As former Anglo executives Willie McAteer and Pat Whelan contemplate the eventual possibility of an 80-year jail term each, arising from 16 charges laid before each yesterday in Dublin’s District Court, one of NAMA’s active law firms must be feeling distinctly uncomfortable.
In October 2010, the Irish Times reported – the report is now mostly behind a paywall but is substantially reproduced by the Broadsheet.ie here – that major Irish law firm Matheson Ormsby Prentice (MOP) “advised the board of Anglo Irish Bank in July 2008 that the loans to the children of Seán Quinn to buy shares in the bank did not breach company law or constitute “unlawful financial assistance” It seems MOP in fact put their advice in writing to the Anglo board.
But yesterday in the Dublin District Court, Messrs McAteer and Whelan were charged with 16 counts each – one for each person to whom Anglo advanced loans for the purchase of its shares – of offences under section 60 of the 1963 Companies Act and each count carries a maximum penalty of five years in prison and a €3,100 fine. It might be a fair bet that both men are right now feeling a little miffed at the advice apparently provided to the Anglo board in July 2008! Neither man is understood to have entered any plea at this stage, both men have been released on bail and the matter is scheduled to be dealt with in court from October of this year.
It was revealed last week that NAMA has so far paid €994,000 to MOP for due diligence work undertaken during the acquisition of loans from banks by the Agency. But MOP is also on both NAMA’s enforcement and financing panels. MOP, whose chairman is Sir Anthony O’Reilly is one of Ireland’s leading law firms and has offices in Dublin, London, New York and Palo Alto.
Last week MOP was the firm of solicitors behind an application on behalf of NAMA at Dublin’s High Court.
NAMA was asked if it has plans to sever or suspend links with MOP after yesterday’s developments, if it still had confidence in the ability of the firm and the advice provided and if it had taken steps to investigate the newspaper report about the advice given by MOP to the board of Anglo. Any response will be posted as an update here. NAMA has in the past been eager to make it clear that it has not used the legal services of the firm associated with solicitor, Brian O’Donnell who is being pursued for the repayment of property-related loans.
The Irish Times report deals with just six of the 16 individuals to whom loans were advanced by Anglo, the six being the five Sean Quinn senior children and Sean Quinn senior’s wife, Patricia. The other 10, commonly known as the “Anglo Golden Circle” or “Maple 10” appear not to feature in the advice reportedly given by MOP.
NAMA Wine Lake 
Great work NWL: The grovelling Irish media refuse to investigate and campaign on this issue.
It is beyond belief that NAMA is using the law and auditing firms that provided questionable assurances to their clients.
The lawyers and accountants win on the up swings and the down roundabouts.
How different would it have been if they had protected their shareholders rather than grovelled to management?
It simply proves, yet again, that the so called professional classes will provide whatever it takes to generate fees.
I can see a possible angle why loans to the Quinn family would be ok. That is to say that the Quinn’s had existing obligations to buy (or settle) contracts for difference. Though I think this is a little too weak. I can’t see such reasons applying to the Maple 10. I think the Maple 10 borrowers should also be charged.
Re the Quinn’s: They seem to contest the 2.3bn Anglo lent for settling the CFD. But this ignores that Quinn was obliged to settle the CFD independent of Anglo. Say if Anglo didn’t lend the money? How would Quinn have honoured the CFD? It is likely that his losses would have been greater as Anglo’s share price would have collapsed more with large numbers of shares hitting the market.
@Ahura M, Quinn’s CFDs would have been sold out as soon as the margin was hit.. Any shortfall would have been a matter between him and the market maker – nothing to do with Anglo. What most of the media pundits don’t seem to grasp is that he did not own the shares in Anglo. He was betting on the movement. The shares were owned by the market makers (CMC Markets etc). If they called Sean’s margin and he did not pay, the market makers would have dumped the covering shares. And it is at that point that Anglo shares would have collapsed and the impact on Anglo would be felt.
Would someone PLEASE explain the difference between shares and derivatives to RTE news and Joe Duffy.
