Neary only aware of extent of Quinn Anglo stake in 2008

Former regulator says ‘quizzing’ people about investments was not what regulator did

Former financial regulator Patrick Neary is seen arriving at Dublin Circuit Criminal Court today. Photograph: Collins

Former financial regulator Patrick Neary is seen arriving at Dublin Circuit Criminal Court today. Photograph: Collins


The head of the Irish Financial Services Regulatory Authority has said he did not know the full extent of businessman Sean Quinn’s holding in Anglo Irish Bank until March 2008, the trial of three directors at the bank was told this morning.

The court had heard that then chief executive of the bank David Drumm and its chairman Sean FitzPatrick had known about the holding since September 2007.

Mr Quinn had contracts for difference (CFDs) – investment products based on share value – worth more than 28 per cent of the bank’s shares.

Patrick Neary, who was appointed chief executive of IFSRA in 2006, told the court this morning he did not know the size of the holding until he was informed on March 21st, Good Friday.

He did say he got a call from Mr Drumm in autumn 2007 and had a meeting with him.

Mr Drumm asked if he could come to see Mr Neary “in person”. This was an unusual request, Mr Neary said, as he did not normally meet chief executives, but he agreed.

He said Mr Drumm was concerned about rumours that Mr Quinn was possibly holding CFD positions in the bank.

Mr Neary said he had heard the rumours as well, and Mr Drumm felt the holding might be “even bigger” than 10 per cent. He wanted to know if the regulator could find out, Mr Neary said.

But, he told the court, CFDs were not regulated products so “we had no statistics, no information collected and no way of finding out”. He said he asked Mr Drumm if he could establish further information to let him know.

Under cross-examination from Brendan Grehan SC, for Pat Whelan, Mr Neary said Mr Drumm was “most probably aware” at the time that Mr Quinn had a CFD holding of 28 per cent “but he chose not to tell me”.

Mr Grehan pointed out that evidence had been given that the board of Anglo became concerned about the holding in September 2007 and asked Mr Drumm to inform the regulator of the position.

The board understood “you were told”, Mr Grehan said.

“I wasn’t told the level,” Mr Neary responded.

“You didn’t ask outright?” Mr Grehan said.

“I don’t recall asking and he didn’t tell me,” Mr Neary responded.

Seán FitzPatrick (65) of Greystones, Co Wicklow; Willie McAteer (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 Neary also told the court of a meeting with Mr Quinn sometime in January 2008. He said Mr Quinn called his secretary and said he was in town and thought he should drop in and see the regulator.

Mr Neary said Mr Quinn outlined the strength of Quinn Direct and the strength of the Quinn Group.

He also said he had a small CFD holding in Ryanair and Anglo, but didn’t intend to hold on to it.

M Grehan asked if Mr Neary questioned Mr Quinn about the CFDs in Anglo. Mr Neary said he didn’t ask him “straight up”, but came about it in a roundabout way.

This was when he got the response that there were small holdings.

Mr Neary said Mr Quinn was entitled as a private citizen to have all the investments he liked and he “didn’t feel it was appropriate to tackle him”.

If he had been armed with the knowledge of a large holding, he “may have approached it”, he said.

Mr Quinn did not tell him of the size of his holding at two subsequent meetings about Quinn Insurance in February either, Mr Neary told the court.

He said there were four occasions on which he could have been informed about the size of the CFDs, one involving Mr Drumm and three involving Mr Quinn, but “they didn’t do so”.

And “quizzing” people about their investments, was “not something a regulator would go around doing”.

Mr Neary will continue to be cross-examined this afternoon.