A former Anglo Irish Bank board member has said she was "horrified" when she found out in 2008 that businessman Seán Quinn controlled almost a quarter of the bank's shares through contracts for difference (CFDs).
Anne Heraty, who sat on the bank's board from 2006 to 2009, told the trial of three former Anglo directors that, in summer 2007, newspapers were speculating that Mr Quinn had a stake in the bank through CFDs – investment products based on share price. The rumours suggested his holding was about 10-11 per cent, she said.
Ms Heraty said this was of concern to the bank's board and, at a board dinner in September 2007, it was agreed that the bank's chairman, Seán FitzPatrick, and chief executive David Drumm would meet Mr Quinn to establish whether he had a stake and, if so, what his intentions were.
Ms Heraty said Mr FitzPatrick reported back to the board on November 19th, informing members that Mr Quinn had built up a CFD stake of about 23-24 per cent. “I was horrified when I heard it,” she told Paul Anthony McDermott, prosecuting.
Anglo shares
Ms Heraty was giving evidence in the trial of Seán FitzPatrick (65), Greystones, Co Wicklow; Willie McAteer (63), Rathgar, Dublin; and Pat Whelan (51), Malahide, Dublin, who are charged with providing unlawful financial assistance to 16 individuals in July 2008 to buy Anglo shares.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals. All three have pleaded not guilty to the charges.
Ms Heraty said that by March 2008, “tension was building” in relation to Mr Quinn’s CFD positions. She said the board was told the regulator “really wanted a plan” as to how this would be dealt with.
A decision was taken that the bank would seek external institutional investors or sovereign wealth funds to take part of Mr Quinn’s holding.
Ms Heraty said the regulator was “a feature of every board meeting we had” in this period. “His desire to see those shares placed was discussed extensively,” she said.
After a board meeting on March 7th, 2008, her understanding was that the regulator “was putting significant pressure” on Mr Drumm and Mr FitzPatrick to find a solution to the problem of Mr Quinn’s position.
Sometime in July 2008, Ms Heraty said, she was advised that the placing of the shares with institutional investors was not going well. Ultimately, that plan did not go ahead.
'High net worth'
Ms Heraty told the court that on the weekend before July 14th, 2008 – which, the court previously heard, was the day on which the unwinding of Mr Quinn's CFD positions began – she received a phone call from Mr FitzPatrick, who told her the share placing was going ahead with 10 "high net worth" individuals.
Ms Heraty told the court no names were mentioned during the call nor did she ask for the individuals’ names. Asked when she became aware of who the so-called Maple 10 were, Ms Heraty said it was some time after the bank was nationalised in January 2009, when she read it in the papers.
Under cross-examination from Brendan Grehan SC, Ms Heraty said she attended a meeting with the regulator in April 2008. In attendance at the meeting were the regulator, Pat Neary, prudential director Con Horan, Mr Drumm, Mr FitzPatrick and a number of Anglo non-executive board members.
Short notice
Ms Heraty said the meeting was called by the regulator at short notice and that he wanted as many board members as possible to attend. She said the purpose of the meeting was not clear. Mr Neary "talked around the subject" but he wanted Mr Drumm to help him out with "an issue he had with the accounts of Quinn Insurance".
“It wasn’t clear what the purpose of the meeting was,” she said. “It wasn’t a meeting that had a real clarity to it.”
