Wednesday 21 November 2018

Jury shown 'real-time' records of allegedly fraudulent multi-billion euro deals carried out between Anglo and ILP during 2008 financial crisis

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Andrew Phelan

Andrew Phelan

A jury has been shown "real-time" Central Bank records of allegedly fraudulent multi-billion euro deals carried out between Anglo Irish Bank and Irish Life and Permanent during the 2008 global financial crisis.

The statements, recorded at the time of the transfers that September, showed Anglo’s balance going from black to red and back again several times as cash went out of and into its account.

They were seen by the jurors in the trial of Anglo’s former CEO, David Drumm, which resumed evidence this afternoon after several days of proceedings in the absence of the jury.

Mr Drumm (51) is pleading not guilty to conspiring to defraud by dishonestly creating the impression that Anglo's customer deposits were €7.2bn larger than they were in September 2008.

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

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

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.

Giving evidence today was former Central Bank senior executive officer, Pamela Lennon.

She told Mary Rose Gearty SC, prosecuting, she was now retired but had been head of the Central Bank’s section dealing with Target 2 - an electronic web-based system for recording transactions, which she managed and monitored. It provided real time gross settlements for payments.

The service was provided by the central banks of Germany, Italy and France for the benefit of everyone in the euro system.

The jury heard at the end of each day, all information was transferred to a data warehouse in France but also retained on the Customer Related Services System (CRSS.)

Ms Lennon explained that intra-day credit was available to banks that had eligible assets, or collateral, with the Central Bank.

She agreed with Ms Gearty this was like an “overdraft facility.”

The jury was shown a series of statements retrieved from the CRSS for September 29 and 30, 2008. Anglo and ILP were participating banks and transactions were recorded in real time each day.

The jury was shown the entry on each statement in which tranches of €1bn went from Anglo’s account to ILP’s, and vice versa. The corresponding balances moved from black to red and back as this happened.

Ms Lennon explained that the red balances meant the bank was going into its intra day credit. Each transaction had a time stamp that was accurate to the millisecond because of the huge number of transactions happening each day.

Anglo’s opening balance on September 29 was over €538m, and its closing balance was over €147m. This was its opening balance on September 30 and its closing balance that day was over €1.7bn.

The jury was also shown statements for ILP showing money entering and leaving its account.

In cross-examination Tessa White BL, defending, said the Central Bank's overall role was to facilitate the movement of monies.

"You could say that," Ms Lennon said, before explaining that Target recorded transactions in real time as they settled.

It showed funds moving from one account to another and the transactions were "final."

The jury also heard brief evidence from another Central Bank official, Michael Lee.

The trial continues before a jury and Judge Karen O'Connor.

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