Anglo Trial

Rolling updates from trial of former executives of Anglo Irish Bank

Irish Times Reporters Mon, Feb 10
 
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  • This event has now ended
  • 09:57
    Good morning, we will be publishing updates from the Anglo Trial throughout the day, please return regularly for live coverage.
  • 10:00
    Day one liveblog coverage from the trial last Wednesday can be seen here. Here's day two, and day three.
  • 10:16
    Sean Quinn leaves court on Friday after he had been expected to give evidence, which was delayed when former chief executive of Quinn Group, Liam McCaffrey, gave evidence for several hours. Photograph: Collins Courts
    Sean Quinn leaves court on Friday after he had been expected to give evidence, which was delayed when former chief executive of Quinn Group, Liam McCaffrey, gave evidence for several hours. Photograph: Collins Courts
  • 10:32
    Sean Quinn has arrived at Dublin Circuit Criminal Court this morning where is expected to give evidence in the trial of Sean FitzPatrick, Willie McAteer and Pat Whelan. Sean FitzPatrick has also arrived.
  • 10:53
    Full running coverage of the Anglo trial is available here.
  • 11:12
    It’s the beginning of the second week of the Anglo trial.

    Once again it’s standing room only in the back of Court 19.

    Sean Quinn is seated in court wearing a dark suit, pale blue shirt and a yellow and gold striped tie. He is due to be the first witness called to give evidence today.

    Last week we heard evidence from Liam McCaffrey over two days in which the former chief executive of the Quinn Group described how Mr Quinn had built up large shareholdings in Anglo through contracts for difference (CFDs), and that the business had come under extreme pressure from CFD brokers to pay out on margin calls as the price of the Anglo shares continued to fall.

    Mr McCaffrey testified that the Financial Regulator was fully aware of a deal made between the bank and Mr Quinn to unwind the Quinn CFD position.

  • 11:18
    Seán Quinn (left), accompanied by his son Sean Quinn jnr, daughter Brenda Quinn and solicitor Niall McPartland (right), arriving at Dublin Circuit Criminal Court today. Photograph: Eric Luke/The Irish Times
    Seán Quinn (left), accompanied by his son Sean Quinn jnr, daughter Brenda Quinn and solicitor Niall McPartland (right), arriving at Dublin Circuit Criminal Court today. Photograph: Eric Luke/The Irish Times
  • 11:27
    Seán FitzPatrick arriving at Dublin Circuit Criminal Court this morning. Photograph: Eric Luke/The Irish Times
    Seán FitzPatrick arriving at Dublin Circuit Criminal Court this morning. Photograph: Eric Luke/The Irish Times
  • 11:52
    The trial is taking place in Court 19 at the Criminal Courts of Justice in Dublin. It’s standing room only there today. Photograph: Collins Courts
    The trial is taking place in Court 19 at the Criminal Courts of Justice in Dublin. It’s standing room only there today. Photograph: Collins Courts
  • 12:03
    Sean Quinn took the stand at 10.45am.

    Beginning evidence, he said in 2005 and 2006 the Quinn Group was profitable and was making about half a million euro a year in profit.

    He said as well as manufacturing and insurance, the group also had a portfolio around the world.

    “Myself and Patricia, my wife, handed over the business to the children in 2002,” he said.

    In 2006, he added, the group had borrowings of €300 million from Anglo and €1.1 billion from a consortium of banks.

    He said he thinks it was in 2006 that he became interested in contracts for difference (CFDs).

    “We thought, we are on our own, obviously no-one else thinks it, we thought we took a very conservative approach,” said Mr Quinn, in describing how the business decided to take a 25 per cent stake, via CFDs, in what was a “blue chip” bank in the State.

    In 2006 the CFD position was up to 8 to 10 per cent. The share price had dropped by about 30 per cent up by September 2007, he said.

    On September 11th, 2007 the stake in Anglo was up to 24 per cent. He said: “I thought it (Anglo) was a marvellous company.

    “We went through the pleasantries and chatted,” he said describing the start of a meeting in the Ardboyne hotel in 2007.

    This was the meeting during which he said he had told former Anglo chief executive David Drumm that “we had to take money out of Quinn Insurance to meet some of the margin calls”.

    “We were talking about hundreds of millions. Three, four hundred millions,” said Mr Quinn, describing the extent of the margin calls in late 2007.

    “I never asked him for any money but I was pleased that he offered me money. He said to me how much it would take to fill the hole. He said to tidy this whole thing up we should make it €500 million.

    “It reimbursed the insurance company and the manufacturing. It filled a hole that we had created.”
  • 12:11
    Sean Quinn said if there was a bad day in the market, a margin call would be made the next morning.

    After a series of large margin calls, Mr Quinn said he asked to meet the board of Anglo.

