Monday 20 August 2018

€7.2bn bank transfer was 'for optical benefit only'

David Drumm is accused of conspiracy to defraud. Picture: Collins
David Drumm is accused of conspiracy to defraud. Picture: Collins

Sarah-Jane Murphy

The €7.2bn transactions between Anglo Irish Bank and Irish Life and Permanent (ILP) in September 2008 were for "optical benefit only" and created no new cash, a jury has been told.

Ciaran Cunningham, former treasury manager at Anglo, was continuing his evidence yesterday on day 34 of David Drumm's conspiracy to defraud trial at Dublin Circuit Criminal Court.

The former chief executive of the bank accepts that in 2008 transactions worth €7.2bn took place between Anglo and ILP, but he disputes they were fraudulent or dishonest.

Mr Cunningham told Paul O'Higgins SC, prosecuting, there was no commercial rationale to the transactions with ILP other than to present the numbers as customer deposits.

Mr O'Higgins referred to the series of transactions between September 25 and 30, 2008 involving Anglo, ILP and Irish Life Assurance.

Mr Cunningham agreed the amounts exchanged were identical in size and interest rates and the only benefit to them was an optical one. He said the "cash neutral" transactions generated no new funding.

The jury was shown Anglo's balance sheet for September 22, 2008, which showed that the customer loan to deposit ratio was 145pc, or 165pc excluding initiatives. Mr Cunningham said that at that point the customer initiatives were recorded as €6bn, but would later amount to €7.2bn.

The court heard that Anglo's balance sheet recorded Bank of Ireland's ratio as 157pc and Allied Irish Bank as 153pc. Of a list of seven banks on the sheet, only Lloyds' Bank's ratio of 142pc was better than Anglo's.

In an email to John Bowe on September 23, Mr Cunningham said he had "no problem" including the €6bn figure in the document he was drafting for Mr Bowe to present to the board.

The jury also viewed an email sent by Mr Cunningham to his boss in which he said there were "too many moving parts to the balance sheet today".

Mr Drumm, with an address in Skerries, Co Dublin, has pleaded not guilty to conspiring with former bank officials Denis Casey, William McAteer, John Bowe and others to defraud depositors and investors at Anglo by "dishonestly" creating the impression that deposits in 2008 were €7.2bn larger than they were.

He has also pleaded not guilty to false accounting on December 3, 2008, by furnishing information to the market that Anglo's 2008 deposits were €7.2bn larger than they were.

The trial continues.

Irish Independent

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