Ex-Anglo Irish Officials Loans-for-Shares Trial Begins in Dublin

Former Anglo Irish Bank Corp. Chairman Sean Fitzpatrick faces trial in Dublin with Willie McAteer, the bank’s former finance director, and Pat Whelan, a one-time managing director of its Irish unit.

The men pleaded not guilty to charges related to loans made to 16 clients in 2008. Prosecutors claim the loans were a breach of corporate law and amounted to unlawful financial assistance for the purchase of Anglo Irish Bank’s own shares.

The bank rose and fell in tandem with Ireland’s economy. Its loans soared more than 18-fold to 101 billion euros ($136.6 billion) in the decade through 2008, as it financed some of Ireland’s largest property developers during a real estate boom.

The bank’s shares hit a high of 17.85 euros on May 31, 2007, valuing the lender at almost 13 billion euros. In the wake of the real estate crash in 2008, the shares plunged 99 percent. With Anglo Irish close to collapse, the state nationalized it in January 2009, with the bank becoming the first of five of the country’s largest lenders to be taken over by the government.

The trial, starting today in circuit criminal court, is expected to last four months, Judge Martin Nolan said in court.

A month after the government takeover of Anglo Irish, police began their probe.

In July 2012, prosecutors charged the three defendants with providing six members of the family of Sean Quinn, once Ireland’s richest man, with funds to buy shares in the bank.

The three defendants were also charged in relation to loans given to 10 other Irish clients to buy Anglo Irish shares in 2008.

Charges

The three men are charged with having authorized or permitted the bank to give unlawful financial assistance for the purchase of buying shares in the bank.

Whelan faces seven additional charges tied to the alleged fraudulent alteration of facility letters. He has pleaded not guilty to the additional charges. The prosecution said the alleged alterations improperly provided an advantage to seven of the clients who were given loans to buy the shares, at a disadvantage to the bank.

Anglo Irish, which cost taxpayers 29 billion euros to bail out, is now being liquidated by the government. The bank’s rescue was the costliest element of the state’s 64 billion-euro bill for saving the nation’s financial system.

Leading Trial

Una Ni Raifeartaigh is leading the team for the state prosecutor, along with Paul O’Higgins for the Office of the Director of Corporate Enforcement. The trial may feature some prominent figures of Ireland’s economic renaissance.

The court heard on Jan. 31 that witnesses may include John Hurley, the last central bank governor, Pat Neary, former head of financial regulation and Kevin Cardiff, a former top official in the finance ministry. Former Anglo Irish directors and executives may also testify.

A chartered accountant, Fitzpatrick, 64, joined the bank that evolved into Anglo Irish in 1974 and became the group’s chief executive officer in 1986. He became group chairman in 2005, quitting in December 2008.

Under his stewardship, Anglo Irish bankrolled many of the property developers behind the building boom that drove economic growth to an average 6 percent in the first half of the last decade.

McAteer, 63, joined Anglo Irish as finance director in 1992 and moved on the lender’s board in February 2000. He resigned from Anglo Irish in January 2009.

Whelan, 51, joined the bank in 1989 before being appointed as a board member in 2006 and becoming managing director of Irish lending in 2007. He stepped down from the board in February 2009, leaving the bank 10 months later.

The cases are DPP v William McAteer, DUDP1019/2012, DPP v Sean Fitzpatrick, DUDP1019/2012, DPP v Pat Whelan, DUDP1019/2012 (Dublin).

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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