    “Could I get some assurances from the board that the bank is OK? That was refused. If you see the share price reducing and you are still being told the bank is profitable - and the share price going through the floor - you are starting to wonder are we being told the truth here,” he said.

    “I wasn’t at all happy. We reluctantly agreed that we would sell the shares, or the CFDs.”

    He said he had a couple of meetings with Con Horan and Patrick Neary from the Financial Regulator in the spring of 2008.

    “Myself and Con Horan [then with the Financial Regulator’s office] met on our own. They had two concerns. Was Quinn Direct OK? And the amount of money Anglo had loaned us. I don’t call it loans. They had invested in us.”

    Asked whether he spoke to the regulator about CFDs, Mr Quinn said: “I think it was talked about. It was just very vague. The regulator was very cautious. He was just doing a bit of fishing.”

    He continued: “In July David [Drumm] rang me up and said he was going to sell the shares. I was even more annoyed at that discussion than the first one. I said, `Why did you not do this a year ago? Why put in a pile of money in our name and then sell them?’ ”

    Paul O’Higgins SC, prosecuting, asked: “Did you have any say at this stage in whether the shares were sold or not?”

    He answered: “No, and he [Mr Drumm] let me know that in no uncertain terms… He told me what he was doing - and I objected strenuously.”  
  • 12:20
    A July 2008 meeting between himself and David Drumm was described by Mr Quinn. “It started off friendly enough but it didn’t end friendly,” he said.

    “What did you mean by Anglo funding the margins calls for Anglo’s benefit?” asked Paul O’Higgins, prosecuting.

    “Well it certainly wasn’t for our benefit. It appears that Anglo knew that the bank was in trouble in November 2007.”

    He said that shortly after the State’s bank guarantee in September 2008, he met with Mr Drumm and Sean FitzPatrick in Buswells hotel.

    “They were there to appease. They were there to say the 15 per cent would carry us through. They still felt very comfortable. The bank was in rude health and we shouldn’t be pursuing legal proceedings, we’d come to a gentleman’s agreement and we’d all live happily ever after.”

    After finishing his direct evidence, Mr Quinn is now being questioned by Brendan Grehan SC, defending Pat Whelan.

    “I read that,” Mr Quinn said, referring to his once-held position as “Ireland’s richest man”.

    In reaction to a description of his one-time position as the 12th richest man in the UK and Ireland, he said: “I didn’t know that. I forgot that. It was never an important criteria for me.”

    In response to Mr Grehan’s suggestion that he had once been in the Forbes top 200 rich list, he enjoined, “How times can change.”

    “We didn’t mean to get into CFDs as deep as we did,” he added.
  • 12:27
    Brendan Grehan SC, defending former Anglo executive Pat Whelan (above), has begun questioning Sean Quinn in court. Photograph: Niall Carson/PA Wire
    Brendan Grehan SC, defending former Anglo executive Pat Whelan (above), has begun questioning Sean Quinn in court. Photograph: Niall Carson/PA Wire
  • 13:05
    Referring to the build-up of Quinn Group’s CFD position in Anglo, Mr Grehan asked Mr Quinn: “Did you not take very great care in the manner in which Bazelly acquired its CFD in Anglo so that it would remain secret and under the radar?”

    “Yes, I think that would be fair. We’d always like to keep under the radar,” Mr Quinn replied.

    He said he had dinner with David Drumm in 2007 and told him he had invested in an interest in shares in Anglo. Mr Grehan told Mr Quinn that he had never referred to this dinner meeting before.

    Mr Grehan said that at one stage Mr Quinn had nine different brokerage firms all buying CFD positions in Anglo on behalf of Bazelly and that these firms, including Merrill Lynch and Bear Stearns, had bought the stocks in which the CFDs were leveraged.

    Mr Grehan asked Mr Quinn whether he understood that the nine brokers were creating an artificial market. They could be keeping the share price up.

    He said that if this situation had become known to the market, hedge funds could force the holder of a vulnerable position to sell shares.

    Mr Quinn said he understood this.
  • 13:08
    Mr Grehan asked that given this having been the case, why, after the Ardboyne hotel meeting in September 2007, did Mr Quinn invest in more CFDs instead of selling them?

    Mr Quinn said: “The logic in that was very clear. The share price had reduced by around 40 per cent. The profits had increased by 46 per cent in the year 2007. It was a phenomenal result. Where I come from those mathematics don’t add up.

    “You see the profits going up so much and the price coming down so much. These accounts were signed by the auditor.

