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BOSSES DENY 16 SHARE CHARGES; ANGLO IRISH TRIAL: DAY ONE; Court told of 'Maple' plan as value plunged; Officials got worried by Quinn's huge stake.


ANGLO'S ex-chairman and the former head of lending yesterday admitted the bank gave loans to borrowers to buy shares in it.

Sean FitzPatrick, 65, Patrick Whelan, 51, and 63-year-old William McAteer each pleaded not guilty to unlawfully lending money to 16 people to buy shares in the bank in July 2008.

Whelan is facing another seven charges of fraudulently changing loan facility letters relating to share purchases sent to seven borrowers.

On the opening day at Dublin Circuit Criminal Court, Whelan and former chairman FitzPatrick acknowledged Anglo did lend money to 16 people - including Sean Quinn and five members of his family - to buy shares in the bank.

In a statement read to the court, defence barrister Brendan Grehan revealed Whelan was making a number of admissions including that:

Between July 10 and 13, 2008, Anglo lent money to the 16 people named in the charge sheet and that the money was lent to them so that they could buy shares in the bank

He was involved in lending the cash under a plan devised by the bank, called the Maple Transaction.

But Mr Grehan insisted Whelan believed the lending involved "was in the ordinary course of the bank's business". FitzPatrick admitted to being a non-executive director of the bank and that the loans were made to unwind Mr Quinn's stake in Anglo.

You could hear a pin drop in the packed Court 19 as the 15 jurors listened to the complex background to the trial.

There was such a big crowd at the Courts of Criminal Justice that an overflow courtroom had to be set up with a live video link to the proceedings.

The three accused sat side by side and spoke only to confirm their names and reply "not guilty" when the charges were read out.

FitzPatrick, of Greystones, Co Wicklow, was dressed in a dark suit, light blue shirt and bright pink tie while McAteer from Rathgar, South Dublin wore a similar dark suit, white shirt and light pink tie. Whelan, from Malahide, Co Dublin, was in a dark suit and open-neck blue shirt and the trio listened intently for the almost 25 minutes it took for the 23 charges to be read out.

Counsel for the prosecution Paul O'Higgins told the jury Anglo issued almost [euro]625million worth of loans to 16 people - including six members of the Quinn family - in an attempt to unwind Mr Quinn's 25% share in the bank.

The former tycoon built up his stake in Anglo through betting on whether the bank's share price would go up or down without having to actually buy shares. The process - known as contracts for difference - initially worked very well for Mr Quinn.

Mr O'Higgins told the court "the tide turned" in 2007 and in September that year, former Anglo CEO David Drumm, who is not on trial, met Mr Quinn at a hotel near Navan to discuss what was becoming a serious problem.

As financial markets got into difficulty, the bank's share price dropped from its record high of [euro]17 and the Anglo board was concerned the bank was exposed to the fortunes of one person.

Mr O'Higgins said: "I think it's fair to say that Sean FitzPatrick, David Drumm and the rest of the board weren't keen on that situation and were 2 Aenthusiastic to put an end to it." But despite their efforts to get other people to buy the Quinns' stake by converting them into actual shares, no one was interested. By February 2008, even the financial regulator was getting concerned, the jury was told, and the Anglo share price had plummeted to just [euro]6.50

So the court heard Anglo came up with a plan to lend [euro]625million to the six Quinns and 10 other supposedly wealthy individuals - who became known as the Maple 10 - so that they could buy shares and prop up the bank.

But Mr O'Higgins told the jury this scheme of lending was "absolutely illegal" and designed to pull the wool over people's eyes.

While the Quinn family were made personally liable for the loans, the court heard the Maple 10 were told they wouldn't be personally liable for their borrowings.

It is alleged at this point that Whelan backdated the loan facility letters and changed the terms and conditions to make them more favourable to the customers.

Mr O'Higgins said there would be a market announcement afterwards saying the Quinn shares position had been resolved.

He added this was "choreographed" so the public would be told the Quinns were buying the shares when in practice Anglo really dealt with it itself by supplying money. Mr O'Higgins said the case involved "lending in very extraordinary circumstances, which had nothing to do with the bank's ordinary business" and that "the clear and direct purpose of lending was for the purchase of Anglo shares".

He also claimed people loyal to the bank or who relied on Anglo's continuing support were chosen to take the loans to buy shares - and that David Drumm and Whelan even approached two people who were on their holidays in Portugal and France to persuade them to get on board.

He quipped: "A lot of people, if they were on holidays and they saw their bank manager in the distance, might head for the nearest sand dune."

The prosecution said Whelan was very much involved, McAteer wasn't as involved but knew all about the Maple Transaction and that FitzPatrick was told about the lending and did nothing to stop it.

Mr O'Higgins told the jury that shares represent to people a person's stake in a company and said: "They mean big things in people's lives and how they are dealt with is a very very important thing to people.

"These are the expression of people's property in the company and their entitlement to expect regular lawful and proper behaviour. It's not something academic and in the air, it is about real people." The 16 charges against all three accused allege that in July 2008 actions were taken by them which were contrary to Section 60 of the Companies Act.

As officers of Anglo, they authorised or allowed the bank to give unlawful financial assistance to people in connection with the purchase of shares in Anglo in breach of the Companies Act, it is claimed.

And if the company commits an offence every officer who is in default is liable, the jurors were advised.

They were also told they would hear many others were involved in Anglo, but they had to decide the case on the three before the court and not wonder about others who could or should have been charged.

Judge Martin Nolan had already warned the jury the trial could last until May 31.

Mr Quinn, his wife Patricia and their four children as well as the former financial regulator Patrick Neary and former Anglo and Central Bank employees are among 100 possible witnesses.

Kevin Cardiff, former head of the finance department, will also be called, as a f well as 42 gardai.

There are 24 million documents and 800 witness statements.

Shares mean big things.. it's not up in the air.. it's about real people PAUL O'HIGGINS court yesterday FitzPatrick and the board were not keen on exposure to one person PAUL O'HIGGINS court yesterday





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Publication:The Mirror (London, England)
Date:Feb 6, 2014
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