In court number 19 in the Dublin Circuit Criminal Court yesterday a plastic evidence bag containing a handwritten note in blue pen was passed to Kevin Cardiff, a senior official in the Department of Finance in 2008.
The note was given to Mr Cardiff, who now has a position in Europe, to help him during his 22 minutes of testimony during the Anglo trial.
Mr Cardiff in a white shirt and red tie had been in court since Tuesday awaiting his turn to be questioned. Paul O'Higgins SC, for the prosecution, began by asking Mr Cardiff when he first heard tycoon Seán Quinn had build up a position in Anglo Irish Bank using contracts for difference.
“Certainly it was in the first quarter of 2008,” Mr Cardiff said.
He said he’d received “some” information in February 2008, before receiving “more” the following month.
He said he was aware of press speculation in 2007 too, but that was it.
Concerned
Mr Cardiff said he was concerned about Mr Quinn's position in Anglo for a number of reasons.
“The first is that this could present a threat to financial stability,” Mr Cardiff said.
He said he feared it could make Anglo a “target for speculation,” and this could affect confidence in its bondholders and deposit holders.
“That would undermine Anglo as a bank and potentially the rest of the Irish market as well,” Mr Cardiff explained.
He said he was also concerned about an individual, who was also a borrower from a bank, having a large stake in that same bank.
Mr Cardiff added that “in this particular case,” there was an additional factor that Mr Quinn had been using money from his insurance company to finance his position in Anglo. Mr Cardiff said this was “inappropriate,” and could be in breach of insurance regulations.
“That was a concern as well,” he said. Mr Cardiff told Mr O’Higgins he was not personally involved in trying to resolve the situation.
He said updates were "almost entirely through the financial regulator and the Central Bank. "
Mr O’Higgins then asked Mr Cardiff about his attendance at a meeting of the Domestic Standing Group, made up of the Department of Finance, Central Bank and the financial regulator. Mr Cardiff said his interest was only in terms of “financial stability,” and he had “no interest in the share price of Anglo in and of itself”.
As Mr Cardiff entered his final 10 minutes in the box, his handwritten note of a July 23rd 2008 meeting of the standing group was introduced. By that date the transaction to unwind Mr Quinn’s CFD position had taken place.
Mr Cardiff read out his note as: "Generally the deal consisted of high net worth individuals from Ireland and the US. None more than 3 per cent. None of them more than 1 per cent. Some lending to them – likely short-term."
No discussion
Mr Cardiff said there was no discussion of the terms of any lending. He said a telephone call with Mr Horan prior to the standing group meeting was "very similar," to what he said at the meeting. Brendan Grehan SC for former Anglo director Patrick Whelan, asked him again about the phone call with Mr Horan.
“On that phone call I do remember him saying there was lending and it was short-term,” Mr Cardiff said.
Michael O’Higgins SC for former Anglo non-executive chairman Seán FitzPatrick asked Mr Cardiff to confirm his note was based on a what the financial regulator told him, which he did.
Patrick Gageby SC for the third Anglo director, Willie McAteer, had no questions.