The Quinn Saga - Pt 52: They can't find him anywhere! O' look - He's at a GAA match!

Yamanoto wrote: »

...there's certainly no compelling reason to believe their actions enjoy the tacit approval of HQ.

A. Insurance – a taste for other people’s money

It would appear that he fundamentally misunderstood or ignored the nature of insurance in the pursuit of his own gain.
Insurance is a trust business, you seek to provision correctly out of current premia the risks which you are underwriting. People take out insurance trusting that that the insurer is taking in appropriate premia to guard against the aggregate risk of all insurance policies (which is largely predictable) together with a profit element for the insurer. They also trust that the funds and assets held to guard against the risk will be will be available to discharge such liabilities to the intent that their insurance will work.

It has been alleged that the Quinns did three things in relation to the insurance business.

Firstly, they used aggressive tactics to try and make consumers (who are by definition vulnerable) to settle earlier than they should settle and for less than the full value of their claim. It is alleged that retired Gardai were used in this regard. Insurance is supposed to cover risk, not to avoid risk.

Secondly, it is alleged that they under provisioned to try and gain market share. This is particularly evident in relation to their foray into professional indemnity insurance I the UK where they got flayed alive until the receivers stopped it. It is alleged that this was done in the interests of gaining cash-flow and market share ahead of abiding by proper principals.

Thirdly, and most seriously, it is alleged that by way of guarantees between group companies and loans to family members which were written off, that they put the assets of the insurance business at risk in support of the wider Quinn Group and thereby the Quinn family.

These are allegations of heinous activity. Sean Quinn has been fined a huge amount in this regard, the regulator has stepped in and taken the companies away and all insurance holders in Ireland have been hit with a levy to pay off the loss so that the company can be sold as a going concern without the loss which nobody would take on.


B. Anglo Gamble – Moral Hazard

After getting a taste for the potential megabucks that they now understood could be garnered by getting their hands on other people’s hard earned cash, Sean Quinn then decided he would buy a bank. (In this regard maybe John Waters right – SQ is like the traders who risked billions of other people’s money in pursuit of their bonus). He decided he would do it by leveraging himself way beyond his wealth. He further decided to avoid the rules where by the integrity of the stock market and companies are protected by doing it via contracts for difference.

When the sh1t hit the fan, the bank was faced with a situation where Sean Quinn’s failed gamble was going to destroy the bank unless they devised a dodgy scheme to clean it up. His personal actions were at the root cause of this particular ****-storm.

Sean Quinn may say he did not contract with the state, and he only contracted with a private institution and that is correct. However, he saw a moral hazard situation and went quids-in. He thought they would never call him out on his insurance business or on his bank dealings and if it wasn’t for the global financial disaster he may have succeeded at our expense in the face of lesser difficulties.

However, this line that he was willing to take the hit on his losses and walk array was bull-crap. Any effort by him to divest himself of his humongous lump of Anglo shares held on foot of CFD’s would have collapsed the share price leaving him nursing a loss for the full amount.

Don’t forget that apart from the losses taken by his family which may be on foot of illegal contracts, he also off-loaded a huge portion of his problem onto Anglo which they tried to get other borrowers to take on.


C. Contempt of Court

Let’s be clear here. The main problem the Court has is not that Sean Quinn and co have sought to protect their assets but rather that they did so after the Court ordered that the assets must be protected for Creditors.

The Court believes (and nobody other than the Quinns disagee after the Daily Mail videos) that the Quinns acted against a direct order of the High Court. We have rules called laws and we have independent Courts who we go to if we disagree on what should happen according to the rules. (This is what the Quinn family are doing in saying the loans made to them to buy shares were illegal – I think they are right on that score). The Court has seen that the Quinns have decided they are above the law of the land.

The Quinns have said (i) that they put their scheme in place before the injunctions and (ii) that their scheme has somehow backfired and they have been duped of the cash. The Court is saying in relation to (i) that it has been proved beyond a reasonable doubt that they did not do it before the injunction was in. In relation to (ii) Judge Dunne has further said that she does not believe the cash is beyond their reach.

This seems to be based on the fact that (a) the Quinns are not that stupid, (b) the Quinn story does not add up (i.e., they are still lying about what happened), and (c) even if it is true, it is their actions in contempt of court that have put the assets at risk and beyond their reach – it is their illegal actions that have brought them to this situation so they should bear the punishment the same as if the assets were within their reach and they refused.

So, the answer to John Waters is that the Quinns have been brought to this sorry situation as a result of three serious sins – they sinned morally and legally against consumers in Quinn direct, they sinned morally against the population in destabilising the banking system through under-the counter deals they could not finance, and they sinned morally and legally against the taxpayers and the state and the rule of law by seeking to asset strip and take monies which they were not entitled to out of companies which should have had their assets applied to debts.