Robert Heron, formerly of Matheson Ormsby Prentice, was giving evidence ahead of the sentencing hearing of the two former Anglo executives who were convicted two weeks ago.
Former director of finance William McAteer, aged 63, and former head of Irish lending Pat Whelan, aged 52, were convicted by on April 17, following a 48-day trial, of providing the loans to the group known as the Maple Ten.
The witness was giving evidence yesterday in a Newton hearing. This is a hearing before a judge which sometimes takes place after a guilty verdict or plea. It occurs where there is a specific aspect of the case which is still in contention.
In this case, the prosecution contend the directors did not receive legal advice that the loans to the Maple Ten were permitted under company law.
The issue of legal advice could be a possible avenue of mitigation for the two men when Judge Martin Nolan considers his sentence. The sentencing hearing is due to begin today at 11am
Mr Heron told Úna Ní Raifeartaigh, prosecuting, that on March 27, 2008, he first learned that Mr Quinn had built up a substantial shareholding in the bank through contracts for difference (CfD).
He said Mr McAteer told him that a solution to unwind the CfD position had been found and involved disposing of the shares to institutional investors. He said he did not recall giving any legal advice at this time. He believed that the transactions would be between the Quinn family and the investors.
He said he prepared a draft agreement to cover the unwinding of the CfD position and used “qualification language” in the letter because he was conscious there could be legal considerations around the issue of market abuse or insider trading.
Mr Heron said he was again consulted in July 2008, by Anglo head of compliance Fiachre O’Neill, and was asked if it would be legal for Anglo to lend money to the Quinn family to buy shares in the bank. He said Mr O’Neill made no reference to lending to the Maple Ten.
Mr Heron said he did not know about lending to the Maple Ten until late July, weeks after the deal went through. He said he did not know the terms of that lending until late 2008 or early 2009, including that they were subject to only 25% recourse. The lending to the Quinns was at 100% recourse.
Under cross-examination from Brendan Grehan, defending Whelan, Mr Heron agreed he had no recollection of the contents of a “due diligence” conference call requested by Morgan Stanley on July 12. Whelan put it to him that other attendees at this meeting had said they believed the legal advice given at the meeting was that the transactions were legal.
Mr Heron said he had no notes of the call apart from a number of words written in his diary for that day. These notes included the terms, “Maple 13%,” and “ten ind 14.9%”. He said these notes did not show he had any knowledge of lending to the Maple Ten borrowers.