For much of 2018, officials from the Irish Bank Resolution Corporation (IBRC) traversed the globe for a series of confidential meetings with two Dubai fixers they believed were central to the Quinn family’s alleged €500 million asset-stripping scheme.

One took place in Dubai. Another in the Italian city of Milan. Further meetings were held in Copenhagen and Zurich. Three separate meetings took place in London.

Despite the varied locations, all the meetings had one common agenda: to reach an entente between IBRC and the two principals of Senat Legal, a hulking Swiss financial adviser called Michael Waechter and a Dutch lawyer called Willem Smit.

Both were now working in Dubai, and had long been linked with the family’s plan to shift €500 million of international assets away from the nationalised bank following its seizure of the wider Quinn Group in 2011.

The impetus for the meetings was a looming court action between members of the Quinn family and the bank, with the family suing the IBRC in an effort to prove that billions of euro of loans they received were unenforceable and that the receivership of the sprawling manufacturing empire was therefore invalid.

In an effort to obtain leverage, officials from IBRC had begun to engage with Waechter and Smit to see if they would be willing to cut a deal and turn sides.

So, for much of 2018, both sides attended a string of meetings aimed at securing a global settlement agreement between the two sides. The Quinn family was not aware of the meetings.

When the agreement was finally reached towards the end of the year, it gave the bank ammunition to help settle one of the longest-running, and most bitter, sagas in Irish corporate history.

The new information was compiled into a court affidavit, which was given to the Quinn family days after the court action began in March 2019. The case had proceeded, but the contents of the affidavit lingered in the background.

As it transpired, the Quinn family sought mid-trial settlement talks after losing a crucial application to the courts over the nature of their argument. But it was the content of the affidavit that also played a crucial part in forcing the Quinn family to surrender. 

The contents of the affidavit were due to be presented to another division of the High Court in relation to the alleged asset-stripping conspiracy. The settlement meant it never made it that far.

So, the detail of what Waechter and Smit handed over has never been discussed until now.

It is not clear where all of the gold or the remaining cash went, but much was subsequently paid to agents working on behalf of the family in Russia and Ukraine.

A two-month investigation by The Currency has established some of the information. It centres on the cash extraction mechanisms used by the Quinn family in the early years of the dispute to obtain rental incomes from the disputed foreign properties in Russia, Ukraine and India.

Waechter and Smit handed over information dating back to 2012, involving cash withdrawals from banks in Dubai on behalf of the Quinn family. 

Much of that money was then transferred into gold in Dubai. It is not clear where all of the gold or the remaining cash went, but much was subsequently paid to agents working on behalf of the family in Russia and Ukraine. The family has always claimed they were ultimately misled, and double-crossed by fixers in the two former Soviet countries.

The precise role of the family in the actual transactions is unclear, and it is equally not clear if the family authorised the transfer of cash into gold. However, Waechter and Smit gave formal statements that it was done on their behalf.

The information obtained also showed the flow of substantial rental income from the foreign properties in the early years of the dispute and revealed how much of it was disbursed.

The information, if published while the Quinn family action against the bank was ongoing, would have been highly damaging to the family, as it highlighted the huge efforts the family had gone to thwart Anglo’s efforts to wrestle control of the assets.

Lax Dubai disclosure laws

Gold was central to the scheme, with fixers benefitting from lax financial disclosure laws in Dubai to transfer the funds into something less easily traceable. This sort of manoeuvre is quite common in Dubai.

Waechter and Smit also gave the bank details of specific transactions, and also of the role of certain family members. Senat, as part of the agreement, also provided details of interactions and certain correspondence from the family.

It identified how tens of millions in missing rents had been shielded through certain bogus transactions and an opaque network of shelf companies.

The agreement with Waechter and Smit was a massive fillip for the bank and is viewed by its legal team as being central to the settlement with the family last year – a settlement which resulted in the Quinn family simply walking away without any money.

As part of the deal, the IBRC secured €88 million judgements against each of the five children, but they were not enforced. Unlike their parents, they were saved from bankruptcy and allowed to move on with their lives – unless, of course, the deal is broken.

Further judgements were registered for some $133 million in missing rents from the overseas properties and 72 million Russian roubles (€980,000) relating to salaries paid to the Quinn children and some of their families.

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The bank had long known Senat was central to the scheme. Within weeks of being installed as IBRC liquidator in 2013, Kieran Wallace filed an affidavit with the High Court in Dublin asking Senat to be joined to the case against the family.

Evidence was produced at that time linking Senat to a transfer of shares in an entity called Mack Soft, an Indian subsidiary that owned the Q City asset, to an offshore company in the United Arab Emirates called Mecon. The shares were transferred for a pittance. Furthermore, a small number of Mack Soft shares were also transferred to Logvis, a company incorporated in Unterkulm, a small town in Switzerland.

