Regulator knew of Quinn’s Anglo holding, court told

Gary McGann told David Drumm everyone was ‘rooting’ for him

Former Anglo Irish Bank director Gary McGann outside Dublin Circuit Criminal Court today. Photograph: Collins Courts

Former Anglo Irish Bank director Gary McGann outside Dublin Circuit Criminal Court today. Photograph: Collins Courts


A former director of Anglo Irish Bank has said he believed the financial regulator was told about the size of businessman Sean Quinn’s holding in the bank in late 2007 or early 2008.

Gary McGann, who is currently chief executive of Smurfit Kappa, told the trial of three former directors of the bank that at a meeting in late 2007 or early 2008 the Anglo board learnt of Mr Quinn’s significant contracts for difference – investment products based on share price – in the bank.

The board told the chief executive of the bank, David Drumm, to inform the financial regulator, he said.

Mr McGann said he understood the regulator was informed and he understood he was “equally exercised” and he “pressurised management” into finding a solution.

Brendan Grehan SC, for Pat Whelan, asked Mr McGann if there was any suggestion Mr Drumm should meet the regulator but not disclose to him the size of the Quinn CFD holding.

“I have no recollection of that. In fact intuitively I would have said the opposite,” Mr McGann responded.

Seán FitzPatrick (65) of Greystones, Co Wicklow; Willie McAteer (63) of Rathgar, Dublin; and Mr 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 Quinn’s CFD holdings were unwound in July 2008 with the Maple 10 businessmen buying 1 per cent each of shares in the bank and the Quinn children purchasing just under 15 per cent, both groups using loans from Anglo.

Mr McGann said he was informed a deal had been finalised by Mr FitzPatrick in a phone call around July 16th when he was on business in the Netherlands. He said he was at dinner when the call came through and he excused himself. Mr FitzPatrick did not give him details of the transaction but said it had been completed, Mr McGann said.

He did not recall him mentioning lending to the Maple 10 investors or to how the Quinns would be funded.

Emails sent from Mr McGann to Mr Drumm on the evening of July 10th were opened to the court by Úna Ní Raifeartaigh SC, for the prosecution.

One read that Mr McGann had been “speaking to Sean on a couple of occasions about the planned execution”.

The email said: “You and the team are doing fantastic work in very trying circumstances and I just want to acknowledge that – we are all rooting for you! Keep up the good work.”

Another email from Mr McGann on the same evening said when the deal was done, they needed to have “a credible explanation for how we got where we are, what we have done about it and whether the problem is solved”. It said in the “worst case scenario”, they would have to explain “the totality”.

Mr McGann told the court he believed the unwind was complex and would have to be explained “to investors if not to others”.

In a responding email, Mr Drumm said they were handling each customer separately, they were each close to the bank and “none of them know who else or how much is involved”.

Also giving evidence this morning was head of markets supervision at the financial regulator’s office Martin Moloney, who said he was not surprised that some officials in his office had some awareness of Sean Quinn’s holdings in Anglo Irish Bank six months before he did.

Mr Moloney said he did not know about Mr Quinn’s CFDs until April 2nd, 2008. Under cross-examination, he conceded he was the person with responsibility for transparency issues, but said CFDs were not regulated and he had very precise obligations under the EU transparency directive.

In a brief contribution also this morning, Mr Neary concluded his evidence under cross examination by Patrick Gageby SC, for Mr McAteer. He confirmed a regulator might give “negative clearance” to certain transactions the office was informed about.

The case continues this afternoon.