February 5, 2014 / 7:12 PM / in 4 years

Irish bank scheme was "absolutely illegal", court hears

3 Min Read

DUBLIN, Feb 5 (Reuters) - Ireland's collapsed Anglo Irish Bank decided to do something "absolutely illegal" by lending money to individuals so they could buy the bank's own shares, prosecutors said on Wednesday.

Three former executives of Anglo Irish - former chairman and chief executive Sean FitzPatrick and two others, Willie McAteer and Pat Whelan - last week pleaded not guilty to charges of providing unlawful financial assistance.

It is the first trial of bankers since the collapse of Ireland's financial system forced the government to seek an international bailout.

The three are accused of having provided loans to investors known as the "Maple Ten" and to the wife and five children of bankrupt businessman Sean Quinn to enable them to buy shares in the bank, boosting its stock price. The maximum possible sentence is five years in prison for each charge.

Paul O'Higgins, prosecuting counsel, said Anglo Irish discovered in 2007 that a large part of it was owned by Quinn and was concerned that it was heavily exposed to the fortunes of one person.

"Some time around the 8th of July 2008, Anglo decided to do something the prosecution say was absolutely illegal," O'Higgins told the Dublin Circuit Criminal Court.

"Prosecution says Mr Whelan was very much involved in carrying out the transaction, Mr McAteer was involved, but not as involved in carrying out the transaction, but knew all about them and Mr FitzPatrick as chairman was told about the lending," O'Higgins said.

"How much exactly he knew about the transaction will be a matter for you. The prosecution will say he did nothing to stop it in any way and he authorised it."

Ireland's banking crisis cost taxpayers more than 60 billion euros ($81 billion), or about two-fifths of national output, forcing it to take an emergency package in 2010 from the European Union and International Monetary Fund.

Though Dublin has now completed its bailout and growth has returned, it still has one of Europe's highest levels of national debt and has to make more painful changes to ensure its economy is on solid foundations.

Whelan, the bank's former managing director for Ireland, faces seven more charges that he was privy to fraudulent alteration of facility letters addressed to seven investors relating to terms for loans. He also pleaded not guilty to those charges.

Anglo Irish, whose failure cost Irish taxpayers some 30 billion euros, was put into an accelerated liquidation process last year.

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