Quinn was the ‘bad boy’ but the regulator took a ‘holistic approach’

Michael O'Higgins SC, for former Anglo Irish Bank non- executive chairman Seán FitzPatrick, yesterday described interactions between the tycoon Seán Quinn and Patrick Neary, the financial regulator, as taking a "holistic approach."

“Quinn was there as the bad boy in the headmaster’s office and instead of coming down the heavy on him, you take a more holistic approach,” O’Higgins said.

“The patient was very sick and we’ll deal with any restrictions later.”

Neary agreed this was his office’s approach, when he learned in 2008 that Quinn’s insurance business was facing difficulties.

During 30 minutes of cross- examining Neary yesterday, O’Higgins said insights had been gained into how the financial regulator did its “business” during the crisis.

“Let’s get this big problem [Quinn’s position in Anglo’s shares] sorted, is that how it was to you?” he asked. Neary agreed, this was his first priority.

O’Higgins asked Neary what was the “difference” in relation to how the Financial Regulator dealt with Anglo and with Quinn.

“Anglo is the boy who was leaned on to drop the guarantees [the bank held over assets in the Quinn Group] until Quinn had solved his gambling problems,” O’Higgins contended.

He said the regulator took the “same approach” to Anglo as to Quinn, in that its priority was to deal with the problem first, before worrying about anything else.

“You pushed that right through the system to get it solved and now you are distancing yourself,” O’Higgins said.

Neary did not agree but he said “the authority certainly wanted the situation resolved.”

Earlier in his cross-examination , O’Higgins asked Neary about his statement to the Garda made on June 1st, 2010.

O’Higgins said this statement claimed Anglo had placed Quinn’s shares with his family and the “balance” with “domestic and international investors”.

O’Higgins asked Neary if he was referring to 10 individual investors (known as the Maple 10) here. Neary said he was.

O’Higgins asked why did he not specifically say that. Neary said he only recalled there being a “number” of investors.

O’Higgins said his recollection seemed “terribly confused”, to which Neary replied: “I hope I didn’t give that impression.”

O’Higgins asked Neary about evidence he gave to the Chartered Accountants Regulatory Board, which had also investigated the Quinn/ Anglo matter.

Neary agreed with O’Higgins that he had told that regulatory board that the issue of how to deal with Quinn was “discussed ad nauseam by the authority”, it was “always on the agenda” and took up a lot of the time of his prudential director Con Horan, who, he said, kept the authority updated.

O'Higgins suggested that Neary had a "level of confusion" about a meeting with David Drumm on September 12th, 2007.

This was a meeting between the two men the day after Quinn told Anglo’s then chief executive that he had a 24 per cent position in his bank’s shares.

“Is it possible you are confused?” O’Higgins asked, that Drumm had not told him what was Quinn’s exact position in Anglo? “I don’t believe I am confused about it,” Neary replied.

Neary described a suggestion of a second meeting with Drumm on September 27th, 2007, as a “complete blank to me”. He said the meeting he recalled was a “very low-key meeting” where Drumm had asked to speak to him “privately.”

O’Higgins asked did he think Drumm wanted to talk to him about “problems at home” or a “holiday”.

“It allowed for that possibility,” Neary said.

O’Higgins said that at that stage, Quinn owned 24 per cent of Anglo, which was far from being an “informal matter”.

“It was an exploratory meeting,” Neary said, “There was no decision-making involved.”

He said Drumm did not tell him of the scale of Quinn’s exposure to Anglo’s share price.

“Mr Drumm was in possession of the facts. I was in possession of no facts.”