Private dwelling
He agreed with John Berry BL, prosecuting, that Lynn was a customer of the bank's Ballina branch in 2004 and later approached the institution for finance to buy Glenlion House in Howth in September 2006.
Nelson was taken through an assortment of documents, including loan offers and internal memos.
He agreed that an application was made in the names of Lynn and his wife Bríd Murphy for a loan of €3.78 million, being 70% of Glenlion's €5.4 million valuation.
He said that the loan's purpose was to purchase a private dwelling home, and that it was not a commercial loan from the bank's perspective.
Nelson told the court that the bank instructed its own external solicitors, Douglas Kelly and Co, to act on its behalf in this transaction.
Legal charge
The loan was drawn down on 12 April 2007 and payments were made until October 2007.
He agreed with Berry that the bank had a first legal charge over the property that later allowed it to realise its security. Glenlion was repossessed, later sold, and the loan recovered.
Nelson said that the bank was not aware that INBS and Bank of Scotland Ireland had also provided loans of €4.12 million and €3.85 million, respectively, to Lynn for the purchase of Glenlion in April 2007.
He agreed that ACC would not have lent to Lynn had it been aware of these other loan facilities.
Nelson told Paul Comiskey O'Keeffe BL, defending, that his employment with ACC started in 2010 and that the bank's records were compiled for gardaí by another bank employee in 2009.
He agreed that he did not have direct knowledge of the bank's lending to Lynn in 2007, as he was not working there at the time.
Exposure
Comiskey O'Keeffe put it to Nelson that a letter accompanying a financial questionnaire seemed to suggest that Lynn sign and return the blank document.
“I've never seen that before. I can’t see a scenario where it would be approved,” Nelson replied.
He said he did not agree when defence counsel suggested that the only “logical interpretation” of the letter was a request to sign a blank form that would be completed later by a bank official.
He agreed that Lynn had other lending with ACC at the time of the Glenlion application, and that a condition was imposed that this lending should be repaid.
Nelson said that the bank would not want to be over-exposed to a client, and as “the bank was aware Mr Lynn was involved in property development, they would keep an eye to ensure that the overall exposure remain[ed] within the appetite of the bank”.
He said he could not agree that the bank accepted an unsigned statement of affairs, describing it as “unusual”.
Development potential
Comiskey O'Keeffe showed Nelson an unsigned letter of offer, which the witness noted could be a “draft” document. He said he couldn't say whether the loan offer was never signed, or if there was another version of the loan.
Nelson agreed it was “not impossible” that there could be further documents that might have been moved to external solicitors during legal proceedings.
He said that he was not aware of the bank withholding documents on the basis of legal privilege, or of an enquiry by the financial regulator into lending by institutions to Lynn.
Defence counsel then took the witness through an internal credit memo relating to the Glenlion application, and its references to the long-term development potential of the house and site. He suggested that his client had advised the bank of his intention to develop the site.
Nelson replied that the notes could be interpreted as the ACC relationship manager outlining conversations with Lynn – including about his intention to develop the site.
He added: “That's what is written there. That’s not what the loan was given for. You can say in the application that it might be suitable in the future for development, but that’s not what the loan was granted for.”
Comiskey O'Keeffe put it to Nelson that this document recorded a conversation between Lynn and the relationship manager. “You can infer a conversation happened, but I can’t say for sure,” Nelson said.
Defence counsel suggested that the credit-committee minutes, noted in the memo, suggested that they had an “eye on the future development” of the site.
Nelson replied that it suggested that the committee was aware that it could be a possibility at some point in the future.
The witness also told the jury that he did not carry out any investigation into this loan, and was not aware of an internal enquiry by ACC.
‘Impossible to generalise’
Earlier, John Kinsella (of accountancy firm Kinsella Mitchell & Associates) agreed with Berry that the last genuine statement from the office was dated 11 July 2006.
The court has heard that Kinsella was a partner in the firm that acted as independent auditor for Lynn's property-development company Kendar Holdings Limited, and as accountant for his legal practice, Michael Lynn & Co Solicitors.
Kinsella agreed that there were legal distinctions between a person and a company. He agreed that his answers during cross-examination about Kendar Holdings Limited related to that company.
He confirmed to Berry that his recollection was that Lynn was “heavily involved” in property development.
He further agreed when Berry put it to him that the seven banks in this case were not a “monolithic entity” and that, while they had some similar procedures, it was “impossible to generalise them all in the same way”.
Kinsella accepted that the firm would have no liability when anyone applied the firm's stamp and signature to a document without its knowledge. He also told the jury that statements of affairs were not statutory documents.
The trial continues before Judge Martin Nolan and the jury.