Trial told it was ‘normal’ for credit committees to be independent

A banking expert has told the trial of three former directors of Anglo Irish Bank that it was "normal" for a credit committee to be independent and to meet to discuss loans before loan facility letters were issued.

Tom Reid, who retired from Ulster Bank in 2004, made his remarks after being asked his opinion about then head of lending at the bank Pat Whelan signing loan facility letters on July 10th, 11th and 12th 2008 for loans to the Maple 10 to buy shares in the bank when credit committee approval was dated July 14th.

Paul O'Higgins SC, for the prosecution, also asked Mr Reid if he had any comment to make that Mr Whelan who signed the credit committee approval had been a party to the loan facility letters.

Mr Reid said in his experience it was normal for a credit committee to meet before facility letters were issued and it was normal that people dealing with business at the bank would not have attended credit committee meetings.

“Normally it would be independent,” he said.

The Maple 10 businessmen borrowed €45 million each from Anglo to buy 1 per cent of the bank’s shares as part of a deal to unwind businessman Sean Quinn’s holding in Anglo.

And the Quinn’s were loaned €170 million to buy almost 15 per cent of the shares. The court heard the unwinding deal was carried out in the week of July 14th, 2008.

Seán FitzPatrick (65) of Greystones, Co Wicklow; William McAteer (63) of Rathgar, Dublin; and Mr 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.

Under cross examination by Brendan Grehan SC, for Mr Whelan, Mr Reid acknowledged Mr Whelan “was entitled to sign off” on the credit committee documents.

Mr Reid also acknowledged that Ulster Bank was different in some ways to Anglo.

He agreed with Patrick Gageby SC, for Mr McAteer, that Ulster Bank had an established bank branch system with in excess of 200 branches.

It was a clearing bank dealing with customers’ credit and debits while Anglo had only one bank in Dublin and was not a clearing bank. He also agreed he had never seen an Anglo ATM.

But he said the bank was “no different” when it came to lending money.

“The business which it did in relation to lending money would have been the same,” he said.

The case continues.