Monday 18 June 2018

Former Anglo boss David Drumm denies fraudulent bank transfers

Former Anglo Irish Bank chief executive David Drumm pictured as he arrives at the Criminal Courts of Justice. Picture; Gerry Mooney
Former Anglo Irish Bank chief executive David Drumm pictured as he arrives at the Criminal Courts of Justice. Picture; Gerry Mooney

Andrew Phelan

FORMER Anglo Irish Bank chief executive David Drumm has admitted he authorised a series of circular transactions that boosted the bank’s balance sheet but denies they were fraudulent or dishonest.

Mr Drumm (51) today issued a series of 11 admissions through his lawyers in which he accepts “all the factual matters” about how the 2008 transactions at the centre of his trial happened.

The “only issue he disputes,” a jury heard, was whether they were fraudulent or dishonest.

The admissions were read out at Dublin Circuit Criminal Court after the trial had opened to the jury and before evidence began.

Mr Drumm is charged with conspiring to defraud Anglo investors in 2008 by dishonestly creating the impression that the bank’s deposits that year were €7.2bn larger than they were.

He is alleged to have conspired with former Anglo officials Wille McAteer and John Bowe, as well as Irish Life and Permanent’s then-CEO, Denis Casey, and others.

Mr Drumm is also charged with false accounting, by providing misleading information to the market on December 3, 2008, giving the impression that Anglo's deposits were €7.2 billion greater than they really were.

The accused, from Skerries, Co Dublin, has pleaded not guilty to both charges.

This afternoon, Tessa White BL, defending, read out 11 admissions on behalf of Mr Drumm.

The first two accepted the licensing of Anglo, ILP and ILA, and the third was that Mr Drumm was CEO of Anglo from January 1, 2005 to December 19, 2008.

The fourth admission stated that from late 2007 onwards, Irish banks including Anglo came under sustained funding and liquidity pressure due to a worsening global financial crisis. On March 16, 2008, David Drumm in his capacity as CEO disclosed to others in Anglo that the Governor of the Central Bank had raised the issue as to “How the Irish Banks could help each other?”

This initiative encouraged Irish banks to provide mutual support to each other in response to the financial crisis, Ms White read out.

David Drumm directed that Anglo should give consideration to this initiative.

The fifth admission was that on or about March 31, 2008, Anglo’s half year end, Anglo placed €1 billion with ILP. ILA deposited €750m with Anglo. Shortly after March 31, 2008, ILP repaid €1 billion to Anglo and Anglo repaid €750m to ILA.

The purpose of conducting these transactions was to increase Anglo’s non-bank deposits by €750m over its half year end reporting date of March 31, 2008. These are referred to as the March transactions.

The sixth admission was that on or about June 30, 2008, which was ILP’s half year end, ILP transferred bonds worth in excess of €3 billion to Anglo. Anglo placed the sum of €3 billion with ILP. Shortly after June 30, 2008, ILP repaid €3 billion to Anglo and the bonds were returned to ILP.

The purpose of these transactions was to reduce ILP’s reliance on European Central Bank (ECB) funding over its half year end reporting date of June 30, 2008. These are referred to as the June transactions.

The seventh admission was that in the period coming up to September 30, 2008, which was Anglo’s year end, in a series of short term transactions, Anglo placed approximately €7.2bn with ILP. In return ILP on behalf of ILA deposited approximately €7.2bn in a similar manner with Anglo.

These are referred to as the September transactions, and the detailed movements of these funds “are accurately set out in the flow charts to be introduced in evidence through Russ Carter.”

The purpose of these transactions was to increase Anglo’s non-bank deposits by €7.2bn over its year end reporting date of September 30, 2008.

The eighth admission was that between September 30 and December 19, 2008, ILP and Anglo agreed to enter into transactions similar in nature to the June transactions whereby ILP would transfer certain of its bonds to Anglo over ILP’s end of year reporting date of December 31, 2008.

In return, Anglo would place up to €7 billion with ILP.  The intention was that these transactions would then be reversed (or unwound) shortly after December 31, 2008. The purpose of these transactions was once again to reduce ILP’s reliance on ECB funding over its year end reporting date of December 31, 2008. These are referred to as the December transactions and while the process had commenced, the transactions were never in fact completed and the parts which had commenced were reversed prior to December 31, 2008.

The ninth admission was that, subject only to specific objections, no issue arises in relation to the production in evidence, electronically or otherwise, of any exhibit or document.

The tenth admission was that Mr Drumm as CEO authorised the March, June, September and December transactions and assumes responsibility for their execution by Anglo.

The eleventh was that Mr Drumm “accepts all of the factual matters relating to the mechanics of how the September transactions happened and the only issue that he disputes is whether they were fraudulent or dishonest or that there was any dishonesty in their reporting.”

Judge Karen O’Connor told the jury the admissions would reduce the number of witnesses required to give evidence and shorten the duration of the trial, but said it was still going to be lengthy.

Later, former Anglo treasury executive Russ Carter began evidence and was questioned on a number of banking terms by Mary Rose Gearty SC, prosecuting.

The trial continues on Monday before Judge O’Connor and an enlarged jury of 15.

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