Regulator sought removal of references to it in agreement

References made to the financial regulator in an agreement between Anglo Irish Bank and businessman Seán Quinn were removed following a request from the financial regulator's office, the trial of three directors of the bank heard yesterday.

The agreement reached at the end of March 2008 outlined how Mr Quinn’s holding in the bank would be unwound. The original draft of the agreement included references to the financial regulator.

Matt Moran, former chief financial officer with Anglo, said he got an email from the bank’s chief executive David Drumm on March 31st saying “he” wanted references to the regulator to be removed from the agreement between the bank and Mr Quinn.

Brendan Grehan SC, for Pat Whelan, asked Mr Moran who he thought "he" was. "I believe he refers to Con Horan," Mr Moran responded. Mr Horan was prudential director at the regulator's office.

“So the regulator wanted references to the regulator removed?” Mr Grehan asked.

“That’s my understanding,” Mr Moran responded.

Sean 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.

The court heard earlier this week that Mr Moran had been granted immunity from prosecution by the Director of Public Prosecutions for the purpose of the trial.

The jury was shown an email sent from Mr Drumm to Mr Moran on March 19th, 2008.

“If we had the approval of the regulator would there be any legal issue (company law) with lending against our own shares?” Mr Drumm asked in the email. “As I understand it we have an out under section 60 if it is in the ordinary course of business. In our case that means lending. Let’s look at this option tomorrow.”

Mr Moran said he did not recall the email or any follow-up on it the following day.

Mr Grehan highlighted an email sent by Mr Moran to Mr Horan at the financial regulator’s office on March 31st. It included a memorandum of agreement between Mr Quinn and Anglo over the unwinding of Mr Quinn’s interests in the bank.

Mr Moran requested confirmation from the regulator for approval of the deal, “if so required”.

Mr Grehan noted there were a lot of emails sent to the financial regulator’s office on foot of conversations but “very little back traffic”.

Mr Moran said the regulator’s office would ask questions on the phone and he would share the information with colleagues and respond to the regulator accordingly.

“Does the regulator get back and say okay, that’s fine?” Mr Grehan asked.

“That would not be my experience,” Mr Moran replied.

Mr Grehan asked if he got no response, how did he know it was okay to proceed.

If there was going to be an issue, “you’d expect a flag”, Mr Moran answered.

Asked by Mr Grehan if any stone had been left unturned in trying to resolve the CFD issue, Mr Moran said it was very difficult to see “if we could have done much more”.

On July 8th, Mr Moran received an email from Mr Drumm shortly before 9pm, saying he had spoken to Mr McAteer about “moving the game forward” with “a select group of clients”.

“Time for action,” Mr Drumm wrote.

A deal was agreed shortly afterwards that the Maple 10 would each buy 1 per cent of the bank’s shares and the Quinns would buy almost 15 per cent.

Mr Moran believed Morgan Stanley would ensure “what we did was properly undertaken”.

Mr Grehan asked Mr Moran what his understanding was of “Morgan Stanley’s position” in relation to the Maple deal after the company spoke to the financial regulator’s office and to legal advisers Matheson Ormsby Prentice on July 12th.

“I believe they were satisfied with all matters,” Mr Moran said.

The trial continues.