Anglo loan team believed board discussed Quinn situation ‘at length’, court told

The team at Anglo Irish Bank that dealt with loans for the Maple 10 understood all matters regarding the Quinn Group exposure were discussed at length by the bank's board, the trial of three directors was told yesterday.

Elma Kinane, former manager in the lending division of Anglo made her remarks after Una Ní Raifeartaigh SC, for the prosecution, asked her who she thought had ultimately authorised loans to the Maple 10.

Ms Kinane said the group she led, Team 91, understood the board were aware of all matters regarding the Quinn Group’s exposures and draw-downs.

The 10 businessmen, known as the Maple 10, borrowed €45 million each from Anglo to purchase shar+es in the bank in July 2008.

Ms Kinane explained that Team 91 dealt with all loans to the Quinn Group. She said rumours of the Quinn contracts for difference (CFDs) – investment products based on share price – had been circulating among colleagues in late 2007. In November 2007, Team 91 was told the Quinns needed €150 million. In December there was an additional requirement for €500 million and numerous credit applications were put together involving various properties held by Quinn to fund the loan.

Drumm supportive
Ms Kinane agreed she was at a meeting when then chief executive of the bank David Drumm "popped in" and mentioned he was keen the loan be accommodated. He said "you must find a way to do it or words to that effect".

She said the money was advanced without all of the security being perfected.

In July 2008, a decision was made to unwind some of the Quinns CFDs and Ms Kinane was asked to accompany Lorcan McCluskey, her line manager, to a meeting with Mr Whelan, then managing director for lending in Ireland.

Mr Whelan gave Mr McCluskey the names of the Maple 10 who were going to buy shares in Anglo as part of the unwinding. Mr Whelan asked that loan facility letters to be drawn up for them, said Ms Kinane. She said she recognised the names on the list as among the bank’s largest customers, though they were managed by other teams within the bank.

Ms Kinane said Team 91 was to deal with the 10 individuals for these loans only. And the understanding was she was “not to speak to them” and not to speak to the other teams about them.

“They wanted us to keep the knowledge of the CFD positions just within our team,” she said.

She filled out the credit committee applications for the loans on July 10th.

Ms Ní Raifeartaigh took her through one of the applications made for Maple 10 businessman Seán Reilly. She asked Ms Kinane why she wrote that Mr Reilly had contacted the bank when in fact the bank had contacted him about buying the shares.

Ms Kinane replied that she had assumed the borrowers had come to the bank.

“I didn’t know differently at the time,” she said.

'I can't recall'
Ms Ní Raifeartaigh asked why she had written that the loan was to purchase Irish shares and not shares in Anglo.

“To be honest I can’t recall,” replied Ms Kinane.

The form also noted Mr Reilly’s net worth and indicated he was “an astute investor”. Ms Kinane agreed she had no knowledge of this. She said she was asked to prepare the forms in a hurry and she was “not to be touching base with other teams”.

Lorcan Staines, for Mr Whelan, asked Ms Kinane what she would say to someone who thought she had done something “underhand” in the way she prepared the documents.

“They would be wrong about that,” replied the witness.

She said the team had no knowledge of the buyers (Maple 10) and was not allowed to contact them. She was told to prepare the forms quickly “and that is what I did”.

If there was any incorrect information she would expect it to be corrected prior to sign-off by the group-risk section.

The case continues on Monday.