Sunday 25 September 2016

Former bank chief told gardaí he authorised €7.2bn deal with Anglo because he felt obliged to support other bank under 'green jersey agenda', court hears

Declan Brennan

Published 03/05/2016 | 18:02

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

A former bank chief accused of conspiracy to mislead investors told gardaí that he authorised a €7.2 billion deal with Anglo Irish Bank because he felt he was obliged to support the other bank under the “green jersey agenda”.

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Four former executives from Anglo Irish Bank and Irish Life & Permanent (ILP) are on trial for allegedly conspiring to mislead investors by setting up a €7.2 billion circular transaction scheme to bolster Anglo's balance sheet.

Denis Casey (56), who was the Group Chief Executive of ILP from May 2007 until February 2009, told gardaí that Anglo misrepresented the deposit from his bank to achieve their stated aim of bolstering its deposits figure.

Mr Casey from Raheny, Dublin, Peter Fitzpatrick (63) of Convent Lane, Portmarnock, Dublin, John Bowe (52) from Glasnevin, Dublin and Willie McAteer (65) of Greenrath, Tipperary Town, Co. Tipperary have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions between March 1st and September 30th, 2008.

At the beginning of the week 14 in the trial Detective Sergeant Catharina Gunne from the Garda Bureau of Fraud Investigation gave evidence of voluntary interview statements provided by Mr Casey in October 2013.

Mr Casey told Det Sgt Gunne that he had authorised the allegedly back to back transactions with Anglo but had no role in the structuring or execution of the deals.

He said he authorised the placement of billions of euro to Anglo in September 2008, to cover the date of their year end accounts on September 30, in order to support a “pillar” financial institution in the Irish banking system.

He said he was motivated to do this because of his understanding of a request from Pat Neary, Chief Executive of the Financial Regulator, and John Hurley, Central Bank Governor for Irish banks to support each other, a so-called “green jersey” agenda.

“The September transactions would never have arisen or never have been contemplated by ILP but for our understanding of our obligations under the green jersey agenda mandated by the Central Bank and Financial Regulator,” he told gardaí.

He agreed that Anglo were seeking support to bolster its deposits by billions of euros. He stated that he honestly believed that “Anglo could not have approached ILP for support without the knowledge of the Financial Regulator”.

Asked why ILP “did not just walk away” Mr Casey replied: “I believed at the time that the approach by Anglo was in the context of oversight of their year end balance sheet by the Regulator.”

Mr Casey said he authorised the placement on the basis that it would be collateralised, or secured by another payment or asset. He said he believed the financial exposure to ILP from the deposit with Anglo was nil.

“As the transaction was collateralised no financial exposure arose for the Group (ILP),” he said. He said that because the deal was collateralised it could not have been used to bolster Anglo's deposits because of accounting regulations which only allowed deposits which carry a risk to be included on the bank's balance sheet.

In fact the €7.2bn deal did appear in Anglo's corporate deposits figure on their year-end balance sheet when they published their accounts in December 2008.

Investigators put it to Mr Casey that he had facilitated Anglo's intention to bolster its deposits figure by engaging in these transactions.

The accused denied this was true and said: “The collateralised transactions could not have been used to 'bolster' Anglo deposits. In fact Anglo were required to misrepresent the transaction...in order to present it as it did”.

He told gardaí that in September 2008 he had no reason “to question or doubt the integrity and honesty of the Senior Management in Anglo”.

The trial continues before Judge Martin Nolan and a jury.

Mr Casey told detectives that it was only in February 2009 when he became aware that if Anglo went into liquidation the financial exposure in ILP could have been €7.2 billion.

He said that in September 2008 “I had no reason whatsoever to doubt the honesty and integrity of Anglo Irish Bank”.

He added: “It never occurred to me that they would misrepresent the transaction entered into with ILP and would suggest that...ILP was prepared to create a €7 Billion financial exposure to Anglo in September 2008.

“Subsequent events have called into question the integrity and honesty of the way in which Anglo was run,” he said.

He said he didn't believe that it was the same one billion being circulated during the course of these transactions.

On September 22 ILP chairman Gillian Bowler and Mr Casey met senior executives from Anglo, including their CEO, David Drumm, to discuss the merger of the two institutions.

He said he had previously recommended that the ILP Board reject the merger proposal and the Board had done this on the previous Friday. He told gardaí he was deeply unhappy that a second meeting had been arranged and did nothing to disguise this.

He said that over the previous weekend media articles had appeared suggesting the only way forward for ILP was to merge with Anglo and he believed that Anglo had planted these stories.

He said he found out later that Mr Drumm described Mr Casey as having “a fucking brick wall built in front of him” and “kept saying very very stupid things”. Mr Drumm told colleagues that “we stopped short of insulting him”.

Gardaí asked Mr Casey if, after this meeting and the final rejection of the merger, anything was said regarding the inter-bank deals. Mr Casey said he recalled a senior executive from Anglo said “notwithstanding any lack of agreement on a merger ILP and Anglo should continue to co-operate as we had been doing”.

He said that he and Ms Bowler confirmed this would continue. He said that after this meeting there was a hostile relationship between himself and Mr Drumm.

“My willingness to support Anglo in September 2008 had nothing to do with my regard for or relationship with Anglo but was motivated only by my understanding of my obligations under the green jersey agenda,” he claimed.

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