Monday 24 April 2017

Anglo trial hears of 'green jersey agenda' during 2008 financial turmoil

Left to right, William McAteer, Denis Casey, John Bowe, and Peter Fitzpatrick
Left to right, William McAteer, Denis Casey, John Bowe, and Peter Fitzpatrick

Declan Brennan

A former Anglo Irish Bank director has told the trial of four senior bankers accused of conspiring to mislead investors that there was a “green jersey agenda” which involved banks working together to help each other out during the financial turmoil of 2008.

The four men, including former Irish Life and Permanent (ILP) CEO Denis Casey and Anglo's former Head of Finance Willie McAteer, are accused of conspiring to mislead investors by using interbank loans to make Anglo appear €7.2 billion more valuable than it was.

Mr McAteer (65) of Greenrath, Tipperary Town, Co. Tipperary and Mr Casey (56), from Raheny, Dublin are on trial alongside Peter Fitzpatrick (63), from Malahide, Dublin, who had been ILP’s former director of finance and John Bowe (52), from Glasnevin in Dublin, who had been Anglo's head of capital markets .

They have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions to make the bank appear €7.2 billion more valuable that it was between March 1st and September 30th, 2008.

On day 16 of the trial Brendan Grehan SC, defending Mr Fitzpatrick, showed the jury an email sent from the former CEO David Drumm to Mr Bowe and other Anglo executives on March 16, 2008 discussing a suggestion from the Governor of the Central Bank that Irish banks help each other out.

Matt Cullen, the former director of treasury at Anglo, agreed that the genesis of the email was about how banks could help each other out and that this was a case of “pulling on the green jersey”.

“This was Ireland Inc.,” Mr Cullen said, adding that Mr Drumm was talking to CEOs of the other banks. He agreed with counsel that everybody was involved to try to achieve the same aim, to protect the Irish banking system.

Mr Cullen told Michael O'Higgins SC, defending Mr Casey, that he had heard of the “green jersey agenda” and said he would have been aware of what was been discussed in Mr Drumm's office from March 16 up until the end of March.

“That was the biggest signs of banks working together. AIB going to work with the likes us shows what a crisis it was,” he said.

Mr O'Higgins said that the origin of the crisis was the selling of loans that contained a lot of mortgages, some of which were sub-prime. He said a lot of banks in Europe had bought these loans in the form of bonds.

He said that when some of these mortgages started to go bad there was no way of knowing how badly the bonds were tainted and that market confidence began to collapse.

“Slowly but surely the confidence in the market started to wane and the brakes came off,” counsel said. He described the market as a “sentient being” but “not in any way sentimental”.

He said that Anglo's position in the market was made worse because businessman Sean Quinn had taken out a “Contracts for difference” position on shares in the bank.

“Mr Quinn had made a bet that the shares would increase in price and they had been falling rapidly and everyday they fell he had to make up the difference.

“The bank was in an unusual position...because he owed the bank so much money he was controlling the situation,” said Mr O'Higgins.

Brian Lynch, who was Head of Treasury at Anglo, told Úna Ní Raifeartaigh SC, prosecuting, that the deposits in September between the bank and ILP were “circular”.

He said the purpose of the transaction was that the deposit from Irish Life Assurance would be classified as a customer deposit from a non-banking institute.

He said that this figure would be read by shareholders, investors and rating agencies. He said the deposit would have no impact on the bank's liquidity and had no commercial benefit.

The trial continues before Judge Martin Nolan and a jury.

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