Money was moved at 'lightning speed' in alleged €7.2bn fraud as Anglo chief 'called the shots'
Former Anglo Irish Bank chief executive David Drumm was "the man who called the shots" at the bank and was central to a €7.2bn conspiracy to defraud, his trial has heard.
Mr Drumm was responsible for authorising a series of "lightning speed" circular transactions that were used to make the troubled bank's balance sheet seem healthier than it was to deceive the public, it was claimed.
Lead prosecutor Paul O'Higgins SC compared the alleged scheme to a "balloon" that Anglo blew up, and added "you can't cheat people to keep yourself afloat".
Mr O'Higgins was delivering his opening speech to the jury in the trial of Mr Drumm (51), who is accused of taking part in an alleged conspiracy to defraud.
Mr Drumm is charged with conspiring to defraud Anglo investors in 2008 by dishonestly creating the impression the bank's deposits that year were €7.2bn larger than they really were.
He is alleged to have conspired with former Anglo officials William McAteer and John Bowe, as well as Irish Life and Permanent's then chief executive Denis Casey and others.
Mr Drumm is also charged with false accounting, by providing misleading information to the market on December 3, 2008. The accused, of Skerries, Co Dublin, has pleaded not guilty to both charges.
Mr O'Higgins said it was a "prime objective" of Anglo coming up to the end of its financial year on September 30, 2008, to make sure its balance sheets looked as strong as they possibly could.
Customer deposits were considered better than inter-bank deposits in the evaluation of the strength of a bank.
It was alleged that in conjunction with Irish Life and Permanent (ILP), Anglo organised a scheme in which money was circulated "with lightning speed" between the two banks through Irish Life Assurance (ILA), a company owned by the ILP group.
"This was a completely artificial process that led to a dressing up - and more than a dressing up, a fabrication - of Anglo's balance sheets," Mr O'Higgins said.
Mr Drumm, Mr McAteer, Mr Bowe, and Mr Casey "got together to cause this wholly artificial, completely commercially unreal transaction," Mr O'Higgins added.
Its only objective, he argued, was to deceive investors, depositors and lenders.
Mr O'Higgins outlined the "tough times" for banking in 2007 and 2008. Anglo was not a retail bank and dealt mainly with commercial and property lending, so found itself in a sector under particular threat during the financial crisis.
Irish banking authorities wanted banks to help each other through crises of liquidity.
The jury would hear, Mr O'Higgins said, that Mr Drumm instigated funding initiative meetings, but one by one they fell away and "they were reduced to the initiative you have here".
There was noting illegal, in itself, about moving money around - but the only purpose of these transactions was so that when the bank published its financial results, it would suggest customer deposits were greater than they really were, Mr O'Higgins said.
The jury would hear phone recordings of Mr Drumm authorising transactions.
A series of 11 admissions was then read out on Mr Drumm's behalf by Tessa White BL, defending. He accepted responsibility for authorising transactions in 2008 but denied fraud or dishonesty.
He said the purpose was to reduce ILP's reliance on European Central Bank funding and increase Anglo's non-bank deposits.
The trial continues.