Two former Anglo Irish Bank executives found guilty of handing out illegal loans

Patrick Whelan and William McAteer convicted in Dublin court of illegally lending to Maple 10 group of investors

The Guardian, Henry McDonald in Dublin, Thursday 17 April 2014

Patrick Whelan outside court. He was found gulity of illgeal lending.
Photograph: Niall Carson/PA

Two former Anglo Irish Bank executives have been found guilty of handing out illegal loans from the financial institution whose reckless lending almost bankrupted Ireland.

Patrick Whelan and William McAteer were convicted in a Dublin court of illegally lending to the Maple 10 group of investors in the summer of 2008, in order to prop up the Anglo Irish share price and save the bank from collapse.

The 10-week-long trial of the directors transfixed a nation that had been forced to pay out more than €30bn (£25bn) in taxpayers' money to rescue the business.

It was the first time that any bankers faced charges under Section 60 of the Irish Republic's Companies Act, which bars banks from giving out loans to bolster their share price.

However the pair were found not guilty of orchestrating illegal loans from the bank to the family of Seán Quinn, Ireland's one-time richest man.

William McAteer leaves
court after the verdicts.

The pair will remain on bail until they are sentenced on 28 April, the Dublin circuit criminal court was told. Trial judge Martin Nolan warned that sentencing may go beyond that date.

Whelan, 52, the former head of lending in Ireland for Anglo Irish Bank, and McAteer, 63, its former chief risk and finance officer, could face up to five years in jail on each count.

The jury took nearly 17 hours to decide the fate of Whelan and McAteer as well as Seán FitzPatrick, former Anglo Irish chairman, whom they found not guilty on Wednesday.

The guilty verdicts for Whelan and McAteer were unanimous. Outside court the two men refused to talk to the media.

The judge had previously directed that 65-year-old FitzPatrick be found not guilty in connection with loans to Quinn, because of a lack of evidence. He also cleared Whelan of seven counts relating to the amendment of loan facility letters sent to the so-called Maple 10, a group of rich Irish investors allegedly used to buy out the Quinn family's shares in the bank.

Quinn and his family's legal battle with the Irish state over the collapse of Anglo Irish sustained a blow after the jury decided the loans given to them were legal.

The Quinns are engaged in a civil action against the state which rests on the supposed illegality of the loans from Anglo Irish.

The trial focused on moves by the bank to unravel Quinn's secret holding in the institution, built up via financial instruments called contracts for difference – or highly leveraged bets on an increase in the Anglo Irish share price.

By July 2008, with financial ruin looming for Anglo Irish Bank owing to excessive lending in the Irish property boom, Quinn controlled about 28% of the shares in the ailing bank.

The Maple 10 investors were lent a total of €450m by Anglo to buy about 10% of the shares that Quinn controlled. Quinn's wife and five children were also lent €169m to buy nearly 15% of the stock.

In February prosecutors said that executives at the bank decided to do something "absolutely illegal" by lending money to the individuals.

FitzPatrick, who was chief executive of the bank from 1986 to 2005, said his successor, David Drumm, told him the plan to lend the money was "kosher and above board", according to interview notes that police read out during the trial.

FitzPatrick's legal team had persuaded the jury that he was kept in the dark as to the identities of the Maple 10 investors and consequently would not have known the loans were illegal transactions.

The case was one of the most complex in European financial criminal history and lasted 43 days. More than 600 documents were read into the book of evidence and 54 witnesses were called during the trial in court number 19 of Dublin's circuit criminal court.

Attention will now turn to whether the Irish government will hold a public inquiry into the Anglo Irish scandal. In 2010 the state was ultimately forced to seek a €67.5bn bailout from the International Monetary Fund, the European commission and European Central Bank, which it exited last year.