THE Financial Regulator is investigating improper conduct by some individuals as well as looking at the failure of systems and internal controls which led to Quinn Insurance's solvency problems, the Sunday Tribune has learned.
Senior regulatory officials met with lawyers last week to determine how best to carry forward a formal investigation now that the head of financial regulation, Matthew Elderfield, has succeeded in having administrators permanently appointed to oversee Quinn Insurance.
Officials are still examining files seized from Quinn's offices in Cavan over the last two weeks and interviewing personnel to decide which lines of investigation to pursue.
A senior source at the regulator said investigating people was a "more worthwhile exercise", as it would have a bigger deterrent effect than investigating the company in general.
"To have an effect we need some significant public fights," the source said.
The regulator in 2008 fined Quinn Insurance €3.25m for giving unauthorised loans of €288m to Seán Quinn. It hit Quinn with a personal fine of €200,000.
The regulator is set to decide within days whether to allow Quinn Insurance to resume taking on new customers in the UK. Quinn said the decision has cost the company €1.5m per day since being placed in the hands of the administrators.
The mounting losses in the UK had prompted Elderfield to step in last month and remove the insurance company away from control of the Quinn Group. The regulator said Quinn lost more than €44m on insurance underwriting in the UK last year despite promising to place limits on new business.
The administrator Grant Thornton said it has submitted a new plan to the regulator that would allow Quinn reopen its doors to new customers.
"We believe they [the Financial Regulator] have everything they need at this stage and we are just waiting for them to come back with a yes or no. We are hopeful the decision could be made in a matter of days," Michael McAteer, one of the joint administrators to Quinn Insurance said yesterday.
The administrators have so far resisted cutting jobs at Quinn's UK operation, which employs 1,400 people, but said it cannot guarantee all of the jobs will be safe if it is prevented from taking on new business.
"The more customers we have, the more people we need. The less customers we have, the less people we need," McAteer said.
The insurance company needs about €150m in fresh cash to boost its solvency levels to the standard demanded by Elderfield. It also needs to be released from guarantees held by the Quinn Group's bondholders over its assets. Those guarantees wiped out the company's solvency cushion.
Quinn Group, meanwhile, remains locked in talks with its banks and bondholders, who are owed €1.2bn.
The company last week hired restructuring expert Murdoch McKillop to lead the negotiations. McKillop is best known as one of the liquidators to Robert Maxwell's newspaper group. A deal with the bondholders could see Seán Quinn lose control of his empire.
A deal involving Anglo Irish Bank taking over the group has not been completely ruled out.
It is understood the Financial Regulator did find parts of the bank's plan to take over the Quinn Group "reasonable". The Quinn family owe Anglo €2.8bn after their disastrous spending spree on the bank's shares.
A source close to the process said: "Nothing is going to happen in the next few weeks and even if something happened, getting regulatory and High Court approval would take weeks if not months."