Saturday 18 August 2018

Anglo officials discussed getting 'a bit of drink into' foreign banker before asking him for €5bn, court hears

Former CEO of Anglo Irish Bank, David Drumm. Photo: Collins Courts
Former CEO of Anglo Irish Bank, David Drumm. Photo: Collins Courts

Andrew Phelan

ANGLO Irish Bank officials discussed getting “a bit of drink into” a foreign banker before asking him for €5bn and telling him to “sign the beer mat,” a court has heard.

As the bank struggled during the financial crisis, senior executives talked about asking the London-based banker for a "one night stand," in an approach a week before Anglo was bailed out.

Discussing the proposed deal, the pair said they would not need "physical cash" and would "just run the cash in one door and out the other."

A tape of the conversation between Anglo’s then Chief Financial Officer Matt Moran and Head of Capital Markets John Bowe was played to the jury in the trial of the bank’s ex CEO David Drumm today.

Mr Drumm (51) is pleading not guilty to conspiring to defraud Anglo investors by dishonestly creating the impression that the bank’s customer deposits in September 2008 were €7.2bn larger than they were.

He is alleged to have conspired with former Anglo officials Willie McAteer and John Bowe, as well as then-CEO of Irish Life and Permanent (ILP) Denis Casey, and others.

The case centres on a series of multi-billion euro interbank loans which circulated between Anglo and ILP.

Mr Drumm also denies false accounting, by providing misleading information to the market.

Today, the jury was played a recording of a phone conversation between Mr Bowe and Mr Moran in which they discussed what Mr Moran should say at a meeting with "Ewen."

It took place on September 22, 2008, just over a week before Anglo’s financial year end and the Government’s banks guarantee.

Mr Moran, who was in the witness box for a third day, confirmed to Mary Rose Gearty SC that "Ewen" was Ewen Stevenson of Credit Suisse, based in London.

The transaction proposed in the conversation never actually went ahead.

Mr Moran was heard on the tape telling Mr Bowe of arrangements to meet “Ewen” and when the time was finalised, Mr Moran said “thanks be to f**k”.

“If I can get a bit of drink into him, I might say to him, I’d like about €5bn before the 30th,” Mr Moran said.

“Get him to sign the beer mat,” Mr Bowe said. “Do you think he’d be prepared to give us a little kind of one night stand?”

“If I can promise him there’s no f**king STD out of it,” Mr Moran said.

“It’s a dance,” Mr Moran said and the pair discussed the proposed transaction.

“It’s sort of the cherry on the cake, plus a bit of the cake as well,” Mr Bowe said, to laughter. “And the f**king tin as well. And the bloody oven.”

“It’s two f**king layers,” Mr Moran said.

Mr Bowe told Mr Moran if “you can say that in such a way” and that “you guys will do very nicely out of it.”

“We give them the eligible assets or we give them the cash and we just run the cash in one door and out the other,” Mr Bowe said.

“But do we have the cash?” Mr Moran asked.

“Yeah but what you do is we pay them and they pay us, do you know what I mean?” Mr Bowe replied.

“Yeah,” Mr Moran said.

“So it’s one set of cash,” Mr Bowe said.

“Yeah, you don’t need the physical cash,” Mr Moran said.

“You don’t need the physical cash,” Mr Bowe repeated

“We just make a payment on the basis that we are getting the receipt in anyway,” Mr Bowe said. “Do you know what I mean?”

Read more: David Drumm told colleagues their €5bn customer funding target was 'magic number' they had to make, court hears

Earlier, Mr Moran gave evidence about references in Anglo documents to the transaction that was carried out with ILP later that month,

He was shown the bank's December 3, 2008 preliminary results. On a section entitled “performance highlights - balance sheet,” customer deposits were €51.5bn, which was slightly up on the figure from 2007.

Ms Gearty asked Mr Moran if there was anything to link that customer deposits figure to loans from banks.

“No,” he replied.

There was no reference on that page to bank loans generally, he said.

The Chief Executive’s review also referred to these figures, stating that customer funding had increased €1.9bn on the previous year and referring to the “continued strong performance” of the bank’s customer deposit base.

Mr Moran and the jury were then shown minutes of a board meeting of January 13, 2009.

“The knowledge and full awareness of the Financial Regulator and the Central Bank as to the nature of the transaction was considered, it being confirmed by Matt Moran that both parties were fully aware of both sides of the transaction at the time it occurred,” the minutes stated.

Mr Moran told the court the description “fully aware of both sides of the transaction as it occurred” was “not something I would have said.”

He was shown the minutes of a January 12 audit committee meeting.

“Matt Moran advised the committee that the Financial Regulator and the Central Bank were aware of the transaction entered into in respect of ILP at the time of the transaction and outlined details of the discussions with the Financial Regulator in respect of the transaction,” the minutes stated.

“He added that the matter had also been outlined in the PWC report.”

Mr Moran told the court he understood the Regulator had been aware of the transaction and had queried it with Finance Director Willie McAteer, and a senior finance manager Colin Golden has responded to the Regulator.

He understood this had happened in October.

It was only in the “look back” that Mr Moran became aware of the details of what the Financial Regulator was aware of at the time of the transaction, he said.

He understood Mr Drumm and Mr McAteer had met the Regulator at the end of September 2008 and informed the Regulator of the transaction with ILP.

Mr Moran had made a note of what Mr McAteer said the Regulator’s comment was.

The jury was shown Mr Moran’s handwritten notes from a meeting with Mr McAteer and Mr Drumm.

The court heard he noted that Mr McAteer said “we would be managing the balance sheet at year end.” Ms Gearty read out that Mr Moran’s note of what Mr McAteer said the Regulator said to him was “fair play to you.”

The words “good man” were crossed out.

The trial continues.

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