March 27, 2014 / 7:56 PM / 4 years ago

Anglo Irish ex-chairman says CEO told him bank scheme was 'kosher'

DUBLIN, March 27 (Reuters) - The former chairman of failed Anglo Irish Bank said his chief executive told him a scheme to lend money to individuals so they could buy the bank’s shares was “kosher and above board”, a court heard on Thursday.

Three former executives of Anglo Irish - ex-chairman Sean FitzPatrick and two others, Willie McAteer and Pat Whelan - have pleaded not guilty to charges of providing unlawful financial assistance by lending money to others to buy the shares.

The three former bankers were put on trial in January in the first such case since a banking crisis pushed Ireland into an 85 billion euro ($116 billion) international bailout programme that ended last year.

In interview notes with police that were read out by senior counsel for the prosecution, FitzPatrick was quoted as saying that David Drumm, who succeeded him as chief executive of the bank in 2005, told him the plan to lend to 10 individuals was “kosher and above board”.

“Well just think about it. Was he (Drumm) going to go off and do something illegal in what was going to be one of the most publicly looked at deals in Ireland? Why would he do that?” senior counsel Una Ni Raifeartaigh said FitzPatrick told police who first interviewed him in 2010.

“We had Morgan Stanley right in the middle of it advising us. Why would they not say, ‘You cannot do that?’ It all stacked up, it all looked appropriate.”

The three former executives 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.

Earlier this month, prosecutors said that Anglo, which was put into accelerated liquidation last year and whose failure cost some 30 billion euros, decided to do something “absolutely illegal” by lending money to the individuals.

Ireland’s banking crisis cost taxpayers more than 60 billion euros overall - about two-fifths of national output - forcing Dublin to take an emergency financial aid package in 2010 from the European Union and International Monetary Fund. ($1 = 0.7278 Euros) (Writing by Padraic Halpin; Editing by Hugh Lawson)

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