious to get this done”.

In July 2008 a decision was made to unwind some of Seá n Quinn’s contracts for difference (CFD) holdings and Ms Kinane was asked to accompany Lorcan McCluskey, her line manager, to a meeting with Mr Whelan, she told the court. Mr Whelan gave Mr McCluskey the names of the Maple 10, who were going to buy shares in Anglo as part of the unwinding of Mr Quinn’s CFD holdings. Mr Whelan asked for loan facility letters to be drawn up for them, Ms Kinane said. She recognised the names on the list as among the bank’s largest customers.

Ms Kinane said she prepared memoranda for Anglo’s “group risk” division on the 10 “Maple” loans. Part of the memo for each borrower stated: “The Irish equity market is experiencing unprecedented volatility due [to] the on going credit crunch, economic downturn and rising commodity prices. As a result, in excess of € 40 billion has been written off Irish banking shares alone since February 2007.” It continued: “Many market watchers are of the view that it is a good time to acquire equities . . . Given the opportunities that now exist, [named borrower] has approached us seeking a share-dealing facility.”

Prosecuting counsel Úna Ní Raifeartaigh SC asked Ms Kinane why she wrote that the investors had contacted the bank when in fact the bank had contacted the investors about buying the shares. Ms Kinane said she had “assumed” the borrowers had come to the bank, but that nobody had told her that. “I had limited knowledge, I made some assumptions and assumed they would be reviewed by the right parties,” she said.