Two of the 'Maple 10' investors in Anglo Irish Bank believed they would not lose money buying the bank's shares, Dublin Circuit Criminal Court has heard.
Joe O'Reilly, the developer behind the Dundrum Shopping Centre, and Dunboyne-based developer Sean Reilly, were giving evidence in the trial of three of the bank's former executives.
Former Anglo Chairman Sean FitzPatrick (65), former Head of Lending in Ireland Pat Whelan (51) and former Finance Director at Anglo, Willie McAteer deny providing unlawful financial assistance to the Maple Ten group of customers and the family of bankrupt billionaire Sean Quinn to buy shares in the bank in July 2008.
It is the prosecution's case that these were irregular loans that were intended to give the appearance of stability in the bank.
Mr. Whelan also faces seven charges of being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
In his evidence Joe O'Reilly, said he could not say if he had ever been worth close to €1 billion but he could confirm he was a 'serious customer' of Anglo Irish Bank.
He told the jury that he was first contacted about the proposal to buy Anglo shares while he was on holiday in Portugal on July 4th 2008 and that a meeting with Pat Whelan and former Anglo CEO David Drumm took place at a bar in Faro two days later.
He said Mr. Whelan told him a person had built up a large stake in Anglo, mainly through Contracts for Difference (CFDs) which was causing turbulence and driving the share price downwards.
The jury has previously heard evidence that this individual was Cavan businessman Sean Quinn.
"Central Bank & Financial Regulator aware of deal"
Mr. O'Reilly gave evidence that he was asked to help unwind the situation by buying 1% of Anglo's shares with borrowings from the bank of up to €60 million.
The Anglo men explained the shares were the subject of short selling which impacted on the share value and the bank's reputation.
He said he trusted the bank and drew comfort from the fact they were using Morgan Stanley and Matheson Ormsby Prentice, who he described as a leading firm of solicitors.
"That was as good a team as could be put out there" he said. He said in July he thought the shares were good value and that he believed their price would go up.
The jury heard evidence Sean Reilly was offered the same terms on borrowings of up to €60 million euro by Mr. Drumm at a meeting in the former Anglo CEO's office at St. Stephen's Green in July 2008.
He said he agreed to Mr. Drumm's request because Anglo wanted him to do it; he had a good relationship with the bank and because the deal was reasonable.
"I might even make some money on it" he said.
Mr. Reilly said he was told by Mr. Drumm that the Central Bank and Financial Regulator were aware of the deal, that the bank had sought legal advice from Matheson Ormsby Prentice and that 'everyone was aware of it and wanted it done'.
The jury has heard the developers would only be liable for 25% of the loan if, in the worst case scenario, the share price was wiped out.
Mr. Reilly told defence counsel Brendan Grehan SC, for Mr. Whelan, that he initially made money on the Anglo deal and was up €7 million at one stage.
He later sold 80% of the shares. The stake he was left with became worthless when the bank was nationalised.
Joe O'Reilly described Pat Whelan as 'very professional' while Sean Reilly said he found him 'straightforward' to deal with and absolutely trustworthy.
Quinn family gives evidence
The trial also heard from five members of the Quinn family who were lent money by Anglo to convert about 15% of Sean Quinn's CFDs into ordinary bank shares.
Sean Quinn Junior agreed with the prosecution that his signature was on the documents but he expressed his view that the loans were illegal and that his family are not liable for them.
He also agreed that he and his family are involved in ligation with the remnants of Anglo.
Patricia Quinn, the wife of the bankrupt billionaire, said she played no active role in relation to the Quinn Group.
She said she also played no role in the deal to unwind her husband's stake in Anglo which he built up using Contracts for Difference. However she agreed that her signatures appear on the documents.
"I was at home looking after the children, I have no involvement with anything here, I'm sorry" Mrs. Quinn told the prosecution.
The trial also heard from Lorcan McCluskey, who worked as an Associate Director of Lending in Anglo.
He says he was contacted by Pat Whelan around July 9th 2008. He was asked to go to his office where he was told that a CFD position was being unwound and that €60 million each was being loaned to ten investors.
He said the Maple 10 loan facility letters were signed on block and did not go to the full credit committee for approval.
Mr. McCluskey gave evidence that the exercise was 'very unusual' as he had never before been asked to draft ten identical loan facility letters.
The jury heard he refused to sign a second facility letter dated July 17th that potentially reduced the bank's recourse on the Maple 10 loans to zero if the share price collapsed.
"I voiced my discomfort because I was of the view that it was taking away 25% recourse" he said. "It was weakening the bank's positions".
He said his manager Michael O'Sullivan told him that he had been advised by Pat Whelan that it had been approved by the CEO and the board of the bank.
He said the letter was ultimately signed by Michael and Pat, but in January following a 'high level review' of assets, another set of amended facility letters were issued which had the effect of reverting to the original recourse terms of July 2008.
