Ex-Anglo Irish Bank directors avoid jail for fraud
Dublin (AFP) - Two former directors of the collapsed Anglo Irish Bank were spared jail Tuesday despite being found guilty of providing illegal loans to support the bank's share price.
Patrick Whelan, 52, and William McAteer, 63, were told by a judge that they would likely serve community service, following the first prosecution of its kind in Ireland.
They were found guilty last week on 10 counts of providing unlawful financial assistance to Anglo Irish customers to buy shares in the lender in July 2008.
They had faced a maximum of five years in prison, but Judge Martin Nolan said the blame must be shared with Ireland's financial watchdog.
During the trial, Nolan told jurors to ignore his criticism that the Financial Regulator took no measures to discourage the loan-for-shares scheme.
But during legal argument, in the absence of the jury, he indicated he could take this into account in sentencing.
"It would be most unjust to jail these two men when I feel that a state agency had led the two men into error and illegality," he said.
He adjourned final sentencing until July to assess both men's suitability for community service.
Whelan, a former director of lending in Ireland, and McAteer, a former finance director, were both found not guilty on six other similar charges after the 11-week trial.
The bank's former chairman, Sean Fitzpatrick, was meanwhile cleared of all charges.
The loans-for-shares deal to 10 of the bank's top customers was part of a plan concocted in 2008 to unwind former billionaire Sean Quinn's stake after it emerged he had built up a secret 28-percent holding.
The bank feared Quinn's sizeable holding left the share price susceptible to risk, particularly if Quinn was forced to dump his stake in an uncontrolled manner.
The prosecution argued that the loans breached company law because the scheme was arranged with the intention of affecting its own share price.
The 10 investors, known as the Maple 10, were loaned a total of 450 million euros ($621 million) to buy around 10 percent of the bank's shares.
The loans were on highly favourable terms, with the investors only liable to pay back 25 percent of the value in case of default.
The case was the first criminal prosecution in Ireland under the relevant section of its Companies Act and followed the largest fraud investigation in the country's history.
Anglo, mostly a commercial and business bank, lent recklessly during Ireland's Celtic Tiger boom years.
In 2008, nearly 30 billion euros ($34 billion) of taxpayers' money had to be pumped into the bank to prevent it from going under.
The bank was nationalised in 2009 as the Irish economy tinkered on the verge of collapse. The following year Dublin sought an 85-billion-euro international rescue.
In 2013, Anglo Irish was liquidated.
