Quinn case: There was nothing ‘normal’ about this litigation saga

Seven years ago, Sean Quinn junior was about to get married.

He was also facing jail for contempt over a €455 million asset-stripping scheme across several countries including Russia, Ukraine, Cyprus and India, involving characters that would not have been out of place in a John Le Carre thriller.

Judge Elizabeth Dunne granted a brief adjournment of the contempt case in May 2012 so Quinn junior could marry Karen Woods.

Later that year, Quinn junior went to jail for three months, and his father for nine weeks, after the judge found them in “outrageous” contempt of orders made in summer 2011 preventing asset-stripping from the family’s international property group (IPG).

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Russian

A warrant to jail Peter Darragh Quinn, a nephew of Sean Quinn senior, for contempt has never been executed because he went back home across the Border after giving evidence and didn’t come back.

"Petey", as his uncle called him, had denied being the mastermind of a scheme to move Quinn IPG assets beyond the reach of Anglo Irish Bank as it moved in 2011 to take over Quinn companies. He insisted there was no masterplan and it was more like "firefighting".

He said he and Sean Quinn senior signed documents in Russian neither could read, assigning multi-million euro loans of Quinn companies to a former railway worker in Ukraine they had never met.

That was on the advice of Russian lawyers and the Quinns believed it was better to take a risk with a stranger than get “nothing” from Anglo.

He was quizzed about assigning multi-million euro loans for nominal payments of €100 and a range of other actions. He denied any involvement in contrived bankruptcies of viable companies as part of the asset-stripping but agreed he made a one day trip to Dubai in June 2011 for meetings about setting up a possible trust structure for new Quinn business ventures.

That was the last the court heard from Peter Darragh Quinn.

When his cousin Sean Quinn junior finally purged his contempt, Judge Dunne told him she hoped she had seen “the last” of him.

It was a forlorn hope. Few could have foreseen in 2012 another court hearing would have to be deferred because Sean junior was at the birth of his second son or that he would have three children by the time the bitter litigation between the Quinns and State owned Irish Bank Resolution Corporation (IBRC) finally ended today.

He and his four sisters - Aoife, Brenda, Ciara and Colette - were all said to be emotional and in tears when the settlement deal was finally done.

According to sources, the Quinns had refused a €20 million settlement offer from a senior IBRC executive some years ago. A settlement then would have saved millions of Euro in legal costs for both themselves and the State. It would also have saved the Quinns a lot of stress and humiliation.

Anglo Irish Bank

The courts have been dealing since 2011 with the two separate cases involving the Quinns and IBRC, into which Anglo Irish Bank was nationalised in 2009 after its collapse.

A source close to the litigation described the bank’s name change as a “masterstroke”. “It should have been Anglo Irish Bank Resolution Corporation but calling it IBRC drew a line between the old and new guard and meant people would see this as a State owned entity trying to recover what it could for the public purse from the Anglo mess.”

Both cases are rooted in the relationship between Sean Quinn snr and Anglo.

A billionaire businessman with more than 100 companies in 14 countries at one stage, the Co Cavan based Quinn patriarch, who described himself as a “simple farmer’s son”, ultimately lost his companies after gambling hundreds of millions on Anglo shares.

He was a bankrupt for a time before re-emerging from bankruptcy to set up QuinnBet, an online betting venture where several of his family are now working.

The story of Anglo and its ultimate collapse, with continuing devastating consequences for the Irish people, is well known but the core dispute in the Quinn litigation was whether the blame for what happened to the Quinn group should be laid at the door of Anglo or Sean Quinn senior.

In their case, the Quinns insisted the blame lay squarely with Anglo. They alleged €2.34 billion of the €2.89 billion loans made by Anglo to Quinn companies could not be enforced because they were for the unlawful purpose of propping up the bank’s share price and the bank was not entitled to have appointed receivers over Quinn companies.

In its case, the bank alleged various Quinn family members conspired with a number of companies, to put €455 million of assets out of its reach and demanded return of the assets.

The full hearings of both cases were delayed for years while separate prosecutions of various Anglo executives and officials worked their way through the criminal courts.

The email had no content except the words "regulator squared" in the subject field. Quilligan replied: "Excellent! I hope he was grateful."

However, there were multiple pre-trial applications including for freezing orders over the Quinns’ personal accounts in 2011 and the contempt hearings of 2012.

In 2013, Judge Peter Kelly refused to let the Quinns join the Central Bank and former financial regulator Pat Neary as co-defendants with IBRC.

They claimed both were well aware Anglo had advanced unlawful loans in 2008 to shore up its share price and they relied on documents including an email from David Drumm to Declan Quilligan of Anglo in July 2008.

The email had no content except the words “regulator squared” in the subject field. Quilligan replied: “Excellent! I hope he was grateful.”

The refusal to allow the Quinns make those claims in their case against IBRC led to them initiating separate proceedings against the Central Bank and regulator, also settled today.

Supreme Court

Probably the high point for the Quinns in their case was in 2012 when High Court Judge Peter Charleton refused IBRC's pre-trial bid to stop them pursuing the illegal/unenforceable lending claims. It would be contrary to public policy to prevent them responding to the "flagrant illegality" alleged against both Anglo and Sean Quinn, the judge declared.

