Sunday 25 September 2016

Regulator was told about Anglo's balance-boosting transactions

Published 12/06/2016 | 02:30

The jury heard evidence that the two ILP accused insisted that they wanted any deposits to Anglo from ILP to be secured against cash collateral from Anglo (Picture: PA)
The jury heard evidence that the two ILP accused insisted that they wanted any deposits to Anglo from ILP to be secured against cash collateral from Anglo (Picture: PA)

The Office of the Financial Regulator was informed six weeks before Anglo published its preliminary results in December 2008 of a series of circular transactions designed to boost Anglo's balance sheet at its September 2008 year end.

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John Bowe, Anglo's former head of capital markets, informed an official at the office of the regulator of the motivation behind the scheme in October 2008, weeks before the bank's preliminary results were published, a jury at Dublin's Circuit Criminal Court heard.

Last week, an 11-strong jury convicted Bowe (52), and the bank's then finance director, Willie McAteer (65), of conspiring to mislead the public about the true state of Anglo's balance sheet. Denis Casey, former chief executive of Irish Life and Permanent (ILP), was also convicted of a €7.2bn conspiracy to defraud.

Peter Fitzpatrick (63), former finance director of ILP, was earlier acquitted of the charge following the longest-running criminal law trial in modern Irish history, which lasted 89 days.

Bowe, McAteer and Casey have been released on bail pending a sentence hearing next month.

The prosecution claimed that the four men were involved in setting up a circular scheme of multi-billion euro transactions where Anglo lent money to ILP and ILP sent the money back, via their assurance firm Irish Life Assurance, to Anglo.

The €7.2bn deposit was later accounted for in Anglo Irish Bank's preliminary results on December 3, 2008, as part of Anglo's customer deposits figure.

The prosecution alleged that the entire objective of the scheme was to mislead anybody reading Anglo's accounts by artificially inflating the customer deposits number from €44bn to €51bn, a difference of 16pc.

However, lawyers for Bowe and McAteer argued that their clients believed that the deposits were real deposits and were accounted for correctly on Anglo's balance sheet and so no fraud was carried out.

The jury heard evidence that the two ILP accused insisted that they wanted any deposits to Anglo from ILP to be secured against cash collateral from Anglo.

The prosecution argued that there was no commercial substance to the transactions and their only purpose was to deceive. Lawyers defending Casey and Mr Fitzpatrick argued that their clients had no control over how Anglo would account for the deposits, and had no intention to mislead the public.

The role of the Office of the Financial Regulator, formerly led by Patrick Neary, is expected to be raised at the sentence hearings, following a key ruling that the regulator's involvement was a matter of mitigation, not defence.

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