Former Quinn family adviser: ‘I should have acted differently’
Michael Waechter of Senat says he has nothing to hide in his dealings with Quinns
Between the City of London and the theatres of the West End lies One Aldwych in Covent Garden. It is a plush five-star hotel located between where big money and high drama meet.
Based in the United Arab Emirates, Waechter has flown in from Munich. Later he will return to the Senat office in Gold & Diamond Park, an office park not far from the Palm Jumeirah, an artificial archipelago in Dubai.
The Swiss-born business adviser is wearing a blue suit and an expensive-looking tie. “Good to finally meet you Tom,” he says.
“Likewise Michael, I’ve read a lot about you,” I reply. “Don’t believe everything you read!” he laughs.
Waechter has a cappuccino in front of him and gestures to a waitress to take my order.
Request to meet
Some weeks earlier, Waechter had contacted The Irish Times requesting a meeting. It was hard not to be sceptical about the businessman’s motivations but Waechter said he wanted a chance to set the record straight and to clear his name.
In civil proceedings in the Irish courts, Waechter has been accused of helping to orchestrate a vast international alleged “conspiracy” to defraud Irish taxpayers.
There is a lot of money involved: the assets range from shopping malls to skyscrapers. They are worth up $500 million (€360 million) and record rents of more than $35 million per annum.
It is still not known where much of the rent has gone however.
For the past four years the former Anglo Irish Bank has been battling to regain control of these assets in an epic multi-jurisdiction battle that has taken it to courts in four continents incurring legal fees that run into the multimillions.
Waechter freely admits he is part of the Quinn-Anglo story. He says that he certainly helped to get the ball rolling for the Quinn family but he is certain he did so legally.
Russian and Ukraine
In particular he says he has nothing to do with Russia or Ukraine, where things are so serious the Irish state has teamed up with Russian oligarchs to try to regain control of some former Quinn assets.
From Waechter’s point of view his name has been dragged unfairly centre stage. He is, he says, an economics and computers graduate who worked in financial services with UBS before moving to Dubai.
In 2006 he founded Senat which employs six people today, and five at the time he first met the Quinn family.
Waechter says his involvement with the Quinn family has distinct parts. The first contact was in Hyderabad, India, where the Quinns owned an office park called Q City in the booming business district of Gachibowli. Q City has almost 1 million sq ft of office and commercial development space and its neighbours include Microsoft and Wipro. This project has been valued at $80 million. Sean Quinn developed it for his children as part of a €500 million property portfolio.
In 2011 Anglo Irish Bank, which had by then been nationalised, began to move to seize this portfolio from the family. It wanted to sell the assets off to pay down €2.8 billion in borrowings.
The Quinn family disputed the legality of this debt as most of it related to funding Quinn’s position in the bank’s own shares.
They decided to fight the bank and took steps to move some assets away from Anglo.
The family has always denied doing so illegally and they claim the assets are now out of their control. A judge did not believe that they had acted legally, however, and found three members of the family in 2012 guilty of contempt of court, including the family’s patriarch Sean Quinn, for breach of an injunction secured by the bank on their assets.
In 2011, however, when Senat first met the Quinns, this was all in the future.
Waechter said he knew nothing about Anglo when out of the blue his company was approached to buy Q City.
“In the end of May, beginning of June, we got approached,” Waechter recalled. “They say that we have the opportunity to become majority owner of a company.”
This company was a Quinn firm called Mack Soft, which owned Q City.
“It was kind of a distress sale so we had a short time to decide would we be interested to go ahead and have a look at it. We say fine, yes, why not?” Waechter recalled.
He said he had a client who was “open for such investments” who owned another company called Mecon. Waechter said he had known this client for years and he was a “real” person.
Waechter said he could not name this man citing client confidentiality, but he said he would tell his name to a judge.
Waechter declined to name the Indian “contact” who first approached him with the deal. He said after a “very, very basic due diligence” the deal went ahead.
An “independent accounting firm,” he said had valued the shares acquired in Mack Soft, and this gave Senat the confidence to feel the deal was legal.
Waechter could not name this firm offhand, but later said it was RPVS & Associates, chartered accountants.
This company states it was founded in 2004 by two Indian accountants and its website indicates that it employs about 10 people.
Waechter said he did not consider the suitability of this firm to provide a complex valuation.
Back in Cavan that same month an extraordinary general meeting of Mack Soft was held. This issued new shares in the company and transferred them over to Dubai-based Mecon, giving it control.
How much did his client pay for a building worth $80 million today? “It was clearly below one million US dollars,” he says.
Did you not think this was too low?
