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ANGLO TRIAL: Bank was in daily contact with regulator about Maple Ten deal, court hears

Monday, 24th March, 2014 5:58pm

ANGLO TRIAL: Bank was in daily contact with regulator about Maple Ten deal, court hears

By Conor Gallagher

The trial of three former Anglo Irish Bank executives has heard there was “a hotline” between the bank and the Financial Regulator about the allegedly illegal Maple Ten deal.

One of the accused, Pat Whelan, told gardaí that the regulator’s office was in daily contact with the bank in the run-up to the deal and that it was given full details of the transactions including the identities of the Maple Ten.

The former head of the regulator’s office, Pat Neary, previously told the trial he was only informed that ten domestic or international investors were buying the shares. His second in command Con Horan gave evidence that it wasn’t until the following year that he learned there was lending to the Maple Ten by Anglo.

The Maple Ten were ten property developers who were recruited by Anglo to buy a total of 9.4 per cent of the bank’s shares. This was part of a deal to unwind Sean Quinn’s 29.4 per cent control of the bank based on Contracts for Difference (CFDs) which allow an investor to gamble on a share price without purchasing the share itself

The accused also told investigators that both he and Anglo were comfortable with the lending to the Maple Ten as it was “in the ordinary course of business” and the bank’s compliance department had raised no objection.

Mr Whelan and his co-accused Sean FitzPatrick and William McAteer are charged under Section 60 of the Companies Act 1963 of providing funding for the purchase of Anglo’s own shares. This section contains a clause which permits lending if it is the ordinary course of the company’s business.

The three men have been charged at Dublin Circuit Criminal Court with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank. The 16 individuals are six members of the Quinn family and the Maple Ten group of investors.

Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.

Mr FitzPatrick (65) of Greystones, Co Wicklow, Mr McAteer (63) of Rathgar, Dublin and Mr Whelan (51) of Malahide, Dublin have pleaded not (NOT) guilty to all charges.

Today (Monday) Detective Sergeant Brian Mahon of the Garda Bureau of Fraud Investigation gave evidence of Mr Whelan’s interview first garda interview on April 9, 2010.

Det Sgt Mahon told prosecuting counsel Una Ni Raifeartaigh SC that the interview revolved around a report which had been prepared for Anglo’s board by Mr Whelan in January 2009 on the Quinn-Maple deal.

The court heard Mr Whelan had handed a version of this report to gardaí as they searched Anglo’s offices. It was titled “A review of Quinn group and related transactions.”

The report repeatedly states that the Financial Regulator was kept “fully informed” about the Maple deal and was anxious for it to proceed.

Mr Whelan told gardaí that former Anglo CEO David Drumm kept the head of the Regulator’s office, Pat Neary, informed of the details.

“They seemed to have a hotline with each other,” he told gardaí. He said Anglo officials were in daily contact with the Regulator’s office and that the office was told the bank would be lending to the investors as part of the deal.

Mr Whelan also said that the second in command at the regulator’s office, Mr Horan, was informed of the identities of some of the Maple Ten around the time the transaction went through.

He said he “specifically recalls” hearing one side of a phone call between Mr Drumm and Mr Horan during which the Anglo CEO disclosed the names of eight of the investors. He said this call occurred sometime between July 10 and July 17, 2008.

Mr Whelan’s report stated that the bank intended loaning €60 million to each of the Maple Ten so they could buy the shares. It said Mr Drumm felt “uncomfortable” asking them to agree to any personal recourse on these loans because they were being asked to come to the bank’s assistance.

Mr Whelan said it was eventually agreed that they would be subject to 25 per cent personal recourse.

The trial continues before Judge Martin Nolan and a jury of seven men and seven women.