Belfast Telegraph

FitzPatrick 'knew of law breach'

The former chairman of Anglo Irish Bank knew a 625 million euro plan to unwind former billionaire Sean Quinn's secret shareholding was a flagrant breach of company law, a court has been told.

The fraud trial of Sean FitzPatrick and two other executives entered its final stages in Dublin with prosecution lawyers claiming the bankrupt banker was guilty because he had been privy to certain facts as a senior board member.

On the direction of Judge Martin Nolan, FitzPatrick was earlier found not guilty of six charges relating to 170m euro of loans to members of the Quinn family.

There was no evidence against him regarding those loans, Dublin Circuit Criminal Court heard.

At a brief morning hearing - day 41 of one of the most complex trials in Irish legal history - the jury was told he is facing 10 charges for loans given to a group of trusted, long-standing clients of the bank - the Maple 10.

Both sets of loans were arranged in July 2008 to unwind the secret Quinn position.

He owned 28% of Anglo's shares following an audacious and doomed 2.4 billion euro punt using supposedly hidden trading derivatives, Contracts for Difference (CfD), sold by international finance houses like Credit Suisse and Morgan Stanley.

One of the other executives, Anglo's former managing director of lending Pat Whelan, was found not guilty on seven separate charges of being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.

Judge Nolan told the jury: "For good reason I have directed a not guilty verdict in these matters."

The trial, now in its 10th week and with a larger than usual jury due its duration, centres on whether the 625 million euro of loans made by Anglo to buy the Quinn CfDs were in the ordinary course of business.

It is expected to wrap up in the coming days with the prosecution making closing submissions before the three defence lawyers submit their evidence.

The state's case against Whelan, former chief risk officer William McAteer and FitzPatrick alleges they were involved in providing unlawful financial assistance to individuals in July 2008 to buy shares in the bank, contrary to Section 60 of Ireland's Companies Act.

It is legal for companies to provide finance in the ordinary course of business, but it is alleged the Anglo share deal was extraordinary.

In submissions as the prosecution brought its case to a close in the afternoon, Paul O'Higgins, senior counsel, said that such large lending was designed to prop up the share price as it tanked on world markets - from a high of 17.53 euro on June 1 2007.

"The purpose and aim of these loans make it crystal clear that they were nothing like ordinary business for the bank," Mr O'Higgins told the jury.

"They were exceptional business for the bank. They only occurred because the bank found itself in an extraordinary position."

FitzPatrick, of Whitshed Road, Greystones, Co Wicklow, McAteer, of Auburn Villas, Rathgar, south Dublin, and Whelan, of Coast Road, Malahide, Co Dublin, are on bail.

They have all pleaded not guilty to all charges.

FitzPatrick is on trial for 10 counts relating to the loans to the Maple 10 while the other two former executives still face 16 charges.

In a lengthy and complex submission, due to be complete on Thursday, Mr O'Higgins told the jury there is an obligation for company directors to ensure compliance with the law and their job should be looked upon as a privilege.

He said: "There has been considerable play made on behalf of Mr FitzPatrick that he was a non-executive director. He was.

"But he was more than a non-executive director. He was chairman of the company, which imposes and grants power, more than a non-executive director.

"What the prosecution say is, he is guilty, and he is guilty because he knew certain facts while he was a director, executive or non-executive, that he was in a position to put him in clear notice that this company was acting in flagrant breach of the Companies Act."

The jury was told it was irrelevant whether the Irish financial regulator knew about the deal at the time or sanctioned it.

They were also told it was irrelevant whether or not the deal was set up with the intention to save Anglo and that the bank would have collapsed without it.

Mr O'Higgins told the jury they had to consider who authorised the lending and whether any of the three men had taken any steps to prevent it from going ahead.

He also described McAteer and Whelan as being instrumental in arranging the loans.

The hearing continues on Thursday.


From Belfast Telegraph