Anglo Irish Bank trial: Sean Quinn junior says loans were 'illegal'

Sean Quinn jnr Sean Quinn junior said he believed the loans his family had been given were illegal and as a result the Quinns should not be liable for them

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A son of businessman Sean Quinn has told the trial of three former senior Anglo Irish Bank executives that the Quinn family believed the loans they were given were illegal.

Sean Quinn junior said as a result the family were not liable for the loans.

Sean FitzPatrick, 65, Willie McAteer, 63, and Patrick Whelan, 51, deny 16 charges of lending bank money to individuals to buy bank shares.

The individuals include six members of the Quinn family.

Mr Quinn junior told the court in Dublin on Tuesday: "I think it's fair that we would be at one with the state and we would feel that the money that was lent was illegal.

"It would be fair to say that it would be our view that the security obtained by the bank was obtained in a fraudulent and illegal manner and therefore we are not liable for those loans."

Several members of the Quinn family, including his mother Patricia, were in court for day five of the trial.

The court heard from Sean Quinn junior's father on Monday that he had lost 3.2bn euros ( £2.6bn) gambling on Anglo shares in 2007 and 2008.

The shareholding was built up by a Portuguese-registered company, Bazzely Ltd, which was part of the Quinn empire.

It used complex trading derivatives called contracts for difference (CFDs), which at the time did not have to be publicly divulged and essentially amounted to undeclared bets that the share price would increase.

Wealthy client

Dublin's Circuit Criminal Court also heard on Tuesday from one of ten investors who bought shares in the Anglo Irish Bank with loans from the lender.

Sean Reilly, a wealthy client of the bank for about 20 years, said he was called into its headquarters on St Stephen's Green, Dublin, on 8 July 2008 and initially offered 60m euros (£49.8m).

The builder, developer and investor was one of the so-called Maple 10 group lined up to buy Anglo shares to unwind a secret stock holding built up by the former billionaire Sean Quinn.

Mr Reilly is the first of the select group of businessmen to give evidence at the trial.

The court heard Mr Whelan contacted Mr Reilly and both he and former chief executive David Drumm, who is living in the US and not on trial, were in the Anglo offices when the 60m euros (£49.8m) was put on the table.

Pat Whelan, Sean FitzPatrick, and Willie McAteer. Pat Whelan, Sean FitzPatrick, and Willie McAteer deny providing illegal loans to prop up the share price of the former Anglo Irish bank

"They said they had legal opinion from MOP (law firm Matheson Ormsby Prentice) and that the financial regulator was aware of it, and the Central Bank, everyone, was aware of it, and they wanted it done. That was it," Mr Reilly said.

He said the meeting lasted 30 minutes.

Mr Reilly said he was only told the deal was to unwind a position and there was no mention of Mr Quinn.

The deal saw him take about 10m shares - eight million of which he sold before the bank was nationalised in early 2009.

Mr Reilly said it did not look as though he could lose money and he was up seven million euros (£5.8m) at one stage.

The court was told international bank Morgan Stanley would act for him in the deal.

Conditions

Due to the share price continuing to collapse in July the loan was reduced to 45m euros (£37.3m), documents showed.

Mr Reilly said he bought the shares on the condition he could sell them when he wanted, but was asked by Mr Drumm not to flood the market.

The three accused pleaded not guilty to providing unlawful financial assistance to individuals in July 2008 for the purchase of shares in the bank, contrary to Section 60 of the Companies Act.

Mr Whelan has also pleaded not guilty to a further seven charges of being privy to the fraudulent alteration of loan facility letters to seven individuals.

Lawyers for Mr FitzPatrick and Mr Whelan have said they accept the loans were made but they deny any illegality.

Mr FitzPatrick, of Whitshed Road, Greystones, County Wicklow; Mr McAteer, of Auburn Villas, Rathgar, south Dublin; and Mr Whelan, of Coast Road, Malahide, County Dublin, are on bail.

The trial is expected to run until the end of May.

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