As the cost of the adminstration of Quinn Insurance mounts, and to the sound of u-turns from ill-advised supporters of the bankrupt Sean Quinn, BBC NI business editor, Jim Fitzpatrick, sets out the facts in the case of the former billionaire. Here are a few key points
- Sean Quinn didn’t invest in Anglo Irish Bank, he bet on it
If all he’d done was buy shares, his losses would have been limited.
But Sean Quinn chose a dangerous financial instrument called Contracts for Difference (CFDs) to build up a 25% stake in Anglo Irish Bank.
It was a leveraged bet on the share price – if it his bet had come good, he would have made billions, but because it went bad he lost more than five times his initial huge stake.
He literally bet the bank and both bank and Quinn went down. His losses totalled more than 3.2bn euros at the end, with Anglo on the hook for 2.8bn euros.
- Anglo didn’t encourage Sean Quinn money to build this stake
Anglo Irish Bank was horrified when it discovered the scale of Sean Quinn’s stake because they knew they could both go down if the full story was public.
It was a fatal embrace. The reason some directors of Anglo now face criminal charges is because of money lent to unwind and offload Sean Quinn’s bet.
Even Sean Quinn has never publicly suggested that Anglo wanted him to build a 25% stake through CFDs in the bank.
- Sean Quinn broke the law before the bank moved in
Sean Quinn was removed from his insurance business by the regulator because he had broken the law.
He had used funds from his insurance business to prop up other parts of the group. It was a serious offence.
The regulator eventually put the entire business into administration because he found the Quinn management were still breaking the rules and there was a massive black hole in the finances. This happened a year before Anglo moved to take control of the rest of the empire.
Sean Quinn now accepts that the actions of the regulator were “right and proper”.
Meanwhile all insurance policies in the Republic are now subject to a 2% levy indefinitely to fill the financial hole found in Quinn Insurance.
As ever, read the whole thing.
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