Tuesday 19 September 2017

Drumm sees funny side as bank breaks finance rules

Paul Williams, Donal O'Donovan and Fionnan Sheahan

ANGLO boss David Drumm laughed about the bank breaking basic financial accounting rules as it moved around billions to boost its balance sheet.

The revelations in the latest Anglo Tapes come as the Government calls, for the first time, for the former Anglo Irish Bank chief executive to make himself available to gardai for questioning.

In the latest Anglo Tapes, recorded on the brink of the bank guarantee, Mr Drumm and the bank's then director of capital markets John Bowe discuss the movement of €6bn-€7bn worth of funding between Anglo and Irish Life and Permanent.

The transactions are being investigated by the Office of the Director of Corporate Enforcement. The so-called back-to-back loans made it appear like Anglo had more high-end corporate deposits on its books.

Mr Bowe described how the transfer of money works, saying: "The money goes around in a circle."

Mr Drumm put a macabre twist on the basic rule of accounting, as he joked: "Debit the giver, credit the receiver."

<a href='http://cdn4.independent.ie/incoming/article29406611.ece/binary/ANGLO-7-col-July-9-A.png' target='_blank'>Click to see a bigger version of the graphic</a>
Click to see a bigger version of the graphic
Former Anglo CEO David Drumm

The joke was a play on the golden rule of accounting 'debit the receiver, credit the giver' and reflects the highly unorthodox nature of the transaction.

The bank guarantee was brought in the following day due to concerns about the financial position of Anglo and other banks.

At the same time, Anglo was frantically preparing for its end of year accounts, due on September 30.

Mr Bowe goes into detail explaining to Mr Drumm how the transaction operates, and how Anglo is finding it difficult to repay the money.

"Yeah. I mean what's happening is that we give the money to them and, you know, look, the dance here is that we actually get it back in time and that's becoming very, very, very tough to do.

"So, in other words, they have to, they have to, we have to pay it into, ehm, into the bank and the bank has to give it to the assurance company and the assurance and the assurance company has to give it to us."

Mr Drumm responds that he is aware of the operation of the loans.

"Yeah, I know how it works."

Mr Bowe goes on: "And it goes, it has to go through a lot of different hands, in terms of the assurance company's payment agent, as opposed to the bank, so, it just, eh, it's actually very tough to do. But we're picking away at it."

Mr Drumm comments that a "f***in' journal entry would do it an awful lot quicker", before joking: "Remember this, John. Debit the giver, credit the receiver."

CASH

The pair also discuss how the bank doesn't have the cash to give to Irish Life and Permanent the following day.

Mr Bowe says: "Ehm, well, unless we use part of the cash we had tomorrow to do part of that, as well." Mr Drumm replies: "It's become a kind of academic exercise but..."

Two senior government ministers said Mr Drumm should come home to face questioning about the bank's collapse, rather than making complaints from the US about the coverage of his now infamous telephone conversations.

Justice Minister Alan Shatter said: "I do believe he should co-operate with An Garda Siochana, as he has been requested to do, and make himself available to answer any questions that remain to be answered in the context of the investigation that is taking place."

Gardai cannot seek Mr Drumm's extradition unless they can guarantee he will be charged with a crime.

Finance Minister Michael Noonan said the banker should come back to co-operate with the proposed Oireachtas inquiry.

Meanwhile, Social Protection Minister Joan Burton also praised the publication of the Anglo Tapes by the Irish Independent.

"I have to say, I think that airing the tapes has probably brought back to people what it was like and what some people did to this country and did to people and families and communities in this country. I think it is a major piece of journalism to have actually brought that out," she said.

Irish Independent

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