Anglo Irish executives to face 5 years jail time over secret share exit deal

In the biggest collapse of a financial system in the euro region, two executives are to face jail time for their involvement in a scheme that would have unwind a secret stake of then-billionaire Sean Quinn. On April 17, former head of Irish lending Pat Whelan and finance director Willie McAteer were found guilty by the jury for scheming to acquire loans from various clients to purchase Quinn's stake before it hits the market. Bloomberg reported that the two will be facing a sentencing hearing that could land then a maximum of five years in prison.

The 10-week trial has revealed that 450 million euros or $623 million of loans Anglo Irish extended to ten of its customers have broken the law. Former Anglo Irish Chairman Sean Fitzpatrick, on the other hand, was acquitted by the jury of his alleged involvement in the scheme. Fitzpatrick's stewardship reportedly made Anglo a poster child for Celtic Tiger economy in Ireland, Bloomberg said.

According to court proceedings, Quinn started to build his stake in Anglo using "contracts for difference," a form of derivative, in 2006. Bloomberg explained that the instrument allowed Quinn to bet on a share price by putting up an initial deposit without informing the market. With this investment, investors are requested by brokers to put up more cash to cover losses. Because Quinn has 24% ownership of the bank, Anglo Irish Chief Executive Officer David Drumm purportedly instructed Whelan and McAteer to carry out the scheme, presiding judge Martin Nolan told the jury. Drumm, who is also facing his bankruptcy case, is in the US and was not charged in the loan scandal. The two executives then pursued ten property developers to loan cash so the bank can purchase a 13% stake from Quinn. Moreover, Anglo also loaned money to members of the Quinn family to be able to turn the derivatives into a 15% stake.

Bloomberg said that the only time that banks are allowed to loan money to buy its own shares back under Irish law provided that it is in the ordinary course of businesses. Prosecutor Paul O'Higgins reportedly told the court that the loans were offered due to an extraordinary situation the bank was in.

Tags

Anglo Irish Bank, former Anglo Irish Bank head of Irish lending Pat Whelan, Anglo Irish Bank finance director Willie McAteer

© 2023 Lawyer Herald All rights reserved. Do not reproduce without permission.