‘Confusion’ in Lynn’s office
On Friday (17 November), former Permanent TSB commercial-lending manager John O'Brien gave evidence in relation to an allegation that Lynn stole €3.7 million from the institution in 2007.
He told Karl Finnegan SC, prosecuting, that, in April 2007, Lynn had borrowings of €1.9 million with the bank when he applied for a €4.9 million loan to purchase eight residential investment properties in various locations in Dublin.
The court heard that there was a delay in Lynn clearing an earlier outstanding balance of a loan he had with the bank. Lynn had a history of borrowings with the bank dating back to 1999, the court heard.
In an email to O'Brien that was shown to the court, the then Blanchardstown branch manager Ciaran Farrell said: “Due to confusion in Michael's office, this was only done last week and he is embarrassed and annoyed about it.
“I questioned him on it, and it was down to clerical error, and he will show us his account balance to show there was €6 million on deposit at the time,” the email continued.
Farrell went on to say: “I do believe the genuinely (sic) of the delay in redeeming the mortgages and his embarrassment in being told of this.
“This is based on meeting him, and the fact he has little or nothing to do with the running of his practice, and would be out of the country for weeks and months at a time.”
The court was shown internal emails in which PTSB’s head of underwriting, Martin Huggard, wrote to O'Brien about the €4.9 million loan saying: “John, I think there's a deal here.”
In the email, Huggard also told O'Brien that he thought a different firm of solicitors should act in the loan, given the “total exposure”.
Farrell sent an email to O'Brien in May 2007 saying that there was “no issue with legal”, and that Fiona McAleenan “who operates independently of Michael and is responsible for her own undertakings, etc” would act.
McAleenan operated a new practice called Capel Law, Farrell said, and she was also a partner in Michael Lynn & Co Solicitors. Farrell said that this had been checked out by the legal department.
The €4.9 million loan was approved in May 2007, the court heard.
Around the same time as the bank approved this loan, O'Brien and Farrell met Lynn to discuss a €3.7 million loan involving 12 rental investment properties, the court heard. This loan is the subject of the theft charge involving PTSB.
It was approved within seven days of the €4.9 million loan being approved, the court heard.
“A short period of time,” Finnegan said.
Along with this €3.7 million loan, there was a €5.5 million refinancing proposal relating to a commercial property. PTSB also approved this loan, which would have taken Lynn's borrowings with the bank to just over €14 million, the court heard.
The court heard that the €3.7 million loan was drawn down, but that Lynn did not ultimately proceed with the €5.5 million loan offer.
O'Brien agreed with Finnegan that he took the documents provided to him “at face value”. He said that he would not have recommended approving the loan if they were for investment properties abroad, or on a solicitor-undertaking-only basis.
“Did you ever have a conversation other than doing it by the book?” Finnegan asked.
“No”, the witness replied.
Paul Comiskey O'’Keeffe BL, defending, said that Lynn's position in relation to clearing the earlier loan was that it was something he discussed with Farrell, and that Lynn asked: “Do I absolutely have to comply?”
The answer he received was: “If you can carry it, so be it,” Comiskey O'Keeffe told the court.
Ultimately, Lynn was sued by PTSB for the sums of €1.9 million, €4.9 million and €3.7 million, the court heard.
O'Brien denied that the bank or his colleagues were negligent in relation to the loans.
The trial resumes on Monday before Judge Martin Nolan and the jury.