Quinn suspected Anglo were doing "a sweetheart deal"

Former businessman Sean Quinn has told the Anglo Irish Bank trial that he suspected Anglo “were doing a sweetheart deal” when it forced him to sell his stake in the bank.

Mr Quinn, who admitted he used to be Ireland’s richest man, said he couldn’t understand why the share price of Anglo fell so much in July 2008 as the deal was going through. He said that he approached a solicitor in London about the matter.

Mr Quinn told Dublin Circuit Criminal Court that the bank knew from November 2007 that it was in serious trouble but that Sean FitzPatrick and David Drumm maintained it was “in rude health” as late as September 2008, shortly after the bank guarantee.

The businessman also told the jury that collateral agreements between himself and Anglo were never meant to be honoured and were drawn up purely for the benefit of the Financial Regulator, The Central Bank or The Department of Finance.

Mr Quinn’s son, Sean Junior has begun giving his evidence. He told the prosecution that he was given forms to sign in relation to the deal to buy Anglo shares in July 2008 but that he did not know the money from the deal was coming from the bank.

The prosecution allege that three former Anglo executives, Pat Whelan, William McAteer and chairman, Sean Fitzpatrick, were involved in a plan by Anglo to loan money to the Quinn family and the so called “Maple Ten” group of investors so that they could buy shares in bank and guarantee the stability of the share price.

The DPP say that this is an offence under the 1963 Companies Act and the accused, as directors, either took part in it or permitted it to go ahead.

The three men have been charged with 16 counts of providing unlawful financial assistance to 16 individuals to buy shares in the bank. Each charge relates to a specific person, who allegedly received loans between July 10 and July 30, 2008.

Mr Whelan also faces seven charges of being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.

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

Mr Quinn told defence counsel Brendan Grehan SC that he wondered if Anglo was carrying out “a sweetheart deal” following the unwinding of his Contracts for Difference (CFD) stake in the bank in July 2008.

The trial has previously heard that CFDs are a type of investment where a buyer bets on a share price improving without actually owning the share. Mr Quinn controlled nearly 30 per cent of Anglo shares through CFDs.

He said he was not told who was buying the shares in July 2008 or for how much and that he couldn’t understand why the share price fell 20 per cent during the period he agreed to sell his stake.

He added that he was very angry about selling the shares, saying to Anglo: “”Why did you not do this a year ago? Why put in a pile of money in, in our name, and then sell them?”

Mr Quinn said he couldn’t understand why Anglo continued to fund his CFDs between September 2007 and July 2008 when they were just going to “dump” them on the market later.

“It certainly wasn't for our benefit,” he told counsel for Mr Whelan, Brendan Grehan SC.

Prosecuting counsel Paul O’Higgins SC, earlier asked Mr Quinn: “Did you have any say at this stage in whether the shares were sold or not?”

“No and he (Mr Drumm) let me know that in no uncertain terms......He told me what he was doing and I objected strenuously,” replied Mr Quinn.

He later sent a letter to then Anglo CEO David Drumm asking why he was forced to sell his CFDs in Anglo at such a low price, to the benefit of others. Following this he went to a solicitor in London about his concerns.

Mr Quinn alleged that the bank knew it was in trouble since November 2007 but that he was never told. He said he was given assurances from the bank and The Financial Regulator that it was doing fine.

He also noted that they continued to post increased profits even as the share price dropped and that they increased the dividends they paid out.

He said that in September 2008, shortly after the bank guarantee he met with Mr Drumm and Mr FitzPatrick in Buswells Hotel.

“They were there to appease.” the witness said. “They said the bank was in rude health and we shouldn't be pursuing legal proceedings, we'd come to a gentleman's agreement and we'd all live happily ever after.”

Referring to an earlier loan in December 2007, Mr Quinn agreed The Quinn Group took €500 million from Anglo to “fill a hole” in the accounts caused by funding the CFDs.

He described a phone call where he informed Mr Drumm of the hole in the accounts: “I never asked him for any money but I was pleased that he offered me money.

“He said to me how much would it take to fill the hole, I said about 400 million He said to tidy this whole thing up we should make it 500 million.”

Mr Quinn agreed he signed a letter agreeing to sell nine Quinn properties located around Europe to repay the €500 million loan.

However he said he never had any intention to go through with this agreement and that the letter was only for the benefit of others.

Mr Quinn said: “That was never going to happen. It was never meant to happen.”

He continued: “I gave him (Mr Drumm) an undertaking that me and my family would pay every penny back to him, irrespective of the legality of the loans.”

“He said he was in constant contact with the Governor of the Central Bank and that he had to do certain things and he couldn't be seen to be supporting the share price. If he wanted to impress John Hurley (Central Bank Governor) and show that he was on the game I wasn't going to interfere,” Mr Quinn said.

“The bank loaned us the money in order that we wouldn't sell the shares,” Mr Quinn added, telling the court that he believes the loans from Anglo to the Quinn Group were illegal and were there to stop him selling off the shares.

Mr Quinn also denied there was an agreement with Mr Drumm to use his five children’s shares in the Quinn Group as collateral for a loan in March of €220 million.

He accepted this agreement existed on paper but said that it was purely for the benefit of the Financial Regulator and The Department of Finance.

He said this was shown by the fact the Mr Drumm never took over the Quinn shares while he remained as CEO of the bank.

The trial continues tomorrow before Judge Martin Nolan and a jury of seven men and eight women.

Sean Quinn Junior gave evidence that he signed many forms relating to the deal to buy shares in Anglo in July 2008 but that he did not know the details of the deal.

He told prosecuting counsel, Úna Ni Raifeartaigh SC, that he did not know the money from the deal was coming from Anglo but agreed it was his signature on a €15 million loan agreement letter from the bank.

The letter reads, “It is my intention to acquire shares in Anglo Irish Bank Corporation plc as a long term investment” and goes on the request the loan.

Mr Quinn said: “I certainly didn't draft or prepare this document. I'm not sure when this was created. I had no input in drafting it and no input in looking for the €15m.”

He said “there was a standard practice since the company was given to us in 2002 for me to sign large volumes of documents.”

He said the signature page would be emailed to his secretary and printed off and he would then sign it.

He added that he had no contact with Anglo, their lawyers or the Financial Regulator over the deal.