‘Maple 10’ deal done to benefit Irish bank system, trial hears

Former Anglo director says unwinding of Quinn holding had ‘massive benefits’ for regulator

 The former chief executive of  Anglo Irish Bank in the UK Declan Quilligan arrives at Dublin Circuit Criminal Court today. Photograph: Collins Courts.

The former chief executive of Anglo Irish Bank in the UK Declan Quilligan arrives at Dublin Circuit Criminal Court today. Photograph: Collins Courts.

 

A former director of Anglo Irish Bank has said with the benefit of hindsight, he wished everyone had signed off on the “Maple 10” deal because “the reason we were doing this was for the benefit of the Irish banking system”.

Declan Quilligan, head of Anglo in the UK in 2008, said he wished he had “got it all in writing”.

The deal, which involved 10 businessman borrowing €45 million each to buy shares in the bank and unwind Seán Quinn’s 28 per cent interest, would stabilise Anglo and deal with the problem “brought to our door”, Mr Quilligan said. It was also seen as stabilising the Irish banking system, he added.

If they were to do nothing to deal with the Quinn contracts for difference (CFDs) – investment products based on share price - they would have been “unwound in an uncontrolled way”, he said.

Mr Quilligan said it would have meant a risk to the banking system and the results “would have been catastrophic”.

“Doing nothing was never an option,” he said.

Mr Quilligan also said he was aware that the Maple 10 would be borrowing the money from Anglo to buy the bank’s shares. They would not have had that kind of money available to them, he said.

The then chief executive of the bank David Drumm had told him on July 8th about the deal and he also said he “got the impression that David had obviously spoken to Seán [FitzPatrick],” he said.

“And my assumption would have been that Seán would have spoken to the other non-executive board members,” Mr Quilligan said.

Mr FitzPatrick (65) of Greystones, Co Wicklow, William Mc Ateer (63) of Rathgar, Dublin and Pat Whelan (51) of Malahide, Dublin have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to Section 60 of the Companies Act.

Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals.

All three men have pleaded not guilty to the charges.

Mr Quilligan told the Dublin Circuit Criminal Court this morning that Mr Drumm phoned him on July 8th and told him he would be meeting the financial regulator the next day and would go through a “proposition that would lead to us lending to a number of high net worth individuals in the bank”.

An email from Mr Drumm dated July 9th to Mr Quilligan contained no content, the court heard, but the subject line read “regulator squared”.

“Excellent! Hope he was grateful!” was Mr Qulligan’s response to the email.

“Excited I would say. I think he is lying awake at night like the rest of us,” Mr Drumm answered.

Asked by Lorcan Staines BL, for Mr Whelan, what he meant by “grateful”, Mr Quilligan said there were “massive benefits for the regulator” in ensuring the “Maple 10” deal got done. It would avoid a calamity, not just for Anglo.

Mr Quilligan agreed he would have been prepared to meet some of the Irish investors as part of the deal “on the understanding it was supported by the regulator”.

He also told the court he was “quite relaxed” about the Maple 10 deal and didn’t feel he needed to see the loan documents.

Mr Quilligan also agreed that since the deal was done in July 2008, people had been “backing off from it”. He said reports of the deal “sounded like we had acted alone”. He was quite surprised with the reaction, he said.

“It’s being held out as an example of poor governance of a bank. I never felt that.”

The case continues.