A building developer who was one of the so-called Maple Ten lenders has told the trial of three former Anglo Irish Bank executives that the bank approached him and said an opportunity had come up.
In July 2008 Gerard Gannon drew down a €45m loan and bought 10 million shares in the bank on the basis that he would only be personally liable for 25 per cent of the loan. He didn’t sell any and the shares became worthless when the bank was later nationalised.
Mr Gannon was giving evidence on day eight of the trial of Sean FitzPatrick (65), Willie McAteer (63) and Pat Whelan (51), who are alleged to have taken part in a plan to lend money to the Quinn family and the so called Maple Ten group of investors so that they could buy shares in the bank and guarantee the stability of the share price.
The three men have been charged at Dublin Circuit Criminal Court with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
Mr FitzPatrick of Greystones, Co Wicklow, Mr McAteer of Rathgar, Dublin and Mr Whelan of Malahide, Dublin have pleaded not guilty to all charges.
Mr Gannon told the jury that in July 2008 his personal fortune was approaching €1 billion.
He said that in early to mid July, "Pat Whelan told me an opportunity had come up and would I be interested in meeting David Drumm (then CEO of the bank)."
He said he met the men and after five minutes of “chit chat” Mr Drumm asked him if he would be interested in buying shares.
“They said it was an opportunity because I was a good customer of the bank. It wasn’t a very long meeting, about 20 minutes,” said Mr Gannon.
He said there was no mention of any third parties and that the €45m would come with a personal recourse of 25 per cent.
“If anything happened I was to pay back 25 per cent. I was in for 25 per cent which I was quite happy with. I agreed there and then,” he said.
He said he understood the loan was for buying shares in Anglo and that he would give ten days notice in advance of selling the shares on.
When the bank was nationalised Mr Gannon hadn’t sold any of his shares.
He told Brendan Grehan SC, defending Mr Whelan: “I always found all people who worked in Anglo to be honest and truthful the same as I like to think of myself”.
A second member of the Maple Ten, property investor Gerard Maguire, told the court that he was on holidays in Nice, France on July 10th when he spoke to Pat Whelan on the telephone.
He said Mr Whelan told him the bank’s shares were coming under pressure and were under attack from hedge funds.
He asked Mr Whelan if he wanted him to return to Dublin but Mr Whelan said no. Two days later Mr Whelan and David Drumm flew to Nice and the three men met for around two hours.
He said Mr Drumm told him that hedge fund managers were using CFDs to manipulate the bank shares and drive the price down and this was impacting on the bank and other Irish banks.
“I believed others were investing as well and that this investment would put a stop to this run on bank shares and would bring stability and confidence which is what in fact happened immediately after,” he said.
Mr Gannon said that he understood that that over the next six months when the share price rose to over €6 the stock could be disposed of in an orderly fashion ‘if the market would allow’.
He said: “I agreed. I asked two very important questions. Was this transaction legal? Was the Central Bank aware?”
He said he was told the Financial Regulator approved the deal and that legal advice had been received.
Mr Gannon, who had previously bought other shares with the bank, went ahead with the deal and bought Anglo shares using the €45m loan facility. He agreed that his primary motive was to help the bank.
He said: “I was not a professional investor. I wasn’t even a regular investor if I wasn’t assisting the bank in this situation I wouldn’t have been investing in that order. The bank’s position took priority. If we make a profit well and good.”
By the time the bank was nationalised, Mr Maguire said he held around 8 million shares along with a previous personal holding in the bank which involved his savings of the previous ten to fifteen years and was in part for his pension.
In other evidence the bank’s head of risk in Ireland in 2008, Niall Tuite, said that on Christmas Eve that year he confronted Mr Whelan in his office after he learned that month that the conditions on the Maple Ten loans had been changed, allegedly without the approval of the board.
He said he had indicated his dissatisfaction that to his knowledge this change had not met credit approval and “I wanted the issue elevated to the highest levels in the bank.”
“He indicated that he would take responsibility for elevating the matter at a meeting between him and the then executive chairman of the bank, Donal O’Connor,” he said.
Mr Tuite said that a short time later Mr Whelan “put his head into my office and said he had spoken to Donal and that the matter was in hand.”
“His exact words were, ‘you don’t need to worry about it’,” Mr Tuite said.
The trial continues before Judge Martin Nolan and a jury of seven men and eight women.