Quinn – Regulators ‘conspired with Anglo’ to prop up share price

The Department of Finance and Central Bank conspired with Anglo Irish Bank in its advancing more than €2 billion in loans to Quinn companies for the unlawful purpose of propping up its share price, it has been alleged at the Commercial Court, reports the Irish Times.

That conspiracy involved the department arranging for documents from Anglo to be “significantly amended” to disguise the true extent of its knowledge about what was happening in relation to the loans, the Quinn family claims.

The family of bankrupt businessman Sean Quinn want the Department and Central Bank, in their capacity as regulators, joined as co-defendants with Anglo in their action denying liability for those loans.

The family are alleging conspiracy, breach of duty and misfeasance in public office against those parties.

Martin Hayden SC, for the family, said documents showed officials in the department were aware at “every step” of the way from October 2007 of the difficulties being experienced by Anglo in dealing with the Contract for Difference positions built up by Sean Quinn in the bank.

In an affidavit, Aoife Quinn said the department arranged for documents to be “significantly amended” to disguise the extent of its knowledge that Anglo had unlawfully loaned vast sums to support its share price.

Ms Quinn said various documents, including material discovered by Anglo, showed the Deparment, Financial Regulator, the Central Bank and Anglo were all aware the bank was loaning huge sums to Quinn companies to meet margin calls on Contract for Difference positions built up by her father in Anglo.

While some documents asserted the loans were for “working capital purposes”, other documents, including trasncripts of phone conversations between various former Anglo executives, made clear their true purpose was to meet margin calls, she said.

After the bank was nationalised, the Department had arranged for alterations in a draft letter from Anglo’s new chairman, Donal O’Connor, to the Minister, she said. That letter was responding to the Department’s own request for a report on lending for the purpose of acquiring shares in the bank, it has been claimed at the Comemrcial Court.

The first draft of the letter involved a “categorical acceptance” Anglo was lending for the purpose of acquiring its own shares but the letter ultimately sent to the Minister for Finance, said exactly the opposite, she said.

The application to join the Department and Central Bank is opposed by Kieran Wallace, special liquidator of Irish Bank Resolution Corporation (formerly Anglo) on grounds including it will fundamentally alter the nature of the case. He has also alleged delay by the Quinns in seeking to have the two parties joined.

Mr Justice Peter Kelly began hearing the application this morning when he was told the Quinns have prepared a draft plenary summons outlining their claims against the Department and Central Bank.

In affidavits, Ms Quinn has referred to many documents, including transcripts of phone calls and emails between various Ango executives; the “O’Connor Report” of January 2009 reviewing transactions concerning the Quinn group; communications between her father and the bank and communications with the Department and Minister of Finance.

An applicaiton to Anglo’s credit committee dated June 3rd 2008 , stated Sean Quinn had requested the bank to provide €140 million funding. That document continued: “This is to be used to fund cash calls relating to the recent fall in the Anglo share price”, she said.