The real truth is that Seán Quinn is entirely responsible for the mess that he has created, despite his denials, and is entirely incapable of sorting it out, despite his claim that he should just be let get on with fixing his mistakes. Quinn has ruined his own empire financially but, unfortunately, there are many other people who will bear the costs. Three years ago he engaged in reckless gambling and everyone else in the country is now paying the price for his arrogant stupidity. Quinn didn’t just invest badly in buying Anglo Irish Bank shares with his own spare cash: he borrowed excessively to do so and he also borrowed from the Quinn Insurance company without the relevant permission from the authorities. He hid the extent of his share-buying too – as the Central Bank would have investigated his suitability to own more than 10% of the bank had it known about it – and then was allowed to become involved in a highly dubious transaction to sell some of the shares to try and reduce his exposure to heavy losses.
It didn’t work. Quinn’s gambling on the stock market has cost him and his group more than €3bn, as he admitted recently in an RTÉ interview. This is far more than he had admitted previously. Quinn Group owes €2.8 bn to Anglo Irish Bank and a further €1.3bn to Barclays Bank and a group of bondholders.
The Anglo loan is a disgrace. Although it was first described in 2008 as being for “general corporate purposes”, it is clear that much of it was to cover his losses on the purchase of shares in Anglo itself. The assumption that the loan was secured over the assets of the entire Quinn Group is only partly true. The bondholders and Barclays have prior preference and have to be repaid first from the sale of assets.
This is what makes their charge over assets of subsidiaries of Quinn Insurance so important. Insurance companies, as part of their entitlement to conduct business, have to hold sufficient assets that can be used to pay insurance claims.
The amount of unencumbered assets is actually €445 million less than had been thought, once proper analysis is applied. This means that instead of being solvent Quinn Insurance has a deficit of more than €200m. The big question is how Matthew Elderfield’s predecessors at the Financial Regulator’s office failed to act earlier.