Tuesday 18 December 2018

'The walls have ears' - Drumm jury hears call over €750m loan

Former Anglo Irish Bank chief executive David Drumm arrives at Dublin Circuit Criminal Court. Photo: Collins Courts
Former Anglo Irish Bank chief executive David Drumm arrives at Dublin Circuit Criminal Court. Photo: Collins Courts

A banker warned the "walls have ears" as Anglo Irish Bank and Irish Life and Permanent executives talked about arranging a €750m inter-bank loan during the 2008 financial crisis.

Dublin Circuit Criminal Court heard that one banker said they had to keep the transaction as "tight as a duck's arse" because of fears of what would happen if it got out to the market.

As the amounts to be transferred between the two banks increased to €6bn, another executive said "you might as well be hung for a sheep as a lamb".

Phone calls between the bankers were played back to the jury in the trial of Anglo's former chief executive David Drumm (51).

Mr Drumm has pleaded not guilty to conspiring to defraud Anglo investors in 2008 by dishonestly creating the impression the bank's deposits were €7.2bn larger than they were.

Transactions

He is alleged to have conspired with former Anglo officials Willie McAteer and John Bowe, as well as the then chief executive of Irish Life and Permanent (ILP), Denis Casey, and others. Mr Drumm also denies false accounting.

The case centres on a series of circular billion-euro interbank transactions between Anglo and ILP, routed through ILP-owned Irish Life Assurance (ILA).

Mr Drumm admits he authorised the transactions but denies there was anything dishonest or fraudulent. He was not involved in any of the phone calls played back to the jury yesterday.

Anglo's former treasury director Matt Cullen explained what was taking place in the conversations.

The first call, on March 25, 2008, was between Anglo executives including Peter Fitzgerald, Mr Bowe, Mr Cullen and Ciaran McArdle. A proposed transaction of €500m with ILP was discussed.

Another conversation, on March 27, was between Mr McArdle, Paul Flynn from Bank of Ireland (BOI), another man from BOI and Mr Cullen.

"We want to put out there from everybody's point of view to show the best picture that we have," Mr Cullen said to Mr Flynn.

Also on March 27, there was a conversation between Mr Bowe, ILP's then treasury director David Gantly and Mr Cullen.

Mr Gantly said: "You put the stuff into us and we put it straight back through the other boys."

After laughter is heard, he added: "I'm purposely not using names here. The walls have ears in this climate."

Paul O'Higgins SC, prosecuting, asked Mr Cullen about the concern for using names.

"If someone had heard him discussing what was discussed … he was afraid it would get out to the market," he replied.

In a March 28 call between Mr McArdle and Mr Gantly, Mr Gantly said they were "approved to do" and "things have to be kept, just absolutely sat on".

Mr Gantly said he didn't know whether there needed to be different payments "just to make sure it doesn't look very obvious".

Hung

Mr Cullen told the court he understood this to mean "one big amount" of €750m going from ILA to Anglo when the biggest payment before was €57m. "Obviously there would be questions," he said.

Another call was between Mr Bowe and Mr Cullen on September 16, 2008. Mr Cullen said he spoke to Dave (Gantly) and €5bn was "not going to be a problem for them".

Mr Cullen said: "You might as well be hung for a sheep as a lamb, you know," adding that those were "David's exact words".

Mr Cullen also told the jury there was a meeting in which Mr Drumm was asked if the Financial Regulator was aware of the proposed transaction.

The trial continues.

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