Anglo inquiry covers loans to Quinn family to shore up stake

THE INQUIRIES into Anglo Irish Bank include an investigation into use of money borrowed from the bank by the Quinn family to shore up its huge contracts for difference (CFDs) investments in the bank’s shares, it was reported yesterday.

The Quinn family, owners of the Quinn Group, established by Seán Quinn, issued a statement in response to the report, saying it had always repaid its borrowings and “this will not change in the future”. A source with knowledge of the matter said the family had used Anglo, among other sources, when responding to calls for extra money that became due when Anglo’s share price began to fall in early 2008.

The family at one stage had a 25 per cent stake in Anglo, held through CFDs. It later converted this into a 15 per cent stake in the bank, using bank finance, while other long-term customers of the bank used bank loans to buy the other 10 per cent. The purchase of the CFDs had the effect of preventing a flood of shares coming onto the market.

The use of a company’s money to buy its own shares, and market manipulation of share prices, are issues being considered by a number of bodies conducting inquiries into the now-nationalised bank. CFDs are not actual shares.

The Quinn statement, issued in response to a report on RTÉ, read: “The Quinn family assets, which are held outside of the Quinn Group, have over the years been financed from a number of sources including related party loans from the group, internally generated cash, and finance from both Irish and international financial institutions, including Anglo Irish Bank.

“As these are private family assets we do not comment on the arrangements with any specific financial institution, except to say that over 36 years we have always repaid our borrowings and this will not change in the future.

“As has been widely documented, the family has lost a lot of money through their investment in Anglo Irish Bank, acquired initially through Contracts For Difference (CFDs), which are a legitimate and widely used investment vehicle.

“As previously stated, there has been absolutely no impropriety regarding the family’s dealings in any transactions relating to any of its investments, including Anglo Irish Bank, and we have no doubt that the current investigations will prove this. It is therefore disappointing to see the amount of attention focused on the Anglo story given the underlying success of the Quinn Group.

“The group is producing annual cash profits of between €400 million and €500 million whilst employing 5,500 people in Ireland, and will contribute circa €140m to the Irish exchequer in 2009. The group’s export-based model has shielded it from the worst effects of the recession in Ireland, and we are currently looking at expansion plans in the environmental and recycling areas which, combined with the growth of our existing businesses, are likely to create in excess of 800 new jobs over the next three years.”

The Garda, the Financial Regulator and the Office of the Director of Corporate Enforcement are all conducting inquiries into Anglo and matters linked to the Quinn family CFD position.