Drumm raised ‘legal issue’ in Maple Ten deal

The former chief executive of Anglo Irish Bank raised the possibility of there being a “legal issue” surrounding the bank lending money to buy its own shares, four months before the allegedly illegal Maple Ten deal.

The trial of three former Anglo executives heard that CEO David Drumm also said he believed a certain clause in the Companies Act gave the bank “an out”.

The issue was raised around the time Anglo was first trying to finalise a deal to unwind businessman Sean Quinn’s interest in the bank’s shares through contracts for difference. This was an effort to stabilise the share price after Mr Quinn had built up nearly 30% control in the bank.

It was day 12 of evidence in the trial of Sean FitzPatrick, who is accused, along with fellow ex-directors William McAteer and Pat Whelan, of providing funding for the purchase of its own shares in contravention of the 1963 Companies Act.

The three accused have been charged at Dublin Circuit Criminal Court with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank.

Mr Whelan has also been charged with being privy to fraudulent alteration of loan facility letters to seven individuals in October 2008.

Mr FitzPatrick, aged 65, of Greystones, Co Wicklow; Mr McAteer, aged 63, of Rathgar, Dublin; and Mr Whelan, aged 51, of Malahide, Dublin, have pleaded not guilty to all charges.

Anglo’s former chief financial officer, Matt Moran, was cross-examined by counsel for Mr Whelan, Brendan Grehan, yesterday.

Mr Moran agreed that he had immunity from prosecution on a “whole range of matters”, including the issues with which the trial is concerned.

The jury was shown a series of emails between Mr Moran and Mr Drumm from March 2008 when Anglo was first trying to unwind the Quinn contracts position.

Mr Drumm suggested lending money to others to buy shares in the bank might be an issue under Irish company law.

He asked if approval from the Financial Regulator would address any potential legal issues.

Referring to the 1963 Companies Act, Mr Drumm wrote: “As I understand it, we have an out under section 60 if it is in the ‘ordinary course of business’. In our case that means lending. Let’s look at this option tomorrow.”

The trial continues.

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