Anglo Board told Quinn share loans not unlawful



Q-Tours

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Depends on how you interpret the 'ordinary course of business' bit of s. 60 Companies Act 1963. Given the strict construction you need for a criminal conviction, I'd say it would be hard to get a conviction, but it may be possible to rely on the section in a civil action to annul the transaction.

If I was the DCE I'd look to the Market Abuse regs rather than s. 60 for a conviction.
 

Squire Allworthy

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The problem with the legal advise is that it avoids the overall context and purpose of the loans. The question is not the influence of the individuals but the overall intent of such lending.

It is clear that the Board by asking for the advice must have considered the decision problematic. It sounds more like advice on the line of defence to take. It is a distraction into a side issue.
 

athlonedub

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I think for a transaction of that magnitude where there is lack of certainty on the issue, a board will always get some CYA professional advice. In such circumstances though, the advice giver does usually realise that they are being asked to put their reputation (and indemnity insurance) "on the line" and , like hanging, that should concentrate the mind !
 

Oldira1

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I think for a transaction of that magnitude where there is lack of certainty on the issue, a board will always get some CYA professional advice. In such circumstances though, the advice giver does usually realise that they are being asked to put their reputation (and indemnity insurance) "on the line" and , like hanging, that should concentrate the mind !
A bit like an audit report so....................
 

droghedasouth

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The advice reads as self-serving and disingenuous in the extreme.
I wonder how much Anglo paid for this skein of legal advice to cover the the bank directors.

Amazing how small the difference is between common prostitutes and leading law firms. Paying for the best available advice is like paying for a high class hooker.
 

Q-Tours

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The advice reads as self-serving and disingenuous in the extreme.
I wonder how much Anglo paid for this skein of legal advice to cover the the bank directors.

Amazing how small the difference is between common prostitutes and leading law firms. Paying for the best available advice is like paying for a high class hooker.
Cue joke about 'VAT at the Point of Entry'...
 

stanley

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How can Anglo call the funds given to the Golden Circle lads "loans", they were advised only 25% of the amount had recourse but to date nobody has been requested to cough up their 25%.

At the outset in theory they were a form of loan but in application and hindsight they were nothing of the sort.
 

corelli

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I always thought the only obvious issue for Anglo was a potential breach of EU regulation in terms of "hiding" debt on another institutions books then shipping it back after the audit*. In any event, one wonders if the DCE has taken a view at this stage. The obvious move would be for him to invoke the Companies Act's and ask the High Court for an order restricting persons as directors. It would then be a matter for the High Court.

*Can't remember the regulation or the Irish Act incorporating it, at this second*
 

cozzy121

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I take it "Not Unlawful" isn't the same as "Lawful"?
 

Libero

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Depends on how you interpret the 'ordinary course of business' bit of s. 60 Companies Act 1963. Given the strict construction you need for a criminal conviction, I'd say it would be hard to get a conviction, but it may be possible to rely on the section in a civil action to annul the transaction.

If I was the DCE I'd look to the Market Abuse regs rather than s. 60 for a conviction.
It would be interesting to know if this formal letter of advice from MOPs addressed the Market Abuse Regulations in terms of market manipulation.

It would be even more interesting if MOPs tell us how they can hold themselves out as being qualified and able to state that a transaction such as the 'Maple Ten' arrangement did not constitute insider trading. Under the Regulations, that's a technical matter relating to how certain information would affect the share price of a listed company. It's beyond me how a partnership of solicitors can address that sort of issue. Even if it commissions expert opinion from those well versed in the markets, surely it is still duty-bound to state that it cannot provide a yes/no answer to questions of market abuse, and the client must bear the risk.

Then again, if MOPs had acted like that, would they have retained their client? Wise words here in relation to an Irish insider trader who avoided criminal liability at least in part because he had received expulcatory legal advice from another leading Irish law firm: http://www.mcgarrsolicitors.ie/2010/02/03/legal-advice/

The Irish Republic is built on fairly watery sand if one category of criminals can escape being held to have possessed mens rea by paying in advance of their wrongdoing for legal advice that tells them they can do their proposed act with a clear conscience.
 

TonyB

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This is essentially a process of outsourcing risk. MOPs and Auditors (the reference to the audit is almost exactly right - though while audits have a special legal position, legal advice has none) essentially allow the directors of a company to say that they acted reasonably and took advice from experts, because the company directors are not expected to be legal (or in the case of audits, accounting) experts.

MOPs - and for that matter William Fry, Arthur Cox, all the usual suspects - are merely offering advice. They cannot be done for giving incorrect advice, because advice is subjective and is not in and of itself a judgment. If it is so wrong as to be negligent, only the directors of the company have recourse to suing the lawyers for negligent advice, because their negligence will potentially have impacted on them (and by extension the shareholders). However, receiving and acting on the advice of acknowledged experts (not some hick firm) essentially discharges the director's duty to his shareholders, and therefore all parties are essentially indemnifying one another.

