Proceedings on astronomical scale as latest subplot in Anglo saga unfolds

ANALYSIS:A family, a vast sum, a civil action. But without Sean Quinn himself, it is Hamlet without a prince

COUNSEL FOR the wife and five children of Sean Quinn joked that we may have grown accustomed to large sums but that a stated figure of €2,344 billion was not correct in relation to the loans provided by Anglo Irish Bank to the family.

Brian O’Moore told the Commercial Court that the figure in an affidavit of one of Quinn’s children, Aoife, should in fact read €2,344 million or €2.344 billion.

Typos aside, the figures here – the largest claim to come before the court in its seven-year history and possibly in the history of the State – are astronomical.

The action is a subplot of a bigger narrative about the collapse of the State’s third-largest bank and the demise of the country’s richest man, Quinn. The case centres on his investment in Anglo through contracts for difference (CFDs), a heavily borrowed play based on the bank’s share price.

Sean Quinn and his family owe the bank almost €2.9 billion. Of this, some €2.344 billion was advanced to meet losses relating to his CFDs in Anglo, covering almost 30 per cent of the bank, and to fund a direct shareholding, which has been wiped out.

This is the first time the family have disclosed the scale of the loans relating to Quinn’s gamble.

The family say they invested €750 million in the CFDs from “Quinn resources” before the end of 2007 but, from September 2007 on, as the share price fell, Anglo provided the loans of €2.34 billion.

They are contesting the legality of the loans and seeking to overturn the appointment of a receiver by Anglo last month – an action that led to the family’s loss of Quinn’s 38-year-old business.

Loans were advanced to seven companies in the Quinn Group after September 2007.

Aoife Quinn, the only plaintiff to file an affidavit, said the bank gave the loans “in the full knowledge” that they were to be used “to support CFD positions [in Anglo]”.

She claimed the loans were “in support of an illegal objective of market manipulation” prohibited by EU market abuse rules.

Anglo’s lending was “tainted with illegality or was intended to support an illegal purpose”, she said. For that reason, the bank’s loans to the family were unlawful, invalid and unenforceable.

In or around October 2008, loans totalling €385 million were channelled to the family through five Cypriot companies and €102 million to a Cypriot firm owned by Quinn’s wife, Patricia, to buy shares directly in the bank.

The family unwound the CFDs in July 2008 and took a direct shareholding of almost 15 per cent. Ten long-standing customers took another 10 per cent stake in the CFD unwinding in a deal put together by the bank supported with loans from the bank.

Strangely, Quinn himself does not feature in the family’s action, despite his central role. It is like Hamlet without the prince.

But Anglo may draw him on to the stage. The bank’s senior counsel, Paul Gallagher, the former attorney general, said the bank may seek to join Quinn and other parties to the action.

The full details of what the Quinns are seeking is not fully clear as they have yet to file a statement of claim. This must be filed by next week. But the scale of the damages sought were hinted at. O’Moore said Quinn Group (ROI) – the shareholder company behind the group – had net assets of about €750 million in 2007.

Mr Justice Peter Kelly acknowledged the complexity of the case by approving a schedule agreed between the sides that will see months of documents being discovered and exchanged before a hearing early next year.

Now a long-running civil action can be added to the long-running criminal investigations around the events leading to Anglo’s collapse.