Sunday 22 July 2018

Meeting like an 'ambush', Anglo fraud trial hears

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

Anglo Irish Bank officials who met staff at the Financial Regulator to explain a €7.2bn inter-bank deal done during the financial crisis compared the meeting to an "ambush", a court heard.

An Anglo banker also said this meeting, in the wake of ­former regulator Patrick Neary's resignation, was "tense and robust".

Then-head of financial reporting Kevin Kelly was giving evidence in the trial of ­Anglo's ex-CEO David Drumm at ­Dublin Circuit Criminal Court.

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 (ILP) Denis Casey, and others.

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

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

Mr Kelly was being cross- examined by Bernard Condon SC, defending.

Mr Condon asked Mr Kelly about a meeting at the Financial Regulator's office in January 2009.

Mr Kelly was there with ­Anglo's chief financial officer Matt Moran and they met ­IFSRA officials Con Horan, Donncha Connolly and Bernard Sheridan.

Mr Condon said Mr Kelly had told gardaí in his statement that it was a "tense meeting, very robust". Mr Moran in his statement had "described it along the lines of an ambush", Mr Condon said.

"That was certainly the tone," Mr Kelly replied.

Mr Condon asked Mr Kelly what issues had been under consideration.

Mr Kelly said the regulator was querying the treatment of the ILP transactions. Patrick Neary, who had recently announced his resignation as regulator, was not at the meeting.

On February 11, 2009, ILP issued a press release about the transactions and this had an impact on discussions of disclosure and prompted additional work by Ernst and Young.

There was more disclosure because it was now possible to name the counter parties (ILP and ILA), Mr Condon said. Up to then, issues of confidentiality applied.

"In my experience it would be highly unusual to refer to a client transaction in a financial statement," Mr Kelly said.

He agreed that auditors could not audit every transaction done by a bank as it "wouldn't be possible in the timeline".

They would instead decide what was statistically relevant and look at a sample, he said.

The court heard that, after a board meeting in January, a note was added to Anglo's end- of-year accounts to provide additional disclosure before they were published in February.

In re-examination, Paul O'Higgins SC, prosecuting, asked Mr Kelly if the ILP transaction could be detected in the accounts without that note.

"No, I don't believe so," Mr Kelly said. The trial continues.

Irish Independent

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