The lawyers, accountants, and company directors for the banks all work together - past and present. Every CEO of a major bank needs to be expert in law, finance and regulation. Every company lawyer needs to be very strong in finance and regulation. Every auditor needs to know the law. As the attempts to prosecute the bankers continue, this triumvirate of law, finance and regulation will protect all the players. No one will go to jail, it's how the system works. Essentially, according to our system, Seanie Fitz, Fingers Fingleton and all the boys did nothing wrong. And - guess what - there's no appetite to change the system. You ask any politician what has changed, and he will tell you "all the people are gone". That may be true - but shocking as this may be to some, the people were not the problem, the system was.
 

Libero

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TonyB, it's the system and the people.

Think of it this way: if I was a director of a small listed company and went to Matheson Ormsby Prentice, for the first time, for advice on whether or not a proposed transaction constituted insider trading, do you think I would get a definite yes/no answer, not hedged to oblivion, and sufficient to later relieve me of criminal liability by raising a reasonable doubt that I acted in good faith?

I say I'd have more chance of getting a blowjob from the Managing Partner.

That is at is should be. Since it's not a purely legal question, legal firms cannot properly give a definite answer to whether something like a share support scheme is or is not in breach of the Market Abuse Regulations.

So the system can work, at least in respect to little fish. And it's not a system I want to see scrapped. Professional advisors must be free to give advice to clients, and clients are entitled - as a matter of common sense, and in service of the truth - to refer to professional advice as providing a basis for decisions they have made. In parallel, it is recognised that corporate wrongdoing can't be viewed as a matter of strict liability, like failing to pay one's taxes, since commercial life is complex and often judgment calls have to be made. That's how it works in every developed country.

Where Ireland is different from many of those countries, and where the system combines with bad actors to work against the national interest, is the lack of social and professional approbrium for professional advisors who appear to tell clients what they want to hear, even when they must suspect this advice is not only incorrect in law but is being sought to enable wrongdoing and provide protection from retrospective criminal investigation. (There's a lawyerly long sentence!)
I'm not saying that is what MOPs has engaged in with regard to the Maple Ten arrangement, but if it had been, would they lose any clients? Might they even gain some? Would the Law Society take issue? Would the firm lose out in any way?
 

Squire Allworthy

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The Irish Republic is built on fairly watery sand if one category of criminals can escape being held to have possessed mens rea by paying in advance of their wrongdoing for legal advice that tells them they can do their proposed act with a clear conscience.

+1

Perhaps soon you will be able to purchase an indulgence!


If a professional person gives erroneous advise they are liable for that advise. If the person gives advice on a matter which they have no true expertise in they are still liable and could face the consequences from the law and the professional body to which they belong.

It is also possible to compromise the position of the expert by asking for his advice, but failing to divulge the true nature of your concern or the full extent of the possible problem. The context is all important here and it seems to me that the advice given is tangential.

Regrettably I have seen numerous reports from a variety of professionals, produced for government bodies and the private sector, where the purpose of the report was to arrive at a position favoured by the client. This problem is not by any means confined to Ireland and it is to the eternal shame of the various professional bodies that they seem unable to insist on, or enforce, high ethical standards from their members.
 

TonyB

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TonyB, it's the system and the people.
Well, any system staffed by muppets is always in danger...case in point being the difference between Matthew Elderfield (most definitely not a muppet) and the former regulator. The question remains however whether Elderfield's strong enforcement of current legislation is sufficient; or whether new legislation is required.

I'm not saying that is what MOPs has engaged in with regard to the Maple Ten arrangement, but if it had been, would they lose any clients? Might they even gain some? Would the Law Society take issue? Would the firm lose out in any way?
Well, one good thing to note is that reputation is important. That "advice was taken" is useful as a defence where the advisor is seen as being of good repute, and thorough. So their reputation and standing have a value, one that presumably they would like to retain and protect. It is a little bit "soft" though.

The lawyers still regulate themselves, of course. That is one of the sacred cows that needs to be burned...
 

hammer

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How can Anglo call the funds given to the Golden Circle lads "loans", they were advised only 25% of the amount had recourse but to date nobody has been requested to cough up their 25%.

At the outset in theory they were a form of loan but in application and hindsight they were nothing of the sort.
I am amazed the inner circle even offered recourse to 25%

I would have bought the shares with no recourse as I was "bailing" out the Banks management.
 

Nipper

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I am amazed the inner circle even offered recourse to 25%

I would have bought the shares with no recourse as I was "bailing" out the Banks management.

Maybe that was the consideration needed to make it a legal contract

Without it , could it be argued that Anglo was just buying it's own shares in secret?
 

stanley

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Maybe that was the consideration needed to make it a legal contract

Without it , could it be argued that Anglo was just buying it's own shares in secret?


Am inclined to agree with you, looks like a gift, you know how a Dad gives his kid some money to buy him a Christmas present and then expresses surprise when he gets it.
 


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