An internal report on the Maple loans at Anglo Irish Bank found decisions were made to 'keep the bank alive' that may appear 'unwise' with the benefit of hindsight.
The report was written by the bank's former head of lending in Ireland Pat Whelan (51) - one of three executives who deny providing unlawful financial assistance to 16 individuals to buy shares in Anglo in July 2008.
His two co-accused are the bank's former Finance Director Willie McAteer (63) and former Anglo Chairman Sean FitzPatrick (65).
Mr. Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
The 16 individuals that received Anglo loans are members of Cavan businessman Sean Quinn's family, and the so called 'Maple Ten' who are described in Mr. Whelan's 2009 report as 'the bank's most loyal and supportive clients'.
Dublin Circuit Criminal Court heard the ten investors were approached by Anglo and given €45 million loans in July 2008 to buy shares in the bank. The purpose of the transaction was to dilute the 29% stake Mr. Quinn had in Anglo over concerns it might destabilise the share price.
Mr. Whelan's report notes that the traumatic "Quinn saga" had brought the bank to the very edge.
In October of that year, several months after the unwind of Mr. Quinn's position, there were concerns as Anglo's share price fell, that the bank would be subject to a merger or an aggressive takeover.
The fear was that the 'loyal' Maple clients might be treated 'unfairly' by another institution and that they would not be given time to deal with their debt.
'Letters should not have been sent'
Back-dated 'protection' letters wiping out the bank's security by effectively reducing the Maple Ten's personal liability for the loans from 25% to 0% were - the report finds - an 'error of judgment'.
The letters created a 'grey area' to buy the Maple Ten time and Anglo CEO David Drumm instructed that they were to be kept on file unless required.
The report notes that a clerical error meant some were inadvertently posted but that the situation was subsequently rectified so that the original loans terms stood.
When questioned about the report in 2010, Mr. Whelan told gardai the letters should not have been sent out as they had not been approved by the credit committee or the bank's board.
It was put to him that advancing funds to the Quinns and the Maple Ten for the purchase of Anglo shares amounted to multiple breaches of Section 60 of the 1963 Companies Act.
The court heard the former Anglo executive replied that an exception under Section 60 allows banks to issue loans to purchase their own shares because it is in the ordinary course of their business.
