The prosecution in the trial of 3 former Anglo Irish Bank executives claims they knew the bank was unlawfully lending money for the purchase of its own shares and failed to stop it.

Former Anglo chairman Sean FitzPatrick (65), former finance director Willie McAteer (63)and former head of lending in Ireland Pat Whelan (51) sat side by side in the dock today on day one of their trial at Dublin Circuit Criminal Court.

They deny 16 charges of providing unlawful financial assistance to the family of former billionaire Sean Quinn and to individuals known as the Maple Ten group of investors in July 2008.

Pat Whelan denies further charges of being privy to fraudulent alterations of loan facility letters to seven of the Maple Ten in October of that year.

Paul O'Higgins SC spent two and a half hours outlining the prosecution's case to the jury.

He told them that in 2007 there were rumours that Cavan businessman Sean Quinn had some kind of interest in the bank.

He said normally it would be a matter of public knowledge if a person had a shareholding in the bank but his interest in Anglo had been acquired through Contracts for Difference.

Mr O'Higgins described Contracts for Difference (CFDs) as "an extraordinary form of gambling" offered to members of the investing public by "financial geniuses".

"We're talking about tens of millions, maybe hundreds of millions," he said.

'Matter of concern' to the board

The extent of Mr. Quinn's underlying shareholding became apparent in September 2007 in the Ardboyne Hotel in Navan, Co. Meath when he met with Anglo’s Chief Executive David Drumm and Mr. FitzPatrick.

The court heard the CFDs were a matter of concern to the board of Anglo Irish Bank.

In March, when the US bank Bear Sterns collapsed, Anglo shares fell from €17 per share to €6.50.

Mr O’Higgins told the jury it became clear Sean Quinn would need money to maintain his CFD position and meet his margin calls or in other words 'pay the bookie'.

Anglo was prepared to lend him money but insisted on full recourse from Sean Quinn which meant he would be personally liable for his borrowings.

Shares in the Quinn group were used as security. Anglo’s lending to Mr Quinn topped 2 billion euro around this time.

On March 27th 2008, during another meeting between Anglo and the Quinns an agreement was made for a certain amount of Mr Quinn's underlying shareholding to be placed on the market.

Mr. O’Higgins told the jury that matters did not improve. There were efforts to bring in American investors but no-one was interested in buying Anglo’s shares.

The position became acute by late June and it is the prosecution’s case that sometime around July 8th 2008, Anglo resorted to an ‘absolutely illegal’ course of action.

Sean Quinn’s stake in the bank

It is alleged that the bank decided to dilute Sean Quinn’s stake in the bank while swapping some of his CFDs for a direct shareholding in Anglo to be held by members of his family.

Mr. O’Higgins claims Anglo Irish Bank offered to lend money to the Quinns and ten supposedly high net individuals to buy approximately 10% of the bank’s shareholding.

This group became known as the Maple 10. They are Paddy McKillen, Séamus Ross, Brian O’Farrell, John McCabe, Gerard Maguire, Patrick Kearney, Gerard Conlon, Gerard Gannon, Seán Reilly and Joseph O’Reilly.

In a ‘choreographed situation’ the public was to be told in a market announcement that the Quinn CFD issue had been resolved.

‘Between the 8th and 30th of July, Anglo channelled to the Quinns approximately €175 million and to the Maple 10 approximately €450 million’, Mr. O’Higgins told the jury.

The prosecution says the nature and magnitude of the loans show they were not made in the ordinary course of the bank’s business.

Mr. O’Higgins told the jury the borrowers were picked because they were considered loyal customers to Anglo.

One of the borrowers was approached while on holiday in the south of France, another was in Portugal.

‘A lot of people on holiday, who saw their bank manager in the distance might head for the nearest sand dune’, he said.

The bankers stayed in hotels and sought to convince their customers to agree to take loans of €45 million, the jury heard.

The bank’s recourse on the loans was only 25%, which is alleged to be another indicator of their extraordinary character.

The prosecution claims the lending scheme to buy bank shares was designed to give the impression there was stability in the Quinn situation.

Mr. O’Higgins said it ‘was not real stability’ because the bank, rather than outside investors, was funding the purchase of shares.

He told the jury it is the prosecution’s case Pat Whelan was ‘very much involved in carrying out the transactions’.

Mr. McAteer is alleged to have been involved ‘but not as involved’ as Mr Whelan, while it is claimed Sean FitzPatrick was informed about the lending as Chairman of the board and did nothing to stop it.

‘How much he knew about the transactions is a matter for you but he was told about the lending’ Mr O’Higgins told the jury.

Earlier he explained that if a company commits an offence then the officers of the company, including its directors, may be found liable.

Evidence in the trial will begin tomorrow morning.

Read back on the day's proceeding in our Live Blog 

Pictured above: Willie McAteer (left), Sean FitzPatrick (centre) & Pat Whelan (right) arriving at the Criminal Courts of Justice