IRELAND'S RICHEST man, Seán Quinn has resigned from the board of the State's second-largest insurer after his firm was fined a record €3.25 million by the Financial Regulator over multimillion euro loans used for stock market investments.
Mr Quinn, whose multibillion euro group has interests in cement, glass-making, plastics, finance, hotels and leisure operations, was also personally fined €200,000 by the regulator.
The fines arise from a failure to notify the regulator of a loan of €288 million from Mr Quinn's company, Quinn Insurance, to other firms in his group. The cash was used by the Quinn family to cover falling stock market investments and finance share-buying in Anglo Irish Bank. Mr Quinn and his family own almost 15 per cent of Anglo Irish, the State's third-largest public bank.
The regulator said it had "reasonable cause to suspect that breaches of regulatory requirements occurred in relation to Quinn Insurance".
In a statement on his behalf, Mr Quinn took responsibility for the fact that loans from Quinn Insurance breached insurance regulations. He did not accept that the fines were proportionate and intimated that their size was motivated by recent controversy regarding the regulator.
"I accept complete responsibility for this breach of regulation. While I accept that I made mistakes, I feel that the levels of fines do not reflect the fact that there was no risk to policyholders or the taxpayer, but are a result of the pressures existing in the current environment. However, we will pay the fines and move on."
He said the past year had been the most eventful of his 35 years in business. "Whilst the equity losses were one-off and have not put undue financial strain on our business, I am very disappointed with the decisions I made in overexposing ourselves to equities."
Yesterday, the Quinn Group, Mr Quinn's overall company which owns Quinn Insurance, said it was writing off €829 million advanced in 2007 to firms that made stock market investments for the Quinn family. It may right off a further €130 million this year, it said.
Labour finance spokeswoman Joan Burton said Minister for Finance Brian Lenihan must make a statement on the matter in the Dáil next Wednesday, "especially as the bank that was at the centre of these share dealings is a beneficiary of the Government's bank rescue package".
The Quinn family is believed to have built up its investment in Anglo Irish through 2007 and 2008.
The shares were bought by way of contracts for difference (CFDs), which allow investors to build an interest in a stock market company through borrowing, but which exacerbate losses if the share price falls. Anglo's share price has fallen 90 per cent from its peak in May of last year.
In mid-August the Quinn family's stake in the bank was worth €715 million. It was valued at €210 million based on yesterday's closing price.
The €3.25 million fine eclipses the previous record fine from March of this year, when the regulator fined a stockbroking firm €80,000. The maximum penalty is €5 million.
Jim Quigley has been appointed chairman of Quinn Insurance, which owns Quinn Direct and Quinn Healthcare. Mr Quinn remains chairman of the group. The group said its insurance business remains in a strong financial position with €2 billion in assets. "It continues to be very profitable in 2008," it said.