Bankrupt former Anglo Irish Bank chairman Sean FitzPatrick has told the High Court he intended any profits from his Stg£250,000 investment in a London property, funded via a loan from Anglo, would give "a lift" and "a chance of money" to a "bright young kid" who joined the bank from school.
Mark Redmond could have made thousands “or nothing, which is what it turned out to be”, Mr FitzPpatrick said.
Mr FitzPatrick added he paid, from his own money as “gifts”, school and college fees for some children of Anglo officials.
While not wishing to “sound arrogant”, he was “quite wealthy” in November 2006 when he decided to invest in the Woolgate Exchange office property for the benefit of Mark Redmond. Then aged 23 and from Tallaght, Mr Redmond was “not a graduate” and had joined Anglo in 2000 straight from school, he said.
Mr Redmond was working hard, including managing a range of investments of Mr Fitzpatrick, his wife and children and the €250,000 investment “was to give him the chance of money”.
Mr FitzPatrick said that earlier in November 2006 he made a Stg£1 million investment in Woolgate for his own benefit but the value of that was now “zero”. He believed the loans taken out with Anglo for that investment were secured on the property but did not think the security covered the entire Stg£1.25 million investment.
Under repeated questioning by Kenneth Bredin, for the Official Assignee administering his bankruptcy, Mr FitzPatrick insisted references in some documents to the Stg£250,000 as a “loan” to Mr Redmond were genuine mistakes or errors. Both he and Mr Redmond had the same understanding of the arrangement, he said.
Mr FitzPatrick, with estimated debts of €150 million and assets of €47 million, was declared bankrupt in July 2010. He and Mr Redmond were today examined in detail about two London property investments - Woolgate and another in Victoria - organised by property company D2 Private as part of efforts to establish the extent of Mr FitzPatrick’s estate.
Ms Justice Elizabeth Dunne heard the Stg£250,000 Anglo loan for the Woolgate investment has since been paid off by Anglo from sums totalling about €10 million taken by the bank from deposit accounts held with it by Mr Fitzpatrick and his wife.
Mr FitzPatrick told his counsel Bernard Dunleavy the €10 million was taken without any prior discussion with himself and his wife and they were also not consulted as to what debts would be paid off with it.
Earlier, he told Mr Bredin that in late 2006 he was Anglo’s non-executive chairman having stood down as chief executive in December 2004, after which he sold Anglo shares and had “a lot of cash” from which he made investments.
In November 2006, he considered the Woolgate a good investment having probably got details of it from Deirdre Foley of D2 Private. D2 indicated possible returns of about 187 per cent, he said.
He invested Stg£1 million on his own behalf prior to telling Mr Redmond he would put in another £250,000 for the benefit of Mr Redmond. The arrangement was that Mr Fitzpatrick would put up the money via a loan from Anglo and put the investment in Mr Redmond’s name and take any downside while Mr Redmond would take any upside.
If anything was to happen to Mr FitzPatrick, it was agreed Mr Redmond would repay the £250,000 to Mr FitzPatrick’s estate, plus interest, but keep any profit, he said.
He asked Mr Redmond to prepare a note “for my file” to reflect that arrangement. He considered Mr Redmond’s typed note was “gauche” in using the word “loan” and in other respects, but he signed it. He never thought he would be asked questions by barristers about it, he said.
On the Victoria investment, he said he invested Stg£3 million in that property and it had now sold. He expected to get about Stg£2.1-2.2 million back on his investment once issues arising from a claim by D2 Private related to the sale were resolved.
After Mr Redmond indicated he too wanted to invest in Victoria but had inadequate security, Mr FitzPatrick said he talked to Ulster Bank about that and agreed to provide a guarantee of a Stg£100,000 loan taken out by Mr Redmond with Ulster Bank for the Victoria investment. The Victoria arrangement with Mr Redmond was different from the Woolgate arrangement, he said.
In his evidence, Mr Redmond said he assisted Mr FitzPatrick in making the Woolgate Stg£1 million investment and was “delighted” when Mr FitzPatrick offered to purchase another unit in Woolgate for £250,000 with Mr Redmond to get the “upside”. He would have been unable to afford that investment himself as he was on a salary of about €50,000, he said.
He agreed he prepared a typed note which stated Mr FitzPatrick agreed to provide Mark Redmond with a “loan” of Stg£250,000 but said that was not an accurate reflection of the arrangement and his own handwritten notes accurately reflected it. When the investment matured, Mr FitzPatrick would get the costs of the investment and he, Mr Redmond, would get the upside, he said.
Mr Redmond said his Stg£100,000 investment in the Victoria property was entirely different from Woolgate and he hoped to get back some Stg72,000, leaving a shortfall of some Stg30,000 he could not repay if Ulster Bank insisted on that. He was in regular contact with Ulster Bank about the matter, he added.
