Thursday 16 August 2018

Anglo secretary 'took legal advice when told to change minutes of meeting after bail-out' - Drumm trial hears

Former Anglo Irish Bank chief executive David Drumm
Former Anglo Irish Bank chief executive David Drumm

Andrew Phelan

ANGLO Irish Bank’s company secretary took legal advice when she was told to change the minutes of a meeting that was held weeks after the bank was bailed out, a court has heard.

Natasha Mercer said she consulted a lawyer after she was told to amend references to how aware the Financial Regulator and Central Bank had been of Anglo’s €7.2 billion interbank transactions with Irish Life and Permanent during the financial crisis.

She denied however that the bank’s then-Chairman Donal O'Connor told her to “shut up” when she challenged him three times about changing the minutes.

Ms Mercer was concluding her evidence in the fraud trial of Anglo’s former CEO, David Drumm.

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

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

The case centres on a series of circular billion-euro inter-bank transactions between Anglo and ILP, routed through Irish Life Assurance (ILA). The money was placed back in Anglo and treated as customer deposits, which are considered a better measure of a bank’s strength. Mr Drumm admits he authorised the transactions but denies there was anything dishonest or fraudulent in them.

Brendan Grehan SC was cross examining Ms Mercer today on changes she was asked to make to the minutes of the meeting of the bank’s audit committee on November 18, 2018. The jury at Dublin Circuit Criminal Court heard in February 2009 , there was “to-ing and fro-ing” about the minutes of the November 18 meeting and references in them to the ILP transactions.

Donal O’Connor, a non-executive director who had been on conference call to the committee meeting and who had since replaced Sean Fitzpatrick as Anglo Chairman, asked Ms Mercer to make amendments. He had discussed it with two other non executive directors who had been at the meeting, Michael Jacob and Gary McGann.

The court heard Mr McGann had chaired the audit committee.

Mr Grehan put it to Ms Mercer that Anglo’s former Chief Financial Officer Matt Moran had said in a statement that Ms Mercer had told him about conversations she had with Mr O’Connor.

Mr Moran had said Ms Mercer told him she had challenged Mr O’Connor three times and “he told her to shut up.”

According to Mr Moran, Ms Mercer had said “at that stage, Matt, I had done my job.”

Ms Mercer told Mr Grehan Mr O’Connor had never spoken to her like that. She did not recall discussing the issue with Mr Moran but agreed it was possible she did.

Ms Mercer told Mr Grehan she took legal advice because she wanted to make sure that the final record of the meeting reflected what the requirements were.

The advice at the time was that it “wasn’t particularly covered in the law” but as a matter of governance, the chairman of the committee - Gary McGann -  had the final say.

“The response was it’s really a matter for the chairman and committee members to agree,” Ms Mercer said. “If they have a different recollection to you, their record is the correct record.

Ms Mercer said the issue was that there were “subtle differences” between what she had taken down and the recollections.

In her handwritten note, she wrote that Ernst and Young (the external auditors) were “brought through” and the Financial Regulator was “aware.” Somebody else had inserted the word “already” before “brought through.”

In the final written minutes, it was stated about the ILP transactions: “it was confirmed they were in the nature of normal year end balance management activity” and the Financial Regulator and Ernst and Young “had no issues with them.”

Ms Mercer also agreed with Mr Grehan that it would be “fair to say” that, contrary to the official record, there did appear to be references in her handwritten notes to the ILP transactions during meetings on September 22, 26 and 30, 2008.

The trial continues.

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