    “There were brokers left right and centre talking about Anglo being the best bank in the world. I could see no reason why you would see selling shares in Anglo would be a good idea. It turned out I was wrong.”
  • 13:34
    Key points so far in Sean Quinn’s evidence:

    • In 2006, Mr Quinn said, Quinn Group had borrowings of €300 million from Anglo and €1.1 billion from a consortium of banks. He said he thought it was in 2006 that he became interested in contracts for difference (CFDs). On September 11th, 2007 the stake in Anglo was up to 24 per cent. He said: “I thought it (Anglo) was a marvellous company.”
    • “We went through the pleasantries and chatted,” Mr Quinn said, describing the start of a meeting in the Ardboyne hotel in 2007 with then Anglo chief executive David Drumm. This was the meeting during which he said he had told Mr Drumm that “we had to take money out of Quinn Insurance to meet some of the margin calls”. “We were talking about hundreds of millions. Three, four hundred millions,” said Mr Quinn, describing the extent of the margin calls in late 2007.
    • Mr Quinn said to Paul O’Higgins, prosecuting: “In July David [Drumm] rang me up and said he was going to sell the shares. I was even more annoyed at that discussion than the first one. I said, `Why did you not do this a year ago? Why put in a pile of money in our name and then sell them?’ ”   Mr O’Higgins SC asked: “Did you have any say at this stage in whether the shares were sold or not?” He answered: “No, and he [Mr Drumm] let me know that in no uncertain terms… He told me what he was doing - and I objected strenuously.”  
    • A July 2008 meeting between himself and David Drumm was described by Mr Quinn. “It started off friendly enough but it didn’t end friendly,” he said. “What did you mean by Anglo funding the margins calls for Anglo’s benefit?” asked Paul O’Higgins, prosecuting. “Well it certainly wasn’t for our benefit. It appears that Anglo knew that the bank was in trouble in November 2007.”
    • He said that shortly after the State’s bank guarantee in September 2008, he met with Mr Drumm and Sean FitzPatrick in Buswells hotel. “They were there to appease. They were there to say the 15 per cent would carry us through. They still felt very comfortable. The bank was in rude health and we shouldn’t be pursuing legal proceedings, we’d come to a gentleman’s agreement and we’d all live happily ever after.”
    • In response to Brendan Grehan SC’s suggestion that he had once been in the Forbes top 200 rich list, he enjoined, “How times can change.”
    • Mr Grehan (defending Pat Whelan) said that at one stage Mr Quinn had nine different brokerage firms all buying CFD positions in Anglo on behalf of Bazelly and that these firms, including Merrill Lynch and Bear Stearns, had bought the stocks in which the CFDs were leveraged. Mr Grehan asked Mr Quinn whether he understood that the nine brokers were creating an artificial market. They could be keeping the share price up. He said that if this situation had become known to the market, hedge funds could force the holder of a vulnerable position to sell shares. Mr Quinn said he understood this.
  • 13:39
    The trial has broken for lunch. The defence barristers will continue to cross-examine Sean Quinn for the afternoon session.

    Before the break, Brendan Grehan SC, defending Pat Whelan, asked Mr Quinn about a letter to Liam McCaffrey, former chief executive of Quinn Group, committing to a target debt reduction of €500 million by the disposal of assets in Prague, Istanbul, Kiev and Russia.

    Mr Quinn said: “That was never going to happen. It was never meant to happen.”

    He said that Anglo took security of the family’s Anglo share interests and that the Quinn family intended to pay back any loans lent to them from Anglo.

    “David Drumm told me that he was taking security of the shares. I gave him an undertaking that me and my family would pay every penny back to him, irrespective of the legality of the loans.

    “He said he was in constant contact with the governor of the Central Bank and that he had to do certain things and he couldn’t be seen to be supporting the share price. If he wanted to impress John Hurley (Central Bank governor) and show that he was on the game, I wasn’t going to interfere,” Mr Quinn said.

    “The bank loaned us the money in order that we wouldn’t sell the shares,” he added, telling the court that he believes the loans from Anglo to the Quinn Group were illegal and were there to stop him selling off their holdings.

    “But Sean Quinn didn’t want to sell the shares,” Mr Grehan said.

    “They didn’t want them sold either,” Mr Quinn said.

    “They didn’t want them dumped on the market,” Mr Grehan said.
  • 13:42

    Mr Grehan also asked Mr Quinn about the minutes of the meeting between him, Pat Neary and Con Horan in which it was recorded that “Mr Quinn explained that he deeply regretted the situation and believed that `Sean Quinn needed to be reigned in’ and had been greedy in terms of his involvement in CFDs.”

    He said he did not remember that but agreed he would sometimes speak in the third person at meetings and agreed that he would have held that opinion in 2007.

    Mr Quinn said he felt this meeting was a fishing expedition by the Financial Regulator.

    The regulator had concerns about the insurance company and his investment in Anglo, Mr Quinn said.

    The trial will resume after 2pm.

  • 14:58
    Resuming his cross-examination of Sean Quinn at 2.15pm, Brendan Grehan SC for Pat Whelan is going through a letter dated March 18th, 2008 sent from Liam McCaffrey to Michael O'Sullivan in Anglo Irish Bank.