A Supreme Court judgment of 2015 overturning that decision and taking the illegal/unenforceable claim out of the case was a major blow for the Quinns and it was no surprise when a mediation began later in 2015 but that failed. Sources say an offer of €20 million to settle was also made outside the formal mediation but the Quinns rejected that.

The Quinn case was reformulated to essentially focus on claims they didn’t know or understand what they were signing and were unduly influenced by the bank to sign the disputed securities.

In its final stages the case, as a result of the bankruptcy of both of their parents, was pursued only by the five adult children.

Last February, in response to urgings by the High Court, another mediation began but it too failed. When the action opened last month, it had shifted focus as the children claimed undue influence against their father.

Judge Garrett Simons’s refusal to allow them pursue that claim because it amounted to a “radically different” case, was another significant blow prompting the return to settlement talks and the negotiation of the settlement agreement.

IBRC’s own case against various Quinn family members and a number of companies, including UAE-based Senat Legal, alleged a conspiracy to strip assets from the Quinn international property group to ensure the bank didn’t get its hands on them. The bank got injunctions in 2012 restraining asset stripping and the breach of those lead to Sean Quinn and his son being jailed for contempt.

‘Underhand’ 

Sean Quinn senior was adamant during the 2012 contempt hearing that the blame for his group’s misfortunes lay with Anglo. In often emotional testimony, he said he left school at 15 and, with “honesty and integrity”, built up companies which employed 7,000 people.

Anglo, he maintained, was a “reckless” bank that had robbed him and his family of their wealth, pride and dignity.

He choked back tears when he referred to Anglo's "underhand" takeover of his companies in 2011. Anglo had "raped" the Quinn group, "bankrupted me for €3 billion", wrecked Ireland and "bullied me out of office". He told IBRC's Paul Gallagher SC that, since the Anglo takeover of his companies, he wasn't particularly concerned what happened to their assets "so long as Anglo didn't get them".

IBRC spent a lot of time, and money, trying to establish where the IPG assets were, who was controlling them, how to recover them and where the Quinn children were getting their money.

Anglo had "raped" the Quinn group, "bankrupted me for €3 billion"

It took legal proceedings in Russia and India and several other places trying to secure the IPG assets. The Quinns persistently denied dishonesty, insisting they had lost control over the assets and didn’t know their whereabouts.

The five children were cross-examined in 2013 about how they spent about €2.5 million paid to them from Russian companies after the bank insisted their evidence about their 2011 employment contracts with those firms was “completely unbelievable”.

IPG Assets

Sean Quinn junior said he didn’t believe he had to say what he had done with about €400,000 paid to him over a year by IPG companies and his wife was advised she didn’t have to explain how she spent €320,297 paid to her.

Aoife Quinn said she had spent, within a year, almost all of her €370,000 salary from a Russian company paid into her bank account in Moscow but had no receipts. She agreed she travelled to Dubai eight times between 2011 and 2012 to meet lawyers and others, made eight trips to Russia and also travelled to Kiev in Ukraine, Cyprus, Abu Dhabi and Zurich in Switzerland in 2011 and 2012. She denied she was involved in meetings to set up a trust for her father.

There were many applications to vary the freezing orders, with the Quinns complaining those prevented them getting mortgages or buying cars and living “normal lives”.

There were many days of hearings of bitter disputes over living expenses for the family and persistent rows over the alleged role of foreign companies and lawyers in the asset stripping. Other disputes were over discovery of hundreds of thousands of documents and exactly what claims could be advanced.

The Quinns' battle to hold onto former Quinn assets suffered a major setback when they were refused injunctions in late 2013 preventing IBRC either moving Quinn group assets into Nama or selling them by the end of the year. The assets included 27 identified properties here and in various countries, including Russia, India and Turkey.

IBRC managed to recover some of the key assets in the IPG, including the Kutuzoff tower block in Moscow, but the progress of asset recovery appeared to slow after 2013 and was adversely affected by events such as the Russian invasion of Ukraine.

IBRC's frustration with the progress of asset recovery was underlined by its decision to hire a Russian based asset recovery firm, A1, to help recover assets. Under the deal, A1 was to share in the proceeds of any asset recovery. Exactly what return it has achieved has yet to be established.

One source has conservatively estimated the total legal costs to date, here and abroad, at well over €25 million

In 2016, IBRC special liquidator Kieran Wallace complained IBRC still did not know the whereabouts of certain assets and estimated it had lost some US $95 million dollars in rental income, along with several valuable properties in several countries.

Just last January, IBRC claimed that Dubai registered Mecon FZE, a company connected to an advisory firm to the Quinn family, was behind the cash extraction of about $15 million dollars from an Indian company via bogus transactions. IBRC has since reached an agreement with Mecon.

There was also little monetary satisfaction for IBRC in relation to Sean Quinn senior who was declared bankrupt in 2012 on foot of debts of €2.89 billion to Anglo. He exited bankruptcy after three years. IBRC recently got judgment for €121 million against his wife Patricia who also went bankrupt.

Neither the litigation nor asset recovery has come cheap but the exact costs of all of it have yet to be disclosed. What is clear is the costs to the State must be enormous.

One source has conservatively estimated the total legal costs to date, here and abroad, at well over €25 million. Others think it is substantially more. The additional asset recovery and other costs, including accountancy, could well exceed the €25 million.

There was nothing “normal” about this litigation saga.