‘I feel that a State agency led the two men into error and illegality’

Judge Martin Nolan rules former Anglo directors Pat Whelan and Willie McAteer won’t go to jail

Two former Anglo Irish Bank directors will not be sent to jail after a judge said it would be unjust to imprison them given the financial regulator gave the "green light" to the illegal share-buying scheme for which they were convicted.

Judge Martin Nolan said the scheme to unwind businessman Seán Quinn's stake in Anglo in July 2008 was "a blatant affront" to the law but concluded that he could not give Pat Whelan and Willie McAteer custodial sentences as "a State agency led them into error and illegality".

He also took into account that the two men were not motivated by “avarice or greed or the pursuit of profit” and that they believed the scheme was legal. Their motive was “a genuine if misguided attempt to save the bank”, he said.

Whelan (52), Anglo’s former head of lending for Ireland, and McAteer (63), the bank’s former finance director, did not react as the judge spoke and left Dublin Circuit Criminal Court without making any comment.


Earlier this month, after a 48-day trial, they were found guilty on 10 counts each of providing unlawful financial assistance to investors known as the Maple 10 to buy shares in Anglo in July 2008. The two former bankers, who faced up to five years in jail, will now be assessed for community service.

In a sharp critique of the regulator's role in the Project Maple deal, Judge Nolan said he was satisfied then regulator Pat Neary, who had "limited recall", nonetheless knew of the general situation regarding Anglo's efforts to unwind Mr Quinn's stake in the bank.

'Red lights'
Both Mr Neary and Con Horan, prudential director at the regulator's office, "must have known" the bank intended lending to buy its shares by March 2008, when an initial deal was tabled, and it seemed "incredible" that "red lights didn't go off somewhere in the regulator's office," Judge Nolan said. "It seems Mr Horan and Mr Neary were more anxious to solve the problem than to comply with the technicality of the law".

By not warning Anglo they gave “a green light to lending”, he said. Either the regulator didn’t know it was a breach of section 60 of the Companies Act or he “chose to disregard it”.

The Central Bank reacted to the judge's comments by saying it had "substantially strengthened" Ireland's capacity in financial regulation and supervision over the past number of years and introduced "sweeping changes" in supervisory practices. "It is confident that the shortcomings identified by the court would not recur today," a spokeswoman said.

Judge Nolan said the problem Project Maple sought to remedy was not caused by the defendants or by Anglo, but by Mr Quinn’s “investment strategy” in Anglo.

The bank's former chief executive, David Drumm, was the "instigator and author of the scheme", the judge said, and both of the defendants knew about the scheme and played their part in it.

But he said the attitude and behaviour of the regulator, as well as the two men’s belief as to the legal situation, complicated the case and made it unjust to imprison them.

Parliamentary inquiry
The conclusion of the trial will be followed swiftly by Government moves to establish the long-awaited parliamentary inquiry into the banking crash, which was delayed for the duration of the court proceedings.

The Coalition will shortly send proposed terms of reference to the Oireachtas but final details remain to be settled between Taoiseach Enda Kenny and Tánaiste Eamon Gilmore.

While public hearings are not likely to begin until the autumn, the performance of the regulator and other State bodies will be a prime focus of the inquiry.

Ruadhán Mac Cormaic

Ruadhán Mac Cormaic

Ruadhán Mac Cormaic is the Editor of The Irish Times