Maple Ten investor Gerry Maguire asked 'is the transaction legal?' when two Anglo Irish Bank executives approached him about a loan to buy shares in the bank while he was on holiday in the South of France, a court has heard.
The property developer has told the trial of three former Anglo executives that he was on holiday near Nice when he received a message from his office on Thursday July 10th 2008, informing him that Pat Whelan, a director of the bank wished to speak with him.
He said he spoke with Mr. Whelan on the phone the following day and that the Anglo director told him his assistance was being sought because the bank shares were under pressure from hedge funds engaged in short selling.
Dublin Circuit Criminal Court heard Mr. Whelan said they had looked for investment from financial institutions without success and were now looking for individuals to invest in the bank short term to inspire confidence and deal with this attack.
Mr. Maguire is giving evidence in the trial of former Anglo Chairman Sean FitzPatrick (65), former head of lending for Ireland, Pat Whelan (51)and former Finance Director Willie McAteer (63) who deny unlawfully providing financial assistance to the Maple Ten and members of the Quinn family to buy shares in the bank in July 2008.
The prosecution claims the transactions were intended to give the appearance that the bank's share price was stable.
Mr. Maguire, a well-known property developer, has told the jury he knew nothing about Sean Quinn's Contracts for Difference (CFD) position, but as an investor who had bought Anglo shares at €13.50, he had seen the share price drop to €5.30 in 8 months.
Mr. Maguire said he offered to return to Dublin because 'this wasn't ordinary contact from the bank' but instead Mr. Whelan and Mr. Drumm flew out the next day, Saturday July 12th, to meet him in Nice.
In his evidence he said that David Drumm elaborated on what Pat Whelan had told him on the phone.
'He spoke about short selling, mentioned CFDs which were something I didn't know too much about, being used by hedge fund managers to manipulate bank shares'.
He said Mr. Drumm told him that the effect was to drive the share price down and that this was not just having an impact on Anglo but other Irish banks.
He told the jury Mr. Drumm asked him to consider investing in the bank and said the bank would provide a €60 million loan facility to do this.
Mr. Maguire has said he believed there were others investing in this fashion and that 'it was anticipated it would stop a run on bank shares' and 'bring stability and confidence', which 'happened immediately'.
It was anticipated that over the next six months when the share price rose to over €6 the stock could be disposed of in an orderly fashion 'if the market would allow', the court heard.
The developer said he agreed to proceed but that he asked two very important questions. 'Is this transaction legal?' was the first the court heard.
The second question was whether the Central Bank was aware of the deal.
He said he was advised by the Anglo executives that they 'wouldn't be approaching' him unless the deal was legal and that he was told 'They had legal advice and it was in order''.
He was asked by prosecution barrister Paul O'Higgins 'Is there a reason why you might have thought it wasn't?' to which Mr. Maguire replied 'I think it was a common prudent question to ask'.
'I had a particular interest in these shares'
The court heard the developer had invested in Anglo on two previous occasions; the first of which was a profitable investment in 2006. He invested roughly a year later with his own savings, and with borrowings from Anglo's private banking section.
On July 16th, 10.2 million Anglo shares were purchased on his behalf. 2.2 million of the shares were sold in the following month.
Later in the year more shares were sold but at this stage their value had fallen below €1.
By the time the bank was nationalised, Mr. Maguire said he held around 8 million shares along with a previous personal holding in the bank which involved his savings of the previous ten to fifteen years and was in part for his pension.
'I was not a professional investor, I wasn't even a regular investor, I just had a particular interest in these particular shares' he said.
'If everything went well there was a possibility of profit' but he told the court that the first step was tackling the bank's problem'.
The jury has also heard from housing developer and investor Gerry Gannon, who has said his personal fortune was approaching €1 billion in July 2008.
He has said that month he received a call from Pat Whelan, who was head of lending for Ireland at Anglo about an opportunity that had come up.
Mr. Gannon has given evidence he met with Mr. Whelan and CEO David Drumm at their offices in St. Stephen's Green.
After five or six minutes of chit-chat, he said he was told he was a good customer and that an opportunity had come up to buy shares in the bank.
He said he was asked if he was interested and he replied that he was. The jury heard it was not explained to him how the opportunity had arisen. 'It wasn't a very long meeting, about 20 minutes' he said.
The jury is now hearing from Niall Tuite, former head of Credit Risk at Anglo, who has said he was first informed of the Maple Ten loans on July 14th 2008.
He said Pat Whelan outlined proposals to lend money to 10 individuals to buy shares in the bank to reduce the shareholding held by another borrower.
