Tuesday 29 April 2014 16.34 The judge in the Anglo Irish Bank trial has ruled that a State agency led two former executives of the bank into error and illegality, and said it would be unjust to imprison the men.
Judge Martin Nolan adjourned sentencing of Anglo's former head of lending in Ireland, Patrick Whelan, and the bank's former finance director, William McAteer, to assess suitability for community service.
McAteer, 63, of Rathgar, Co Dublin, and Whelan, 52, of Malahide Co Dublin, were convicted by a jury on 17 April, following a 48-day trial.
They were found guilty of giving illegal loans to ten developers to buy shares in the bank; a breach of Section 60 of the 1963 Companies Act.
The judge said the attitude and behaviour of the Financial Regulator had complicated the issue of sentencing.
He said it would be unjust to imprison the two men when a State agency had led them into error and illegality.
He said it seemed to him the Financial Regulator was more interested in solving the problem of Seán Quinn's interest in the bank through risky investment products than in complying with the technicalities of the law.
The judge said the explicit purpose of the loans at the centre of this case was to stabilise the share price of Anglo.
He said the bank's higher executives and probably the Financial Regulator feared that if the share price was not stabilised, it would have a disastrous effect on the financial health of the banking system in Ireland.
But he said this was a blatant affront to Section 60 of the Companies Act, no matter what the motivation was or what necessity was perceived.
He said both men were executive directors of the bank and had an obligation to ensure the bank behaved in a lawful manner and they had signally failed to do this.
They had a duty to stop this scheme he said.
But the judge said to deal with the men justly he had to make certain findings.
He said he found the problem which the scheme sought to fix was caused by Seán Quinn's "investment strategy" in Anglo.
He said David Drumm was the instigator of the scheme to lend money to the Maple Ten.
In particular, he made findings about the role of the Financial Regulator.
He said Con Horan, who was the official in the Regulator's office responsible for the banks, did his best when he gave evidence and he said his memory was reasonably good.
He said it seemed to him the situation Anglo found itself in frightened and disturbed Mr Horan and he was anxious that Anglo should sort the situation out.
The judge said Patrick Neary the Chief Executive of the Financial Services Regulatory Authority, seemed to have limited recall and seemed to have difficulty recalling vital events.
He said both Mr Horan and Mr Neary must have known from March 2008, when an agreement with the Quinn family was first drawn up, that it was intended that Anglo was going to be lending money to buy its own shares to unwind Mr Quinn's position in the bank.
The judge said it was "incredible" that the Financial Regulator did not take advice from colleagues in other State agencies about the legality of this.
He said it was incredible that red lights did not go off in the Regulator's office at this stage.
He said it seemed they were more anxious to solve the problem than to comply with the technicalities of the law.
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