A solicitor who gave legal advice to Anglo Irish Bank has said he did not know the bank lent money to the Maple ten to buy its own shares, until after the deal was done.
Robert Heron, a former partner at Matheson Ormsby Prentice has also told Dublin Circuit Criminal Court that he did not give 'positive legal advice' that the bank's lending to the family of the then billionaire businessman Sean Quinn did not breach company law.
Mr. Heron was called by the prosecution to give evidence at the sentencing hearing of former Anglo Finance Director Willie McAteer and former head of Irish lending Pat Whelan.
The two ex-bankers were convicted by a jury 11 days ago of breaching their duties as directors under Section 60 of the Companies Act 1963 by providing unlawful loans to ten of the bank's customers for the purchase of its own shares in July 2008.
Section 60 bans a business from providing funds for the purchase of its own shares but there is an exception if the lending is in the ordinary course of business.
Neither man claims to have spoken directly to Mr. Heron about the Maple transaction but their lawyers say it was their understanding that Anglo's compliance department had received positive legal advice that the deal was above board.
During the trial, Judge Martin Nolan ruled that whether legal advice had been obtained by Anglo was irrelevant to the guilt or innocence of the accused, but he did find it could be a mitigating factor at sentencing.
Paul O'Higgins SC for the prosecution, told the court that if the accused had fulfilled their duties as company directors they would have been aware that there was no written legal advice at the time of the Maple deal.
Mr. Heron told the court he was informed at a meeting with Mr. McAteer and Anglo's Chief Financial Officer Matt Moran in March 2008 that Sean Quinn had built up a 28% or 29% stake in Anglo Irish Bank using Contracts for Difference (CFDs).
He said Mr. McAteer was concerned that this was affecting the bank's ability to get funding and that hedge funds were short selling the stock.
He gave evidence that he did not take notes at the meeting but the issue of lending to proposed investors was not raised.
Mr. Heron said he was contacted by Anglo again in July 2008 and spoke to Fiachre O'Neill who was head of compliance about loans to the Quinn family.
The court heard he advised the loans could be an exception to the Section 60 ban if the lending was in the ordinary course of business and the net assets of the bank were not reduced.
He supplied the bank with a summary of his legal advice on the July 22nd 2008, after the Maple deal was concluded.
Under cross-examination, Brendan Grehan SC for Pat Whelan put it to Mr. Heron that his recollection was at odds with executives from Anglo and investment bankers at Morgan Stanley who engineered the CFD unwind and understood MOPs to have given positive advice that the deal fell within the exception to Section 60.
He rejected that he had ever given positive advice but agreed that his memory of events has evolved over time and that initially he did not have a clear recollection of conversations with Mr O'Neill.
The hearing will resume with garda evidence tomorrow morning.
