Quinn Group ‘doing what they were told’ in unloading stake

The Quinn Group was “doing what they were told” by Anglo Irish Bank when unloading their 29% control of the bank in July 2008.

The trial of three former Anglo executives accused of illegally loaning money to unwind the Quinn stake has heard from a senior Quinn Group official that Sean Quinn was forced to dispose of his stake.

Dara O’Reilly, who was group finance director, said Mr Quinn was not happy with the plan as he believed Anglo stock, which was falling rapidly, could recover. “I don’t think it was voluntary, no,” Mr O’Reilly told Paul Anthony McDermott, prosecuting. “Quinn was doing what they were told to do.”

Mr Quinn built up the control of the bank in secret through contracts for difference (CFDs), which are investment tools that gamble on a share price rising or falling. The court heard these CFDs had the potential to impact the stability of the entire banking system.

Sean FitzPatrick, the former chairman of Anglo, and fellow ex-directors William McAteer and Pat Whelan, are accused of providing funding for the purchase of Anglo’s own shares in an effort to unwind the Quinn position in contravention of the 1963 Companies Act.

The three men 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. The 16 individuals are six members of the Quinn family and the Maple Ten group of investors.

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

Mr O’Reilly told the jury he was also director of a Quinn subsidiary known as Bazzely, set up in 2005 for the sole purpose of trading in CFDs. Its function was to create a source of independent wealth for Mr Quinn’s children and the plan was they would ultimately take it over.

Mr O’Reilly said the company was based in Madeira, Portugal, for “tax-efficient reasons”. He said Bazzely operated under the direction of Mr Quinn and that initial funding came from the Quinn Group.

In 2007, the “markets took a turn” and Bazzely had put more money into the CFDs to maintain them. Mr O’Reilly said some of this money came from the Quinn Group and some from closing CFD positions in other companies.

He said he was aware Anglo was lending the group money for this purpose. He said at the end of March 2008, Anglo and Quinn representatives met and pressure was put on Mr Quinn to reduce his CFD position.

This culminated in the Maple deal where 10 individuals would buy 10% of the shares and six members of the Quinn family would take 15%.

Mr O’Reilly said it was his understanding Anglo was lending about €175m to the Quinn family to buy the shares. They were then placed in a trust account called Morston.

He said the Quinns took tax advice and the account was moved to Cyprus, “for tax-efficient reasons”.

Judge Martin Nolan sent the jury home until Monday to allow time for legal argument.