However, to force Waechter and Smit to the table, the bank was forced to go much harder, and much deeper. In particular, it focused on the pair’s role in the Q City, an Indian industrial park in the city of Hyderabad.

By 2018, it was the only asset of real value still out of the bank’s control, with assets gradually reclaimed across Russia and the Ukraine. But the battle for Q City threw up some significant information. 

The first came from the former British colony of Hong Kong courtesy of a Norwich Pharmacal Order – an order compelling an innocent third party to hand over documents or information.

Over in India, information was being procured through the Insolvency Courts. Agents for IBRC wanted Mack Soft to be declared insolvent. This would allow it to exercise rights over its assets.

Combined, the information from Hong Kong and India revealed a string of bogus transactions allowing $15 million in revenue generated by Q City to be redirected away from the liquidated bank.

Further documents showed that Logvis had a sister company in Dubai called Logvis Middle East, which shared the same address as Mecon. The listed email address for this company was owned by Waechter.

This provided the bank with direct evidence that Mecon, despite protests and denials to courts in Ireland and around the world, had an economic stake in the Indian asset.

Tracing a string of transactions through Hong Kong, Brunei, Singapore, Switzerland and Liechtenstein, investigators from IBRC uncovered a scheme to extract rents from the Indian asset through six individual transactions. And it showed Senat at the centre.

Arrest warrant threat

This information, allied with existing data, was enough for IBRC special liquidator Kieran Wallace to instruct lawyers to go the High Court in Dublin in early 2018 seeking the appointment of a receiver over any shares held by Mecon or Logvis, and also seeking injunctions against Senat itself.

With those injunctions in place, IBRC now had the upper hand – if Waechter and Smit were found to be in breach of the court order, a bench warrant could be issued for their arrest.

It was at this point that the principals of Senat began to engage. But it was a slow and tedious form of engagement, marked by intransigence to the ongoing litigation.

The bank quickly began discovering a string of vexatious challenges to the bank’s security in India. Procedural objections were also being made in the Irish courts.  In May 2018, Senat and Mecon issued proceedings in the District Court in India seeking to prevent the Irish-appointed receiver from holding an extraordinary general meeting to help seize control of the Hyderabad asset.

The bank issued numerous letters to Mecon and Senat detailing alleged breaches of the High Court orders, and warning that they were actively seeking to frustrate the efficacy of the Irish courts.

By November, the bank had simply had enough. The talks were progressing fine and a broad agreement had been hammered out. But the continual delays and procedural tactics forced the bank to up the ante.

It asked the courts to sequester the assets of Mecon, Senat (and the various entities that it had changed its name to) and make an attachment and committal order against Waechter and Smit for contempt of court.

If implemented, this would have led to a bench warrant for their arrest and imprisonment.

What was set to be the biggest corporate case in Irish history fizzled out. The Quinns walked away with nothing.

It was at this point Waechter and Smit agreed to turn sides. Senat would hand over information against the Quinns, and in return, the various actions against them would be dropped, with IBRC making a small payment towards them.

Then, as I wrote last year in a feature on the global money trail, Smit died of a massive heart attack. It delayed the deal, but did not derail it. By March, it had been agreed and rubberstamped by the Indian courts.

The Supreme Court in India terminated the insolvency proceedings against Mack Soft Tech, the Indian company at the centre of the Q City saga. Under the deal, the control of Mack Soft passed to a new board, controlled by IBRC.

With its new information, IBRC was also using the leverage to close a deal with the Quinn family itself. What was set to be the biggest corporate case in Irish history fizzled out. The Quinns walked away with nothing.

It was a victory for IBRC, but a costly one. The state-owned lender racked up €100 million in legal costs purporting and defending various Quinn related cases. At last count, some €70 million in rent from the properties remains outstanding.

But the deal, facilitated by obtaining information from foreign fixers after a marathon asset chase, closed a chapter of corporate life.

For further reading:

Leveraging surrender: how IBRC followed the Quinn money trail

In this 10,000-word investigation, Ian Kehoe reveals how IBRC following a global trail of offshore shelf companies to track down the missing assets.

Matheson and the making of the Maple 10

In this exclusive report, Tom Lyons revealed the role of law firm Matheson in the Maple 10 deal, designed to reduce Sean Quinn’s mammoth exposure to Anglo Irish Bank in 2008.

Ian Kehoe on Sean Quinn’s perpetual revisionism

When he finally gave up hope last year of reclaiming his former empire, Quinn biographer Ian Kehoe wrote that Quinn’s perpetual revisionism and victimhood is a gross disservice to his legacy and locality“