INTRO: If you’re a billionaire,
most people would agree that you’re too big to fail. Even if your assets plummeted 80%, you’d
be left with hundreds of millions of dollars. If you were originally a multi billionaire,
you may still even have a billion dollars left. While this is true for cash billionaires with
little debt, not all billionaires’ fortunes are built upon such solid foundations.
In many cases, a recession or downturn in the market is all that’s needed to wipe them out,
and no one knows this better than Sean Quinn. In 2008, Sean was the richest man in Ireland
worth an estimated $6 billion. But by 2011, Sean had not only lost it all, but he was bankrupt and
owed an eyewatering $3.5 billion. To this day, Sean hasn’t been able to climb out of this hole,
and his once seemingly indestructible fortune is just a blip in history. So,
here’s how Sean Quinn went from being Ireland’s richest man to filing for bankruptcy in 3 years.
RAGS TO RICHES: Taking a look back,
Sean was born on December 5, 1947 in a small village called Derrylin in Northern Ireland.
Sean’s family was extremely poor farmers who were just trying to survive on a daily basis.
So, Sean never had the luxury of focusing on education or building a career. He had
to spend all his time helping run the farm, and he would even drop out of school when he was just 14
unable to read or write. After he dropped out, Sean searched for alternative ways that he could
make the family farm profitable as their farm had never been very lucrative when it came to growing
crops and livestock. It took a bit of time to come up with a solution, but Sean eventually realized
that his farm was filled with one substance that was in high demand. And no, we’re not talking
about gold or drugs, we’re actually talking about gravel. Sean borrowed £100 and started extracting
gravel from his 23 acre family farm. He would then wash the gravel and sell it to local builders.
Selling gravel wasn’t particularly lucrative, but Sean had plenty of gravel and it was a very
cheap business to run. Soon enough, Sean made his business official by registering it as Sean Quinn
Quarries Limited. Overtime, he expanded into selling other construction materials as well,
but by far his biggest jump forward was when he started selling cement which would become
the basis of his fortune. As the cement business started to pick up steam, Sean entered some more
difficult industries such as glass and plastics. While Sean opened up loads of
subsidiaries throughout the 1970s and 80s, all of them were concentrated on construction. You see,
Sean was able to build up a substantial number of construction contracts through the Gaelic Athletic
Association which is a group focused on promoting Irish sporting and culture. Sean felt comfortable
dealing with members of this group, and for decades, he avoided venturing into anything
else. But eventually in the 1990s, Sean would take his first steps outside of construction.
HUMBLE BILLIONAIRE:
Sean didn’t just jump into starting a tech company or investing into crypto though. In terms
of diversification, Sean looked for industries that had similar stability and consistency to
construction which led him to finance. In 1996, Sean founded Quinn Financial Services which
offered a variety of different financial services, but their most popular business was insurance.
This probably had to do with the fact that Sean was extremely popular within Northern Ireland.
Though his wealth had skyrocketed from 0 to hundreds of millions over the past few decades,
to most people who actually knew Sean, he was just another hard working Irish man.
Sure, he had a nice house and cars, but he never lost his connection to the everyday man.
In fact, he was constantly building up his relationship with his community. Instead
of bringing in highly educated people from the US and Europe, Sean preferred to employ as many local
people as he could. At his peak, Sean employed 8000 people, 5500 of which were from Ireland.
Given Sean’s strong connection with the community, many Irish people far preferred insuring
themselves with Quinn Financial Services as opposed to some large European bank. Eventually,
the company would grow so large that they would actually buy out Ireland's second biggest health
insurance provider, Bupa Ireland in 2007 for 150 million euros. This was a pretty big bet,
but Sean was easily able to afford it. After all, his finance company had turned over 123 million
euros worth of profit within the first 6 months of 2006. Aside from the financial industry, Sean also
dove into the hospitality industry. Throughout the 1990s, Sean purchased a plethora of hotels
across Ireland, the UK, and Eastern Europe. One of his most famous acquisitions came in 2004 when he
purchased the Prague Hilton for 145 million euros. Sean didn’t let all these new investments distract
him from growing his core business either. In the 2000s, he was actively expanding the construction
business into chemicals, radiators, and energy. At this point, Sean’s business was definitely way too
big and way too diversified to fail, but it only took one bad investment to erase decades of work.
ONE BAD INVESTMENT:
The bulk of Sean’s financial pain circles back to a fateful investment into the Anglo Irish Bank.
Looking back, this bank was notorious for funding rich property developers with money
that they would gamble on speculative real estate plays. In retrospect, it’s extremely obvious why
you wouldn’t want to invest in such a company during the housing bubble, but at the time,
it was much less obvious. From Sean’s perspective, the bank had relationships with a bunch of wealthy
real estate developers, so it seemed like a pretty safe bet. Throughout the early 2000s,
Sean invested a total of $1.3 billion into the bank growing a 28% stake. If this investment were
to collapse, it would already be quite painful, but Sean wouldn’t be in risk of bankruptcy. This,
however, would change when the stock of the bank started to drop in late 2007. You see, Sean
thought that this was just a great buy the dip opportunity and that it was just a matter of time
until the bank recovered. So, Sean doubled down on his bet, and took out loans against his other
companies to buy Contract for Differences or CFDs. CFDs are a type of financial derivative and it’s
inner workings are quite complex, but all you need to know is that it’s a form of leveraged trading.
