ANALYSIS:There may be a number of legal reasons why the names of the investors in Anglo shares should be disclosed, writes COLM KEENA

DETAILS emerging concerning the purchase last July of 25 per cent of the shares in Anglo Irish Bank may support reasons for the disclosure of the identities of the people who bought the shares.

The Government has for some time been citing legal advice for its position that the names of the 10 investors who bought 10 per cent of the bank in July, using the bank’s money, cannot be named on the grounds of customer confidentiality.

However, the 2006 Investment Funds, Companies and Miscellaneous Provisions Act says that persons who co-operate “on the basis of an agreement, either express or tacit, either oral or written”, aimed at the acquisition of shares by one or more of them, can be considered a concert party.

A concert party, the members of which buy a shareholding equal to more than 15 per cent of a company, is obliged to make a disclosure to the Stock Exchange. No such disclosure was made last July when members of the Quinn family, and the 10 investors, bought 25 per cent of Anglo Irish Bank.

From what The Irish Times has been able to establish, the shares were held by nine suppliers of contracts for difference (CFDs) with whom members of the Quinn family had contracts.

The entire shareholding was bought, at the same time, by Morgan Stanley bank, London, which immediately sold the shares on to the members of the Quinn family and the 10 investors. Anglo Irish Bank, which had since March been seeking to have the Quinn family CFD position unwound, funded the acquisition by the Quinn family members and the 10 other buyers, who were all long-established customers of Anglo.

It is difficult to see how such a manoeuvre could be carried out without all the buyers involved being party to an agreement. Somebody somewhere was organising the massive transaction. The amount involved may have been close to €1 billion.

In such an instance, therefore, there could be reason to argue that not alone would it not be unlawful to name the former shareholders, but rather that it was unlawful that they weren’t declared at the time.

The bank has since been nationalised. Under section 83 of the Companies Act, Minister for Finance Brian Lenihan, as the controlling shareholder, may have the right to seek to have the former shareholders identified, and to publish this information. This section of the Act allows for the identification of former shareholders by a company and the publication of their names.

Another aspect of the matter is that the purpose of the transactions was to prevent the huge shareholding coming onto the market, as this would have caused a severe fall in the bank’s share price.

It follows, therefore, that the purchasers of the shares could have got the shares for a lower price if they’d refused to become involved in the deal. This brings into question the commercial reality of the loan transactions, without which they could arguably be rendered void.

The bank advanced €451 million to the shareholders, of which approximately €300 million may have had only the shares as security. This money is now likely to be written off.

The fact that a large proportion of the money loaned was secured against the shares that were to be bought with the money being loaned, combined with the fact that at the time the bank’s share price was falling, would seem to be in conflict with the bank’s stated policy of seeking strong collateral for its loans, up to and including personal guarantees.

If it can be argued that the transaction was not a bona fide commercial transaction, there could be a case for the bank seeking to have its money returned. The announcement by the bank that it intended taking such an action could presumably include the disclosing of the names of the persons from whom the bank was seeking the return of its money.

Under section 60 of the Companies Act, a company cannot lend money for the purchase of its own shares. The Act exempts banks from the restriction if they have loaned money in the normal course of their business. There is little about the Anglo transaction that indicates it was normal business, even for Anglo Irish Bank.

As well as this breach of company law, the bank may have been involved in insider dealing and market abuse.