    In the letter Mr McCaffrey wrote that the Quinn family had made a pledge to support their personal guarantee by giving the bank physical custody of their shares in Quinn Group.

    Mr Grehan asked Mr Quinn if he knew about this commitment.

    Mr Quinn replied: “This is where I gave away the family silver? Those share pledges were never given or never required. Anything that is being prepared here is for the Department of Finance.

    “At no stage did I ever believe they are going to be taking this security. I knew that it was never going to happen and it didn't happen.

    “If Liam McCaffrey said I knew that I knew. If he says he told me about it then he told me about it.

    “If I did, it was continuation of this whole Anglo story, we have to prepare a situation whereby the regulator doesn't believe we're assisting CFDs in any way, we have to be seen to be very strict, we have to be seen - you're going to sell property, you're going to hand over the keys. But that was all a pretence.

    “I have never been involved in the administration of the business. I'm involved in spending money stupidly. I finished school at 15. I never got involved in this aspect of the business.”
  • 15:12
    Sean Quinn arriving to give evidence at the Criminal Courts of Justice in Dublin earlier today, with his daughter Brenda. Photograph: Niall Carson/PA
    Sean Quinn arriving to give evidence at the Criminal Courts of Justice in Dublin earlier today, with his daughter Brenda. Photograph: Niall Carson/PA
  • 15:18
    “They were running out of rope,” Mr Quinn agrees with Mr Grehan that Anglo could not lend him any more money by July 2008.

    He then explained his frustration at unwinding his holding in Anglo in July 2008 to see the shares being sold at a record low on the market.

    He said: “After throwing billions of pounds to support and then going and giving them away, it just didn't make any sense. I was furious and I'm still furious.”

    “Anglo had lent all of this money for the purchase of these positions. We lost €3.2 billion through the Anglo fiasco. I was a fool.”

    “I'm not here to see you beat yourself up,” Mr Grehan said.

    “I've got a right beating the last few years,” Mr Quinn replied.
  • 15:25
    Mr Quinn said that Anglo, through David Drumm, had accepted his share position as a security against the loan. He agreed that there is no shred of paper to support this proposition.

    “Are you suggesting that there might be a scrap of paper anywhere that you made that Mr Drumm gave you an undertaking or gentleman's agreement that the loans would be secured on the shares?” asked Mr Grehan.

    Mr Quinn said: “I'm absolutely sure” (this agreement was made).

    “I rang David Drumm in the first or second week in December 2007. He asked me what it would take to sort it out. I said €400 million and he said he'd give me €500 million. I gave a commitment to pay it all back.”

    Mr Quinn later told Mr Grehan: “We ran out of road the previous December (2007). He (David Drumm) ran out of road in July (2008).”

    “If they hadn't given you the money in December?” asked Mr Grehan.

    Mr Quinn replied: “I'd be a very happy man now”.
  • 15:53
    “Your account of events are coloured very much by your losses,” Mr Grehan told Mr Quinn as he finished his cross-examination.

    “Of course they are. If you lost €2.3 billion of course it would colour your view,” Mr Quinn said.

    Mr Quinn admitted he built up a CFD position “without any encouragement from Anglo” but refused to concede a proposition from Mr Grehan that it was also without the bank's knowledge.
  • 15:57
    Mr Grehan finally put it to Mr Quinn that, despite his contention that there was some “unwritten gentleman's agreement” between him and Mr Drumm the bank went to extraordinary lengths to secure the monies that they were lending.

    A letter shown to court, from former Quinn Group chief executive Liam McCaffrey to Anglo, referred to various Quinn Group owned properties around the world.

    Mr Quinn said: “Some of these properties were geared up to four times their value. I'm just saying it was all a sham. This was to cover up the CFD position.”

    On a number of occasions during his testimony Mr Grehan told Mr Quinn that he could not use the witness box for a case he is taking in the Four Courts.

    Mr Quinn has now finished his evidence.
  • 16:37

    The prosecution's seventh witness is Sean Quinn Junior. He has taken the stand and will continue giving evidence tomorrow.


    The trial ended for the day at 4pm.  Check back here for the latest updates.

    Before the court rose for the day Sean Quinn Junior said that he did not draft and does not remember signing a letter purportedly sent from him to Anglo dated July 10th, 2008 and requesting a loan facility of €15,135,404 for the purpose of acquiring shares.


    The letter reads, “It is my intention to acquire shares in Anglo Irish Bank Corporation plc as a long term investment” and goes on the request the loan.



    Mr Quinn Jnr had told prosecuting counsel: “I certainly didn't draft or prepare this document. I'm not sure when this was created. I had no input in drafting it and no input in looking for the €15m.”


    He said “there was a standard practice since the company was given to us in 2002 for me to sign large volumes of documents.”
    He said the signature page would be emailed to his secretary and printed off and he would then sign them.