Thursday 22 March 2018

Former ILP chief Casey guilty of €7.2bn conspiracy

Former Irish Life and Permanent Chief Executive Denis Casey. Photo: Collins Courts
Former Irish Life and Permanent Chief Executive Denis Casey. Photo: Collins Courts

Declan Brennan and Dearbhail McDonald

Denis Casey, the former group chief executive of Irish Life and Permanent (ILP), has been found guilty of a €7.2bn conspiracy to defraud.

Casey (56), who qualified as a barrister specialising in banking, finance and securities following his departure from the ILP Group, is the third former banker to be found guilty of conspiring to mislead investors, depositors and lenders about the true health of Anglo in 2008.

Last week, an 11-strong jury convicted Anglo's former head of capital markets, John Bowe (52), and the bank's then finance director, Willie McAteer (65), of conspiring to mislead the public about the true state of Anglo's balance sheet.

Last Friday, the jury returned a not guilty verdict for Peter Fitzpatrick (63), former finance director of ILP, following the longest-running criminal law trial in modern history.

The prosecution claimed that the four men were involved in setting up a circular scheme of multi-billion euro transactions where Anglo lent money to ILP and ILP sent the money back, via their assurance firm Irish Life Assurance, to Anglo.

The scheme was designed so that the deposits came from the assurance company and would be treated as customer deposits, which are considered a better measure of a bank's strength than inter-bank loans.

The €7.2bn deposit was later accounted for in Anglo's preliminary results on December 3, 2008, as part of Anglo's customer deposits figure.

The prosecution alleged that the entire objective of the scheme was to mislead anybody reading Anglo's accounts by artificially inflating the customer deposits number from €44bn to €51bn, a difference of 16pc.

However, lawyers for Bowe and McAteer (formerly of Anglo) had argued that their clients believed that the deposits were real deposits and were accounted for correctly on Anglo's balance sheet and so no fraud was carried out.

The jury heard evidence that the two ILP accused insisted that they wanted any deposits to Anglo from ILP to be secured against cash collateral from Anglo. The prosecution argued that there was no commercial substance to the transactions and their only purpose was to deceive.

"They take a vast amount of time and trouble and they amount to one large candy floss whose only conceivable purpose is to bolster up and artificially inflate the Anglo customer deposit," said prosecutor Paul O'Higgins SC.

Lawyers defending Casey and Mr Fitzpatrick argued that their clients had no control over how Anglo would account for the deposits, and had no intention to mislead the public.

The convicted men have been remanded on bail pending sentence until July 25th next.

The role of the Office of the Financial Regulator, formerly led by Patrick Neary, is expected to be raised at the sentence hearings.

This followed a key ruling on day 15 of the 89-day trial by judge Martin Nolan, who ruled that the regulator's involvement was "a matter of mitigation, not defence".

Judge Nolan also ruled that the actions of the regulator and the Central Bank did not constitute "entrapment" as that had to include an intention to prosecute.

Any future appeals are likely to centre on the mens rea (mental intent) of the offence of conspiracy to defraud and the level of dishonesty required to commit the offence.

Judge Nolan is "at large", or will have discretion, to decide upon what sentence to impose on the three men, as conspiracy to defraud is a common law offence that is not on the statute books.

Irish Independent

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