The former Financial Regulator has denied distancing himself from events surrounding an allegedly illegal loan transaction at Anglo Irish Bank. Patrick Neary has been giving evidence at the trial of former Anglo directors Willie McAteer (63) and Pat Whelan (51) and the bank's former Chairman Sean FitzPatrick (65).
They deny unlawfully funding the purchase of the bank's shares in July 2008 to prop up the share price.
The loans to the family of Sean Quinn and ten of the bank's customers, the so-called Maple Ten investors, are alleged to be in breach of the Companies Act 1963.
Mr. Neary's evidence is that he did not know until Good Friday, March 21st, 2008 that Cavan billionaire Sean Quinn had indirectly built up a 28.4% stake in Anglo using a financial instrument called Contracts for Difference (CFDs).
The jury has heard the bank's Chairman Sean FitzPatrick and Chief Executive David Drumm had been made aware of Mr. Quinn's position at a meeting with the businessman at the Ardboyne Hotel several months earlier on September 11th 2007.
Mr. Neary said Mr. Drumm unusually requested a 'low key' drop in meeting the very next day but that he chose not to inform the regulator about the Quinn's CFD position.
The court heard Anglo's Chief Executive discussed CFDs in a general way and indicated his concern at market rumours that Sean Quinn had been gambling on the bank's share price.
Cross examined by Michael O'Higgins SC for Sean FitzPatrick, Mr. Neary said he did not take notes at this meeting because Mr. Drumm wanted to talk 'privately' and their discussions were 'exploratory' in nature.
'It was a special meeting of a personal nature', he said.
.Mr O'Higgins put it to the former regulator that this made it sound like David Drumm wanted to discuss personal problems at home to which Mr. Neary replied 'it left that possiblity open'.
Earlier in his direct evidence, Patrick Neary described Mr. Quinn's large CFD stake in Anglo as 'very worrying'.
2008 meeting with Sean Quinn
The financial crisis was underway and there were concerns that a disorderly unwind of Sean Quinn's position could destabilise Anglo and possibly other Irish banks, the court heard.
Mr. Neary described an informal meeting with Mr. Quinn in January 2008 in which the businessman mentioned he had small CFD positions in Ryanair and Anglo Irish Bank which he didn't intend to keep.
He agreed with Michael O'Higgins SC that he 'had the flavour' of the meeting when he suggested Mr. Neary was making it sound like Sean Quinn was 'up from the country for the day' and had 'dropped in' to the Financial Regulator while in town.
Under cross-examination by Pat Whelan's lawyers as to why he did not ask Sean Quinn outright about his holdings at that meeting, Mr. Neary replied that he did not think it was right to ask a private citizen about his investment portfolio, in the absence of specific information.
Later he told Brendan Grehan SC that he could not recall any 'Eureka' moment on being briefed by his colleague Con Horan in July of that year that Mr. Quinn's CFDs had been unwound.
He denied a suggestion by Mr. Grehan that the only letter he ever wrote to Anglo expressing concern about the €1.8 billion the bank had lent to the Quinn Group was a 'posterior covering' exercise.
Michael O'Higgins SC questioned Mr. Neary about the regulator's handling of a breach in Quinn Direct's solvency requirements in 2008.
He said it gave 'vital clues' to the regulator's approach, which appeared to be 'let's get the big problems sorted and afterwards we'll look at things more closely'.
He said Anglo was being 'leaned on to drop guarantees' on loans to keep Quinn afloat 'until his gambling problem could be resolved'.
He put it to Mr. Neary that this led to an Anglo deal being pushed 'right through the system' which he was now distancing himself from.
Mr. Neary replied 'I'm not distancing myself' but otherwise he said he didn't disagree with Mr O' Higgins assessment in that that the regulator wanted the Anglo problem solved.
