Businessman Seán Quinn jokingly told Tom Browne in 2007 he would "have to kill" the then Anglo Irish Bank executive if he told him the Quinn Group's true holding in the bank, the High Court has been told.
After months of rumours, Mr Browne said, during a property viewing trip to Russia and Ukraine in July 2007, he asked Mr Quinn directly about his holding in Anglo. “He laughed at me and said in a jocular fashion, ‘Sure if I told you that I’d have to kill you.’”
Mr Browne was continuing his evidence in an action against him for recovery of some €30 million in loans Anglo made to him before he left the bank in September 2007. The action is being brought by special liquidators appointed to the later nationalised Anglo's successor, the Irish Bank Resolution Corporation (IBRC), in which judgment is sought because of his default on those loans.
He has counterclaimed saying the loans were void by reason of fraudulent misrepresentation through silence by Anglo about the involvement of the Quinn Group in the ownership of the bank. IBRC denies this and disputes his claim he was not aware of the Quinn position when he was leaving Anglo in 2007.
Mr Browne said that jocular remark by Mr Quinn gave him a heightened sense of awareness about the Quinn holding, which was based on its purchase of what are called Contracts for Difference (CfDs). This allowed Mr Quinn to eventually build up a stake of some 28 per cent in Anglo without having to inform the stock market, which requires anything more than 3 per cent to be publicly divulged.
Mr Browne said CfDs were purchased through stockbrokers, whereby the purchaser has an interest but not ownership. As a result, if the share price drops, the purchaser of CfDs must put more money into them to keep up the value in the CfDs.
Stock market turmoil
With turmoil in the stock market in 2007 and 2008, Quinn had to get loans from Anglo to do this. Mr Browne said that while previously Quinn’s loans had been secured on assets at a 70 per cent loan-to-value (LTV) rate, by this stage Anglo was providing 100 per cent LTV for some €750 million in loans in a bid to stabilise Anglo’s shares, he said.
At the same time, Anglo turned to 10 high-wealth customers to get them to buy €10 million in shares each, with Anglo loans, to try to reduce the Quinn holding.
Mr Browne said he did not know about the Quinn holding when he left the bank in September 2007, the same time as he renegotiated existing and additional loan facilities.
As a result of alleged misrepresentation through silence, the wrong committed by Anglo was that he was lent money in 2007 on assets (his shareholdings) which were worth considerably less than he perceived.
Mr Browne said a report prepared by Anglo's new chief executive Donal O'Connor, appointed following the resignation of since-jailed chief executive David Drumm, was shown to him in 2010. He took a note of the report, which stated Mr Drumm "informs of SQ (Sean Quinn) CfD holding (28%)(av cost €14)" on September 11th, 2007.
He said this showed when the Quinn position was first known, while Mr Browne’s resignation had been announced the previous week, on September 4th. Right up until his last board meeting before leaving officially in November 2007, Mr Browne said the Quinn level of involvement in Anglo was still speculation and rumour.
He disputed a claim made by Michael O’Sullivan, who reported directly to Mr Browne as head of lending, that at no stage was a decision made to exclude him (Mr Browne) from discussions about the Quinn CfD position in November 2007.
Under cross-examination by Paul Gardiner SC, for IBRC, Mr Browne agreed he left Anglo with “a €3.7 million “golden handshake” but said initially the then-chairman Seán FitzPatrick told him “those days were gone” and the negotiations he had were hostile.
When he returned from holidays in August 2007, when he told Mr FitzPatrick he was not going to leave after all, the severance package was offered to him. He said he had had a difficult working relationship with David Drumm since 2006.
The case continues.