A senior lender at Anglo Irish Bank has told a court he felt 'compromised' after signing amended loan facility letters to the Maple Ten.
Michael O'Sullivan is giving evidence at the trial of three former Anglo executives accused of providing unlawful financial assistance to 10 individuals and members of the Quinn family to buy shares in the bank in July 2008.
Former head of lending in Ireland Pat Whelan (51), former Anglo Chairman Sean FitzPatrick (65) and former Finance Director at the bank, Willie McAteer (63) deny the charges.
Pat Whelan also denies seven charges of being privy to the fraudulent alteration of loan facility letters to seven individuals in October 2008.
Mr. O'Sullivan has told Dublin Circuit Criminal Court that his position as divisional lending director required him to report to Mr. Whelan.
He said he first became aware that former billionaire Sean Quinn had built up a 28 or 29% stake in the bank through Contracts for Difference(CFDs) at a meeting on November 8th 2007 with Pat Whelan and the then CEO of Anglo, David Drumm.
The jury has heard his reaction was one of 'complete shock' as he was directly responsible for the Quinn relationship.
He described it as 'one of those moments you won't forget in life'.
He said he was told by Mr. Drumm that the Quinn Group was seeking loan facilities to replenish funds that had been spent meeting the Cavan businessman losses from betting on Anglo's share price.
Quinn position considered 'potentially disastrous'
Mr. O'Sullivan told the court funds were made available in December to meet Mr. Quinn's CFD losses and again in the wake of March 17th 2008, which became known as the St. Patrick's Day massacre.
The jury has already heard that was the day US bank Bear Stearns collapsed and that billions of euro were wiped off the Irish Stock Exchange.
Mr. O'Sullivan told the court he was aware attempts were being made to unwind Mr. Quinn's CFD position which was considered 'potentially disastrous' for Anglo.
Cross-examined by barrister Brendan Grehan SC, for Pat Whelan, he agreed there was concern hedge funds were circling and that there were rumours about the short selling of Anglo shares.
The jury has heard evidence that Anglo off-loaded around one-third of Sean Quinn's stake in the bank by lending approximately €450 million to the Maple Ten group to buy bank shares in July 2008.
Under the terms of the loans the borrowers were to be held personally liable for 25% of the loan amount.
Mr. O'Sullivan claims this requirement was diluted, on instruction from Pat Whelan, in a subsequent loan facility letter which they both signed in October 2008.
'He told me it was approved by David Drumm and the board. I said you sign it so and then I signed it', he said.
Following a meeting with two non-executive directors on October 22nd, Mr. O'Sullivan concluded that the board of Anglo was not aware that the 25% recourse on the loans had been modified.
'I was annoyed the board were unaware of the facts as presented to me' he said.
The jury heard by December 2008, Anglo was being recapitalised.
Mr. O'Sullivan said he raised his concerns about the amended Maple Ten loan facility letters with the risk group in the bank and that he also left messages with Anglo's Chief Finance Officer Matt Moran who was involved in the recapitalisation negotiations.
He said that a phonecall from Pat Whelan on Sunday December 21st resulted in a heated exchange on the issue of the 25% recourse.
"I felt compromised by what had taken place"
It is claimed Mr. Whelan expressed his disappointment that Mr. O'Sullivan had not come to him with his concerns and that he was allegedly told by the lender that he had approached him on five or six occasions but with no satisfaction.
'I said I felt compromised by what had taken place and in my 26 years working in financial services that hadn't happened before' Mr. O'Sullivan told the court.
The jury heard Mr. Whelan sent Michael O'Sullivan a text the following morning stating that if he was not satisfied he should go to David Drumm.
The trial will continue tomorrow.