“Ridiculously low,” he agreed.
Too good to be true? No, Waechter said. The deal was not as good as it looks today, back then.
Waechter said his client had to deal with paying corporate property tax of $1.2 million and a service tax demand of $2 million. Then there was a $1 million claim from a previous owner of the site, problems with fire and occupancy certificates and a row with a local bank.
In addition, under a complex deal Mecon has taken control of Q City only until 2017, after which it will return to Anglo control, he said.
But isn’t it still a low price for a building that could earn millions in rents over six years?
Waechter said the rent of the building was only covering its costs. “This is not a gold mine!” he said. No rent, he said, had gone to the Quinns or any Quinn proxy.
Anglo is currently fighting in Irish and Indian courts to try to regain control of Q City. Waechter said in April 2012 a former Indian chief justice had reaffirmed his view that the deal was legal, so he was confident his client would win.
Are you sure you did not commit a fraud? “We are confident that we have done this in line with Indian law. We have done this at what was a justified value. Because of that, I don’t see that it was defrauding IBRC [Anglo].”
About two weeks after the Indian deal on June 20th, 2011, Peter Darragh Quinn, the nephew of Sean Quinn, turned up at Senat’s door. “That was the first time that we met someone from the Quinn family,” Waechter said.
Fugitive from contempt of court
Peter had been described in Irish courts in 2012 as playing a “pivotal role” in the asset-stripping of his family’s former overseas property empire. He is currently a fugitive from a contempt of court judgment in Ireland after he decided to leave the Republic.
“Senat FZC provided Peter Darragh Quinn and some Russian gentlemen with eight companies,” Waechter said.
“Gentlemen is an English expression,” he added. “I have no information about what happened in Russia other than from the media so I don’t want to judge.”
Reports from Russia and Ukraine, appear to demonstrate that whoever took control of assets such as the Univermag Ukraina shopping mall in Kiev or the Kutuzoff Tower in Moscow have powerful connections.
Panama and Belize
This, however, was 2011. Back then Peter and his Russian friends, according to Waechter, simply wanted eight companies in Panama and Belize. Senat provided these firms as it had previously done so for others hundreds of times.
“[Peter] said, ‘Listen I have a demand for eight offshore companies’ and we provided those eight offshore companies,” Waechter said.
“Normal checks” on both Peter and the Russians raised no red flags for Senat.
A notable Russian who met Waechter at this time was Yaroslav Gurnyak. He would later turn out to be a Ukrainian railway worker who was the cousin of a Russian lawyer working for the Quinns. Senat says it was told Gurnyak was a reputable businessman by his translator.
One of the Belize companies that Senat helped to organise was used to put Gurnyak in control of the Kutuzoff Tower in Moscow, an asset worth more than $100 million.
It was bizarre stuff, but Waechter said he did not facilitate any illegality.
By the start of July 2011 the eight overseas companies were operational. Later that same month Anglo Irish Bank secured an order in the Irish courts freezing the Quinns’ overseas assets, as it feared it was about to lose control of them.
Did Waechter know this was coming? “No.”
Later Senat provided the owners of a company with power of attorney so they could prove that they acted on the behalf of the company. “After that, after the handover of those companies we were not involved at all.”
Peter, Waechter said, came across during these meetings as a “normal person”. He said Peter told him that he was involved in a legal row in Russia and that his Russian lawyers, A&B, had sent him to Senat to “organise” the companies.
“Look at this in our view . . . If you have an agreement with the Irish telecoms provider and you have a phone line. On this phone line you discuss a crime. Nobody comes up with the idea that you can sue the telecoms operator because he provided you a phone line.”
Did Peter say he wanted the companies to fight Anglo? “If you have a big company and you see that they are going down somewhere it doesn’t mean that we just sit there and wait until the whole company goes belly up. We say, what can we do within the legal frame, to mitigate the risk?”
Waechter said it was only a year later in 2012 that he began to grasp the full context of what was going on. “They [the companies] were needed for structuring,” he said was all he was told in 2011.
Of all the business advisers in the world why ask Senat and not a big international firm?
“A lot of clients decide not to go with the big ones because they are more expensive and more difficult to deal with. They prefer the more boutique approach,” he replied.
Not long after setting up these companies, another connection between the Quinns and Senat began.
International legal battles
In mid-2011 Senat had just set up a new division called Senat Legal. Peter asked that new division to take on the task of co-ordinating his family’s various legal battles internationally against Anglo.
“We got contacted by Peter Darragh Quinn and he asked could we do that. We are talking about defence. We are talking about the Eversheds [a previous legal adviser to the Quinn family based in Dublin] of this world,” Waechter said.