This means that gains and losses in share price are amplified. For example, if the
share price recovers 2% you might make 20%, but the problem is that if it drops 2%, you lose 20%.
Now, there’s no excuse for borrowing money to make such a gamble, but Sean wasn’t an idiot
either. There were a couple of big misleading green flags that led him down this path.
First of all, Anglo stock was performing way better than the rest of the banking industry.
This doesn’t mean that Anglo stock was at all time highs, but it was down less than the overall
financial industry. This made Sean confident that other investors also saw the potential in Anglo,
but the reality was that a dozen extremely wealthy individuals were propping up the share price.
Once Anglo stock started to fall, Anglo allegedly reached out to it’s top 10 biggest investors
and directors and gave them loans to buy Anglo stock. Apparently, this is why Sean himself was
buying Anglo stock. So, all this extra buying pressure created a false sense of security.
Aside from propping up the stock price, Anglo was also allegedly propping up their fundamentals.
Anglo had loaned out money to one of their rivals who then turned around and deposited the
money back into Anglo which made it seem like Anglo was more solvent than they really were.
This charade helped Anglo stay afloat through the beginning of the financial crisis,
but as other financial institutions started to collapse, Anglo would collapse
as well. And Sean who was basically all in on Anglo got obliterated.
COURT BATTLE:
Given that Sean had lost it all on Anglo stock, he was no longer able to pay back his loans to Anglo,
and Anglo would come after Sean. Sean and his family have fired back with lawsuits against Anglo
claiming that they basically propped up the stock price and fundamentals.
It was never really determined if these allegations are true or not,
but here’s what we know. Anglo did in fact give out loans to top investors, directors, and a rival
who in turn invested back into Anglo. But Anglo claims that there were no laws being broken. They
were simply fulfilling their roles as a bank by loaning out money and giving out financial advice.
It’s not like they were committing securities fraud or running a pump and dump.
Also, it wasn’t the bank’s fault that Sean went all in on Anglo stock. He was clearly smart enough
in the 1990s to diversify away from construction. He should’ve known not to put all his eggs in one
basket regardless of how confident he was in the investment. With not enough money left to
run his businesses, Sean would voluntarily file for bankruptcy in Northern Ireland,
but even this would end poorly. You see, Sean’s choice to file for bankruptcy in Northern Ireland
was strategic because the law in Northern Ireland allows bankrupt businesses to return to business
after 12 months. However, a judge would overturn this bankruptcy filing asserting that Sean’s
main businesses were run out of Ireland, not just Northern Ireland. This made it impossible for Sean
to restart his business without paying back his loans, but without his businesses, there was no
chance that he could ever pay them back. So, Sean was stuck in a catch 22 situation. This went on
until Ireland decided to nationalize Anglo Irish Bank and bail them out with 34 billion euros.
Once the bank was nationalized, it wasn’t just the bank who wanted Sean to repay his loans,
but it was the state and they were looking to take all of his remaining assets.
Seeing this, Sean and his kids would try to stowaway as many assets as they could offshore.
But, they would quickly be caught and charged resulting in Sean being sent to jail for 9 weeks.
And with that, Sean had officially fallen from being Ireland’s richest man to being a convict.
SEAN TODAY:
All these lawsuits and court battles have been extremely expensive for both Sean and the state.
Apparently, the battle cost the state a total of 170 million euros as of 2019, so they finally
decided to settle the case. The court has agreed to let the Quinn family keep 440 million euros
if they liquidate their remaining assets and pay back at least 500 million euros to the state. So,
it looks like the Quinn family will end up walking away with a large sum of money nonetheless.
This has left a lot of the public divided. A lot of people in Ireland still strongly support Sean
suggesting that Sean made a calculated risk on Anglo, and if it wasn’t for Anglo’s deception,
Sean’s investment would’ve panned out. They feel that Ireland unfairly took sides with Anglo,
and that Sean is innocent. On the other side of the spectrum, critics argue that it doesn’t
matter whether Anglo was deceptive or not. Sean’s leveraged investment was extremely irresponsible
and he’s simply facing the consequences of his actions. Not to mention, it was the people who
trusted Sean and bought his insurance policies that sustained the most impactful losses.
In the meantime, it looks like Sean is still walking away with 440 million euros.
Critics also point to Sean’s instinct to hide away his assets as a glimpse at his true colors.
At the end of the day, Sean started off as a poor farm boy who used his ingenuity and
humbleness to reach unthinkable heights. At one point, he was cherished by the Irish and
regarded as a miraculous success story. But, it only took one overconfident investment to
destroy the empire and reputation that he had so painstakingly built. Who do you think is to blame,
Sean or Anglo? Comment that down below. Also, drop a like if you think that greed
kills. And of course, consider joining our discord community to suggest future
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