Drumm trial loses juror
The numbers on the enlarged jury have now dropped from 15 to 14 as a result
A juror in the trial of former Anglo Irish Bank CEO David Drumm has been released from duty after it emerged that she knew someone who had been mentioned in the case.
The numbers on the enlarged jury have now dropped from 15 to 14 as a result.
Dublin Circuit Criminal Court heard the juror in question had brought the issue to the attention of the other jury members who alerted the judge through the foreman.
There are now 10 men and four women remaining on the jury.
Legislation introduced in 2013 provided for enlarged juries of 15 instead of the standard 12. The provision of effectively spare members is to facilitate criminal trials that, like Mr Drumm’s, are expected to last longer than two months.
Mr Drumm (51) is pleading not guilty to conspiring to defraud Anglo investors in 2008 by dishonestly creating the impression that 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, as well 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 ILP-owned 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.
Before evidence resumed today, the foreman passed a note up to the judge which was then handed to barristers for the prosecution and defence.
Judge O’Connor said it was the “correct thing to do to bring it to my attention” and asked the jury to leave.
When the jury returned, Judge O’Connor asked the juror “who appears to have some connection” to identify herself. The remaining jurors were asked to stand out while the judge spoke to the juror in question.
When they returned, the judge said “we have an extra chair” and explained that she had released one of the jurors from her service on the jury “for the reason contained in the note,” which was that “somebody she was acquainted with who was referred to during the proceedings.”
Company Secretary Natasha Mercer, who had been in the witness box yesterday, resumed evidence.
Mary Rose Gearty SC, prosecuting, said Ms Mercer had outlined in her statement that she had had some correspondence with Gary McGann about the minutes that she had drafted from the November 18, 2008 audit committee meeting.
Mr McGann, a non-executive director had chaired that meeting. Her draft included a reference to the ILP transaction details being outlined and that both the Financial Regulator and Ernst and Young (the external auditor) were aware of it.
On February 18, 2009, she was in contact with Mr McGann and in an e-mail shown to the jury, she said she did not recall a comment “re normal balance sheet management” although this may have been said.
Mr McGann replied that he had tried to present the words to the best of his recollection and he preferred to stick to his language which captured “the essence of what was said, I believe.”
An audit results report 2008 said that the accounts presented a “true and fair view” and they had received adequate information.
A statement of the directors’ responsibilities of December said the directors confirmed that to the best of their knowledge, they had complied with their requirements in preparing the financial statements…”to give a true and fair view of the state of the affairs of the bank and group.”
Having attended all the board meetings in 2008, Ms Mercer said the September ILP transaction was only discussed at the November 22 board meeting.
Her minutes from the November 18 audit committee meeting that stated the ILP transaction had been explained by Colin Golden, but this was later amended by Mr McGann with the word “explained” crossed out and “referred to” inserted.
She agreed with Ms Gearty that she understood why Mr McGann made this change as there had been no substantial discussion of the transaction.
The jury heard there were two audit committee meetings on January 12 and 13, 2009 and the minutes did not show that the ILP transaction was discussed.
The transaction was discussed at the January 13, 2009 meeting of the board, in which Matt Moran explained in detail the circumstances and nature of it.
In cross examination, Ms Mercer told Brendan Grehan SC, defending, that one of the roles of the audit committee was in overseeing management.
The committee’s terms of reference stated that a role in financial reporting was to monitor the integrity of the financial statements and to ensure that they complied with the law.
Under the heading of Internal Controls, Mr Grehan said the audit committee’s functions included reviewing procedures for detecting and preventing fraud.
There was also a section dealing with “whistleblowers,” he said.
Ms Mercer agreed with Mr Grehan that there had never been “any controversy” around the minutes of other meetings “like there was about the minutes of the meeting on November 18.”
She agreed there was a “huge amount of discussion back and forth about what should be recorded” in the minutes of that meeting, specifically about the ILP transaction.
Mr Grehan suggested she had been “somewhat caught in the crossfire.”
Ms Mercer said she would not use that term, but she did not have any pre-knowledge of these events as others did, so she was “writing in a vacuum.”
Mr Grehan asked if it would be fair to say that in January 2009, a controversy blew up about the transaction and this prompted people to have significant differences in their interpretations of what happened at the meeting.
Ms Mercer agreed.
This afternoon, Mr Grehan continued to cross examine Mr Mercer about amendments made to the minutes of the audit committee meeting of November 18, 2008.
Ms Mercer said she made a first draft of the minutes in January 2009 and sent them to CFO Matt Moran, who sent them on to senior finance managers Colin Golden and Kevin Kelly.
“Is it normal that you were sending the minutes that you made by review for people who were at the meeting?” Mr Grehan asked.
“No,” Ms Mercer replied.
Mr Moran had specifically asked her to send them to him, she said.
There was no reference to the ILP transactions in the first draft and Ms Mercer said Mr Golden and Mr Kelly phoned her and asked her why she had made no reference to “customer accounts” which is what the transactions were being described as.
Ms Mercer said she was trying to write the minutes with the benefit of what she knew then and there had been no material discussion of the issue at the meeting. She did not believe it was particularly relevant.
On February 12 she accepted what the others had said to her, that the issue was raised at the meeting because she had gone back to her notes and saw it had been discussed. She decided it was appropriate to include it in the minutes.
“I made reference to the fact that the note (transaction) was discussed and details were outlined and the regulator was brought through it and Ernst and Young were aware,” Ms Mercer told the jury.
On February 13, Gary McGann got back to her after reviewing the minutes and suggested some changes. He seemed to have had some discussion with Michael Jacob, another non-executive director who had been at the meeting.
Ms Mercer recalled the wording did not reflect what was in her handwritten note.
Mr McGann had not felt there had been a discussion about the transactions and he wanted to add in a comment about “balance sheet management” and it being normal, Ms Mercer said.
On February 17, 2009, Donal O’Connor, who had replaced Sean Fitzpatrick as Anglo Chairman emailed her to say that his recollection of what was said at the meeting was in accord with Mr McGann and Mr Jacob.
Mr O’Connor then sent an e-mail of his recollection of events in chronological order. In it, he stated he had been on a conference call from Australia for the November 18, 2008 meeting.
He said the phone line had been poor and he had no background in banking and was not aware of the significance of customer deposits or the “round the houses” issue.
He had not received a document about the transactions that had been emailed to someone in Sydney for him, but recalled that when it was read out, he “butted in” and asked: “is this window dressing?”
Finance Director Willie McAteer, he recalled in the e-mail, said it was “normal balance sheet management.”
Ms Mercer told Mr Grehan she did not recall any discussion about window dressing or normal balance sheet management.
Ms Mercer said she would have spoken to Mr O’Connor either before or after the email was sent and in the conversation, she was “not under any pressure” to do anything.
It was cordial and they both explained their conditions, she said.
She accepted it was up to the chairman of the committee to agree that the minutes were accurate.
“Effectively, Donal O’Connor is emailing you as Chairman and telling you he had a discussion with two other people who were at the meeting, Mr McGann and Mr Jacob and they are all agreeing what is to be said and they are telling you in no uncertain terms in this e-mail,” Mr Grehan said.
“Yes,” Ms Mercer replied.
The court heard the final version of the minutes was completed on April 9, 2009. Of the ILP transactions, it stated: “it was confirmed that these were in the nature of normal year-end balance sheet management activity and the regulator and Ernst and Young had no issues with them.”
The trial continues.