Official denies ‘cheerleading’ for Quinn-Anglo deal

An official from the financial regulator's office has denied he was "cheerleading" for a deal between Anglo Irish Bank and the Quinn Group, but said he was "positively disposed" toward transactions between the parties in March and July 2008, the trial of three directors of the bank heard this morning.

In cross-examination, Michael O’Higgins SC, for Seán FitzPatrick, suggested Con Horan, then prudential director at the Irish Financial Services Regulatory Authority (Ifsra - the financial regulator), was cheerleading for a deal.

Mr Horan responded that he would not characterise it like that; of course they were concerned and glad to see a deal happen and were positively disposed toward it.

“Do people get a dictionary when they go to work in financial services?” Mr O’Higgins asked, accusing Mr Horan of using “bland words”.

“Maybe my language is not as colourful as yourself...” Mr Horan responded.

Mr FitzPatrick (65), of Greystones, Co Wicklow; Willie McAteer (63) of Rathgar, Dublin; and Pat Whelan (51) of Malahide, Dublin, have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to section 60 of the Companies Act.

Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals. All three men have pleaded not guilty to the charges.

Mr O’Higgins suggested the Domestic Standing Group, made up of representatives of the Central Bank, Ifsra and the Department of Finance was a “doomsday committee”. And while most doomsday committees never had to fulfil their remit, his one was kept very busy.

Mr Horan agreed.

Mr O’Higgins highlighted a note of one of the meetings of the group on February 22nd and said it showed that, of the 10 areas of discussion, nine covered either the position of the Quinn Group, Anglo or the Quinn holdings in Anglo.

Mr Horan said there were a lot of references to both parties. The note showed the group was aware of the Quinn holding in the bank, Mr O’Higgins said. Mr Horan agreed.

Mr O’Higgins also opened a note to the court dated March 20th about a conversation between the Irish regulator’s office and the UK regulator’s office, following on the collapse of US bank Bear Stearns and market volatility.

The note said the Irish regulator’s office had concerns that London hedge funds may have been spreading negative rumours while short selling Irish stocks. This was then focused on Anglo, though recently Irish Life and Permanent had been targeted, it said.

Ifsra gave the UK regulator the names of some hedge funds and the UK regulator said it would investigate and see if there had been a criminal offence. The note went on to say Ifsra was frustrated that it was creating confidence issues around strong banks, and the behaviour was unacceptable.

“It was agreed we would exchange all relevant information and co-operate closely to maximise the regulatory benefits,” the note said.

Mr O’Higgins asked Mr Horan whether it was he who spoke to the English regulator. Mr Horan said he could not remember, but would say that was correct.

Mr O’Higgins said it was not surprising Mr Horan was suffering a memory loss at this remove. He would not criticise him for it, he said.

The case continues.