A FInancial derivative:
A financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to profit from movement in share prices.
Warren Buffet described derivatives as “financial weapons of mass destruction” that harbor latent dangers for those that use them. The unbridled and unregulated use of derivatives in highly leveraged strategies has the potential of creating massive selloffs should prices move against the strategies.
Sean Quinn speculated in CFD derivatives. Geddit RTE?
I listened to Joe Duffy yesterday. I had it in mind when posting. Some of the views being aired were ridiculous.
I’ve no problem what people talking sh*te but if it’s clearly wrong it should be challenged and corrected. If you were an average punter listening, you could easily form the opinion that Anglo mugged the Quinns.
You can only sell something if you have a buyer,the market at the time was extremely illiquid.Anglo,had the option to tell Sean,to go sort out his CFD’s himself.He simply could have told the counterparties,I’m having a liquidity issue at present,can you work with me?
If this hair brained scheme of Anglos was never executed,worst case Sean filled BK,counterparties burned,few billion saved for Irish taxpayer.This was the absolute worst solution of all,completely panicked and idiotic,perhaps even criminal,we shall find out.
My understanding is that the financial regulator supported the concept behind the Maple 10. Is he not also complicit ?
Exactly !- Major Irish Law firm MOP support, financial regulator support – come on political arrests and more money for the ‘four gold mines’ comes to mind!
There are(at least) 2 things going on. Not clear from traditional media reporting as usual.
1 If it is not criminal for a bank to loan money to its friends to buy shares so as to bolster the price, then people should just keep their money under the mattress, or in foreign countries.
2 The cfd’s were a gamble a billionaire took to get even richer. Not much different from betting on a horse, very different from being a shareholder/voter/influence in an organisation. The subsequent loss appears to be garnering sympathy, amazing. As if the public picked up a mutli-billion dollar tab from Aintree, just cause it was the Quinns.
PS its all getting very legal, so I know nothing or nobody and all my opinions are conjucture, in fact I am a poet, so pay no attention at all at all.
Finally, even these tiny steps are a magic super day for Irish justice, will it lead anywhere…..?
According to Simon Carswell’s tome “Anglo Republic” in relation to the unwinding of the Quinn CFDs:
“Anglo later requested that MOP record the advice it had given the bank concerning the transaction. In a letter dated 22 June 2008 the firm stated that the bank had not breached company law or corporate takeover or Stock Exchange rules in the Quinn share purchases, although there was no reference to the Maple Ten. The advice letter noted that the bank had kept the Regulator informed of the transaction. Anglo seeking to cover itself, furnished a copy of the lawyers’ (MOP’s) letter of advice to the Regulator”
Hhmm…. I bet there will be “trouble at mill” over that advice. And I assume that it was well paid for too.
9th July Email from Matt Moran to Willie McAteer:
“Project Maple – Regulator conversation done & went fine.”
10th July email from David Drumm:
“The entire transaction has been explained to our regulator, is the subject of legal advice and is being handled by Morgan Stanley who must pass their own compliance regime”
MOP, Regulator, Morgan Stanley, Merrion Street.
Ever watch scapegoats being sacrificed for the masses before?
P.S. If that last comment was a little to sarcastic or subtle for some – the fall guys are the recently arrested threesome. Political arrests to satisfy the blood lust – and at this point I’ll leave out the other reasons in case Mr NWL finds it libelous.
Made front page this afternoons,late edition,WSJ-silent on regulator!
“A Dublin court heard that Sean FitzPatrick was arrested early Tuesday at Dublin airport after returning from overseas. He is charged with unlawfully helping the bank provide funds to individuals to help purchase shares in the bank”
Behind pay wall,but no smoking gun!
http://online.wsj.com/article/SB10000872396390443570904577546420019553652.html?mod=WSJ_hp_LEFTWhatsNewsCollection
Who knew what and when will definitely feature,but the board must have been a little queasy about the transaction to seek legal advice or a opinion.
More familiar with them regarding tax advice,they are normally loaded with caveats and outs,not too reliable or enforceable if things go wrong!
