How Ireland’s richest man Sean Quinn ended up utterly bankrupt
Terrible financial decisions all led to catastrophic results -- retraces Quinn’s missteps
Once famous for being Ireland’s richest businessman, Sean Quinn now has achieved the reputation of Ireland’s biggest debtor who may yet face jail time.
The Irish Independent newspaper traced the Quinn family’s financial and business decisions over the past decade that have led to the family’s financial disaster and the taxpayers’ hefty bill.
Sean Quinn was faced with several different financial scenarios over the past ten years or so, with barely any leaving his family with a positive outcome. Sean Quinn’s positions and decisions while dealing with with the Anglo Irish Bank, the stock market, Quinn Insurance, the burst of the technology bubble, the Japanese Yen, and his poor decision-making with his ownership of wind farms, all led to the current predicament he faces today.
In October 2005 - when the Celtic Tiger was still booming in Ireland - Sean Quinn took on risky positions at Anglo Irish Bank, AIB, and Bank of Ireland using a financial instrument called contracts for difference (CFD) as part of a diverse portfolio that also included robust blue-chip firms like Ryanair, Deutsche Telekom, Tullow Oil, and Nestle.
CFDs are a high-reward but also high-risk way of betting on shares, writes Tom Lyons from the Independent. For Quinn, the risk ultimately outweighed the reward. Quinn went on to own over 28 percent through CFDs in “what was the worst-ever stock market gamble by an Irishman.” When Ireland’s property bubble burst, Anglo Irish Bank was nationalized, causing the Quinn family to lose about $3.2 billion.
While the Quinn family says that the bank “illegally used them to prop up its share price,” the taxpayers are still stuck with a hefty bill.
In order to generate cash to pay out their Anglo bill, the Quinns began to cash out on their other stock properties. By doing so, the Quinns faced debilitating losses in the hundreds of millions of dollars. Quinn admitted to losing around $200 million from his ownership in the house builders McInerney, as well as up to $630 million on stocks other than Anglo. Quinn was bankrupt again and the Irish public had a growing bill.
While the cash-cow for the Quinn family, Quinn Insurance, is considered to be the best business that Sean Quinn ever ran, it still produced a fair share of problems for the family. From at least 2007, Quinn Insurance “wrote insurance too cheaply and failed to put enough aside to meet claims,” writes Lyons.
During the crash in 2008, the Quinns, desperate again for cash in the wake of their stock market losses, began to expand “like crazy” in the UK. However, they began writing insurance business that turned out to be fundamentally loss-making. The Financial Regulator was forced to put Quinn Insurance into administration under Grant Thornton, the accountants in 2010.
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