He said Senat’s role was limited only to the family’s legal actions in Cyprus, India and Ireland, and that they had no involvement with actions in Russia or Ukraine.
Waechter said in total Senat spent between $7 million and $8 million on the Quinns’ legal defence, including its own fees.
This stopped, he said, in August 2012 when Anglo Irish Bank appointed a receiver over the Quinn children.
[After the meeting Waechter gets back in touch to say he had also met with Aoife in Zurich for a “general discussion”.]
At the Dubai meeting, Waechter said the Quinns discussed how best to “co-ordinate their legal affairs”.
Waechter said he only met Sean Quinn Jr briefly but he got to know Aoife and her husband better after they went for a beer and BBQ later that evening.
“I think they are sympathetic. They are nice people,” Waechter said. “I don’t want to judge anything that they do. I am speaking about the human interactions.”
Over a beer, he said, Aoife and Kelly complained bitterly about Anglo’s treatment of their family, but he said this was normal for clients in legal disputes.
Waechter said it was in his view normal for business people to take action if under attack.
“Isn’t it logical that when there is a danger coming that you try to reorganise yourself and do whatever you are allowed to do to protect your assets?” he said.
“That is an absolute normal approach. As long as what you do is according to the law, then you can do it. You don’t have to wait until the boat sinks.”
Have the Quinn’s damaged your reputation? “I don’t point the finger,” Waechter said. “I should have acted differently and I should have probably not taken this on.
“I still say legally speaking it was all in line and correct,” he added. “From a marketing point of view it was not a good decision. I am not happy that we were dragged into this case and that we were so dominantly mentioned in these whole hearings,” he said.
If not you, then who is to blame for the asset-stripping? “I don’t know.”
Waechter said if he was the mastermind of the entire operation he felt it was unlikely that the Quinns would so often mention him in legal cases.
“Would you put [the mastermind] into the shooting range?” he asked.
“You would not mention his name.”
Prior to its liquidation the former board of Anglo appointed A1, an asset recovery firm owned by Russian oligarchs, to form a joint venture to recover Quinn assets in Ukraine and Russia.
Waechter said A1 has never contacted him. “How could we help?” he said.
He said that Senat and representatives of Anglo – now called IBRC and in liquidation – have met once to discuss what is going on.
Waechter said at this meeting he tried to find a settlement. He declined to say how much his client who bought Q City wanted to be paid. “There is a small, small, small amount. This is compensation for costs that we will have,” Waechter said.
According to other sources the number mentioned was about $2 million.
Anglo’s special liquidator KPMG said: “We would not accept a settlement and this issue is also subject to current court proceedings.”
Waechter said in August 2011 an unnamed Russian company had told him his firm was doing a “good job” in relation to the Quinn overseas assets.
Waechter said Senat was asked if could also work with this Russian company, helping it to fight Anglo.
“This contract never went ahead,” he said. “It was not so clear who was the owner of this [company] and how would this work. The second thing is that we realised that we didn’t have the knowledge to do so, so we stepped out of this.”
Senat was getting more careful about who it chose to enter into business with.
“Everything doesn’t make sense,” Waechler insists. He said he believes that even if Senat is found guilty of something in Ireland or India, this will have no legal impact as his business is subject to the laws of the UAE.
“You cannot go to the UAE and enforce [a judgment],” he said. “It simply doesn’t make sense.”
“I am not the mastermind,” Waechter repeats. “I don’t know how much money [the Quinns] had before the case. I don’t know where they have the money. I don’t know where the money is now.”
“It is very easy when you see from today and you look backwards. Yes we did a mistake to accept [the Quinns and others as clients]. What could we have done to avoid it? We could have asked more questions. You do an investment in a share and afterwards it goes the wrong way. Everyone has these situations.”
It just seems like extraordinary things kept happening to him and his firm very fast. “You look at this from the back,” Waechter replies.
He said if Senat had anything to hide, it could have tried to do so using various means, but it has not.
“In this whole process we have always said yes we did this, this, this. We never said we didn’t do that. This is not my signature. We said, we did this, this, this.”
Towards the end of the interview, it turns into somewhat of a repeated circle around who knew what and when.
With one hour and 56 minutes on the tape the interview stops.
Waechter takes a neat gold box out of his bag and offers it to me.
I turn it over in my hands, not sure what to do with it, thinking about giving it back. “It is only dates, nothing to worry about! They are delicious!” he laughs.
On that front, at least, later verification proves the Swiss business adviser correct.
KPMG said it could not comment on Waechter as issues related to him were the “subject of an ongoing court action”.