Bit of a belt and suspenders approach,if you need legal advice,in this type of situation,often best not to do the contemplated transaction,should be interesting,Morgan Stanley won’t blink here.
Extract from the infamous David Drumm interview.
DD: This bit about is being presented about who knew what, is like you are kind of trying to put it into like a Watergate thing, like who knew this scheming thing was going on? That is actually not the reality of of things, because everybody was on the same team in 2008.
NOD: But later on, say with regard to the Maple Ten, who knew?
DD: The financial regulator and the Central Bank were in every meeting with me and other directors of the bank throughout 2008 and I have to tell you, that was team work, because it was a common problem.
Read more: http://www.irishcentral.com/news/There-is-a-witchhunt–I-convince-myself-that-this-will-pass-134533003.html#ixzz21aqFRdMW
The Yanks learned from the Brits long ago that the great unwashed never move on until a scapegoat has been found and put to jail.
In the Planning Scandal, it was poor old Tom Phipps who did a few nixers when he worked in the Dublin Corporation. Charlie Haughey thought that his jailing would be enough to satisfy the masses. It wasn’t ….. a bad miscalculation.
The Yanks fared a little better with Madoff, but they have it down to a fine art.
We have a lot to learn. But the spin is in! Meet the new troika of scapegoats with…… wait for it – at least another 15 promised from middle management in Anglo! Well, blow me over like a feather. Who would have thunk it.
No politicians, no central bankers, no civil servants, no regulators, No outside financial advisors, No outside banking advisors, no auditors or accountants and definitely no high priced legal advisors.
Just a few patsies (aka scapegoats) for the masses to keep them happy.
Plus ça change.
@WSTT Hi wstt,hope you are having a great summer,this evening’s Hearld has something regarding ‘pour encourager les autres’!
http://www.herald.ie/news/now-bank-squad-turn-attention-to-david-drumm-3179945.html
http://en.wikipedia.org/wiki/Battle_of_Minorca
The contrast with Lehman is striking,still lacking any decent inquiry into Anglo,someone had to be throw under the bus,statute of limitations and all that.The dithering around about which committee,to undertake a banking inquiry is ludicrous.
Excellent speech today by Dr Elaine Byrne,at the MacGill Summer School in Glenties.Its available in full at broadsheet.ie
@JG, And you to John. Hope it has cooled a little in the Big Apple. We are 4 years into this fiasco and this is what they come up with? It’s risible. Finding a way to protect those in powerful positions and their mates.
Reading Carwell’s book and David Drumm’s interviews it is clearly evident that both MOP and the Regulator were aware of what was happening with Sean Quinn and the CFDs – I wonder how many of those gobsh*tes even knew what a CFD was? When I spoke with David Drumm, he told me that the Department of Finance and the Minister were aware of what was going on.
It is possible that the Regulator was agitated, but it could be argued that the “slap on the Anglo wrist” was merely for optics. It will be interesting to see how this will be orchestrated in court to protect the REALLY guilty.
@WSTT fortunate enough to have an ocean breeze this time of the year,one two days at most in city,the FF spokesman was on VB,very impressive chap.He put forward an excellent case why the committee he chaired was best suited to conduct at least a preliminary inquiry into the bank guarantee/crisis,and of course party politics interfered and may have derailed it.Linked it in case you missed it,
Working my way tru Bruce Arnold’s,End of the Party,has a few interesting pieces on this too,you probably enjoy it if you have not had a chance.
http://www.amazon.com/End-Party-Bruce-Arnold/dp/071715064X
http://www.tv3.ie/3player/show/41/50793/1/Tonight-with-Vincent-Browne
Hate to upset NWL,as he does indulge my occasional/frequent rants,so reluctant to comment too much regarding a case before the courts.But based on the available materials in the public domain completely agree with your assertion,inconceivable that this did not go all way to the top.Dr. Byrnes speech today gives a very important historical context for a lot of this,as an aside have socialized occasionally with an emigrant she references,David should talk to him!