A PUBLIC hearing in the fall of Quinn Insurance has opened in Dublin.
The Central Bank inquiry is investigating whether directors of the now wound-up insurance firm, Liam McCaffrey and Kevin Lunney, contravened regulations that ensured procedures were sound and adequate. This centres on guarantees given by the insurance company’s subsidiaries.
Both men deny failing in their obligations at the company and at the hearing last week Mr McCaffrey said both he and Mr Lunney had at all times acted on legal and financial advice.
Mr McCaffery, who started working for the Quinn Group in 1990, told the inquiry the group had been “significantly impacted” by losses on Quinn family investments after 2006, which he said led to the Anglo Irish Bank takeover in 2011.
The former director said measures had been taken to protect Quinn Insurance, a regulated body, when it came to borrowing by the Quinn Group, however an oversight in legal wording, that did not come to light until 2010, had meant Quinn Insurance subsidaries were not included in these protective measures.
Mr McCaffrey said every document he and Mr Lunney had signed had been drafted by their legal advisors, while financing agreements were made available to auditors.
“We took and followed appropriate legal and financial advice,” he said. “The issue was not picked up by our legal team, by our auditors, nor by any of the other advisers involved until 2010; we were transparent, nothing was hidden; the guarantees were noted in the relevant subsidiary companies’ accounts in plain sight and were accessible to our auditors. In fact, the notes were probably drafted by our auditors.”
Mr McCaffrey added they had had faith in their legal advisors.
“It may not suit the narrative of conspiracy theorists, but this issue originated from a simple error by a respected leading law firm to omit three short words in an early-stage definition which set the course for what was to follow,” he said.
Meanwhile, Sean Quinn told the inquiry he did not become aware of the financial guarantees given by the eight subsidaries to Quinn Insurance until 2010, five years after they were given. He also said he could not remember being notified of three board meetings, in 2005, 2006 and 2007, which were alleged to have given effect to the guarantees.
The inquiry is expected to continue until Friday.
Following the collapse of Quinn Insurance, the Irish government had to introduce a two percent levy in 2012 on non-life insurance policies to make up the deficit left in the Insurance Compensation Fund, which covers third party motor claims when the offending party is not insured. This is still impacting insurance prices in the South today.
Posted: 8:01 pm June 5, 2019