Thursday 21 November 2019

Irish Life dealer tells court size of £978m sterling trade in 2008 was 'very unusual'

Former CEO of Anglo Irish Bank, David Drumm pictured outside the Dublin Circuit Criminal Court. Photo: Collins Courts
Former CEO of Anglo Irish Bank, David Drumm pictured outside the Dublin Circuit Criminal Court. Photo: Collins Courts
Andrew Phelan

Andrew Phelan

AN IRISH Life dealer has said the size of a £978m sterling trade with Anglo Irish Bank during the 2008 financial crisis was “very unusual.”

Seamus Magner, then-head of trading at Irish Life Investment Managers, told a jury he was called in to an “impromptu meeting” hours before the transactions were carried out and told of the details.

Mr Magner was giving evidence in the fraud trial of Anglo’s ex CEO, David Drumm.

Mr Drumm (51) is pleading not guilty to conspiring to defraud Anglo investors by dishonestly creating the impression that the bank’s customer deposits were €7.2bn larger than they were.

He is alleged to have conspired with Anglo’s former Finance Director Willie McAteer and head of Capital Markets John Bowe, as well as then-CEO of Irish Life and Permanent, Denis Casey, and others.

The case centres on a series of interbank deposits which circulated between Anglo and ILP in September 2008.

The transfers were routed through Irish Life Assurance (ILA), returning to Anglo where they were then treated as customer deposits, which are a better indicator of a bank’s health.

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

At Dublin Circuit Criminal Court, Mr Magner told Sinead McGrath BL, prosecuting, that he managed the centralised dealing desk at ILIM, which was the investment arm of ILA.

He worked alongside Head of Business Risk Management Ger Knowles and under Chief Investment Officer Colm O’Neill. Working under Mr Magner was Treasury Manager Jacinta Gaffney.

Mr Magner said his involvement in the September 2008 deal with Anglo related to the sterling transactions only, on Friday September 26.

That morning, he was not aware the transaction was going to take place as Ms Gaffney was off work and there "hadn't been a handover."

At 7.10am, he was called to an impromptu meeting where he was told the details of the transaction.

Mr Magner became aware that there would be transactions in “three separate tranches” of STG £250m, £253m and £475m. It was discussed at the meeting how the procedure was going to work.

Ms McGrath asked Mr Magner if this had been normal practice or if it was a one-off meeting.

Mr Magner said it was a one-off.

The sizes of the transactions were “very unusual for us” for sterling as "we wouldn’t have a sterling book of that magnitude," Mr Magner said.

The court heard there was a 100m counter party limit at the company for transactions with Anglo. Mr Magner was aware at the meeting that the transactions would exceed the counter party limits.

The jury was then shown a group email from that day with the subject “new Anglo limit” sent from Gearoid McManus of the business risk team to the treasury, data, dealing and compliance teams.

Two mails that day from Ger Knowles stated that for the purposes of transactions with Anglo “over the next month”, Permanent TSB would be acting as agent for ILA in respect of receipt of monies from Anglo and payment of monies to ILA.

The jury heard ILIM conducted its banking business as Permanent TSB.

The mails were sent to Paul Kane and Michael Casey, and copied to others including Mr Magner. Ms Knowles set out the procedure, stating that Mr Kane would confirm receipt of monies on behalf of ILA and Mr Magner would place the deal with Anglo and book it on behalf of ILA.

She stated that two of the following people would authorise and instruct Permanent TSB to release the funds - herself, Gerry Keenan and Colm O’Neill. Mr Kane would release the payment to Anglo.

Mr Magner agreed with Ms McGrath that in the course of the day, he received confirmation from that money had come in from Anglo.

He had been aware there were going to be subsequent transactions but not of the amount.

The trial continues.

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