News Courts

Thursday 13 December 2018

Anglo trial: Loan must be 'tight as a duck's arse'

David Drumm Picture: Collins Courts
David Drumm Picture: Collins Courts
Andrew Phelan

Andrew Phelan

A banker warned the "walls have ears" as Anglo Irish Bank and Irish Life and Permanent executives talked about arranging an inter-bank loan during the 2008 financial crisis.

A jury heard one banker warn they had to keep the transaction as "tight as a duck's arse" because of fears of what would happen if it got out to the market.

As the amounts to be transferred between the two banks increased to €6bn, another executive said: "You might as well be hung for a sheep as a lamb."

Phone calls between the bankers were being played back to the jury in the trial of Anglo's former CEO David Drumm (51).

Mr Drumm is pleading not guilty to conspiring to defraud Anglo investors in 2008 by dishonestly creating the impression the bank's deposits were €7.2bn larger than they were.

He is alleged to have conspired with former Anglo officials Willie McAteer and John Bowe, then-CEO of Irish Life and Permanent (ILP), Denis Casey and others. Mr Drumm also denies false accounting.

The case centres on a series of circular billion-euro inter-bank transactions between Anglo and ILP, routed through ILP-owned Irish Life Assurance (ILA).

Mr Drumm admits he authorised the transactions but denies there was anything dishonest or fraudulent. He was not involved in any of the calls played yesterday.

Anglo's former treasury director Matt Cullen explained what was taking place in the conversations.

The first call was on March 25, 2008, between Anglo executives including Peter Fitzgerald, John Bowe, Matt Cullen and Ciaran McArdle.

A proposed transaction of €500m with ILP was discussed.

Mr Cullen said this was a conversation about the back-to-back deal with ILP.

Another conversation was on March 27, between Ciaran McArdle, Paul Flynn from Bank of Ireland (BOI), another man from BOI and Matt Cullen.

"We want to put out there from everybody's point of view to show the best picture that we have," Mr Cullen said to Mr Flynn.

With "all the turmoil we have still got that would be a very positive thing to put out there".

On March 27, 2008, there was a conversation between Mr Bowe, ILP's then-treasury director David Gantly and Mr Cullen. Mr Gantly said: "You put the stuff into us and we put it straight back through the other boys."

After laughter is heard, Mr Gantly said: "I'm purposely not using names here. The walls have ears in this climate."

Mr Gantly said it would be "basically an overnight transaction through both ends".

Paul O'Higgins SC, prosecuting, asked Mr Cullen about the concern for using names.

"If someone had heard him discussing what was discussed … he was afraid it would get out to the market," he replied.

Another conversation played to the jury was between John Bowe and Matt Cullen on September 16, 2008.

Mr Cullen said he spoke to Mr Gantly and €5bn was "not going to be a problem for them". Mr Cullen said:"You might as well be hung for a sheep as a lamb, you know," adding they were "David's exact words".

He added there was a meeting in which Mr Drumm was asked if the Financial Regulator was aware of the proposed transaction.

Mr Drumm had replied: "What choice do we have?"

The trial continues.

Irish Independent

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