Apparent thread between Quinn family and offshore companies

Seán Quinn’s son-in-law and nephew are linked to a company involved in dispute with IBRC

THE MOST notable aspect of the proceedings taking place in the High Court in Belfast is the thread they have apparently established between the family of Seán Quinn and offshore companies behind some bizarre goings on in Moscow and Kiev.

While the web of companies involved is complex, and the developments that have been occurring in the courts in Moscow and Kiev are deeply troubling, at the core of the matter is a simple equation.

Anglo Irish Bank loaned hundreds of millions of euro to Quinn family companies and sought as collateral an international network of property companies established to hold a valuable inheritance for Quinn’s five children.

Now Anglo has collapsed, its wreckage is owned by the State, and the Quinn family has neither repaid the loans nor handed over the international properties. Instead, Quinn’s wife Patricia and his five children, Aoife, Collette, Brenda, Ciara and Seán jnr, are disputing their overall debt to Anglo for reasons to do with Anglo’s involvement in issuing loans to support its own share price.

Aoife Quinn has said in an affidavit the family is seeking to protect its international properties from being seized by the bank and that the family disputes the bank’s right to the properties. The family’s case against the Anglo loans will be heard this year. The family was not represented in court in Belfast yesterday and has yet to make an appearance in the case.

As far as the foreign properties are concerned, one of the most valuable is the Kutuzoff Tower in Moscow, a commercial building with blue chip tenants which brought in rent of $19.2 million in 2010 and which has a value of up to $180 million (€140.7 million).

It is owned by way of a Russian company, Finansstroy, which is in turn owned by way of a web of companies headed by a former Quinn family company based in Sweden.

The bank has had a receiver appointed to the Swedish company, but has yet to get its hands on the tower, or its rent roll.

The courts in Moscow have recognised a claim for up to $100 million (€78 million) against Finansstroy. The claim was from a Belize company called Galfis Overseas Ltd. Bankruptcy proceedings have been initiated by Galfis on foot of the judgment, and if successful, the chances of Anglo (now Irish Bank Resolution Corporation, or IBRC) seizing the Moscow tower may slip away forever.

When the claim from Galfis emerged in the Russian courts last year, it was said to be an entity until then unheard of. The proceedings in Belfast show this is not quite so. A temporary injunction granted by Mr Justice McCloskey concerns an assignment by a Quinn family company of a loan agreement it had, to Galfis.

The Quinn company in question, Demesne Investments Ltd, is based in Seán Quinn’s home village of Derrylin, Co Fermanagh, and Quinn is one of its former directors (it has since been seized by IBRC).

The Ukraina shopping centre in central Kiev is another of the properties Quinn intended would form part of his children’s inheritance. It has a value of up to $60 million (€47 million), and produced rent of $10.8 million (€8.4 million) in 2010. Again, IBRC has so far failed to seize either the rent or the building.

On St Stephen’s Day, the courts in Kiev granted a $45.2 million (€35 million) judgment order in favour of a British Virgin Islands company, Lyndhurst Development Trading SA, against Univermag, the Ukrainian company that operates the shopping centre.

Following the appointment of the receiver to the Quinn company in Sweden last year, a new director was appointed to run Univermag in the place of the director who had run it when owned by the Quinns.

On St Stephen’s Day, the court in Kiev heard a submission from the ousted director of Univermag, accepting the claim presented by Lyndhurst, and refused to hear the director who had been appointed in her place some months earlier. IBRC now expects a bankruptcy application to be filed against Univermag.

The proceedings under way in Belfast have now disclosed an apparent link between the Quinn family and Lyndhurst.

According to an order issued by Mr Justice McCloskey on December 23rd last, a supplementary loan agreement was entered into between Demesne Investments, Enniskillen company Innishmore Consultancy Ltd and Univermag on April 6th, 2011.

An assignment agreement dated October 7th, 2011 between Innishmore and Lyndhurst was also cited in the court, as was a supplementary loan agreement between Innishmore, Lyndhurst and Univermag dated November 4th, 2011.

The nature of the agreements was not spelled out, but their net effect is understood to be that Lyndhurst now has the right to debts formerly due by Univermag to Demesne.

Records in Companies House, London, show Innishmore was incorporated on January 17th, 2011. Its shareholder is Peter Quinn jnr, a nephew of Seán Quinn. Stephen Kelly (an accountant married to Aoife Quinn) was appointed a director of the company, which has an address in Enniskillen, on April 17th, 2011, and he resigned on June 20th, 2011.

The accounts for Demesne Investments show Seán Quinn resigned as a director on April 14th, 2011, as did his long-time associates Kevin Lunney and John Dara O’Reilly. They were replaced as directors by representatives of IBRC including Ray Jackson, the receiver appointed to the Quinn Group that same day – a day which Seán Quinn has described as the worst in his career.