A former Anglo director has told the trial of four senior bankers accused of conspiring to mislead investors that he was acting under the direction of his former CEO David Drumm when he approached Irish Life about an interbank loan of €7bn.
The four men, including former Irish Life and Permanent (ILP) CEO Denis Casey and Anglo Irish Bank's former Head of Finance Willie McAteer, are accused of conspiring to mislead investors by using interbank loans to make Anglo appear €7.2 billion more valuable than it was.
Mr McAteer (65) of Greenrath, Tipperary Town, Co. Tipperary and Mr Casey (56), from Raheny, Dublin are on trial alongside Peter Fitzpatrick (63), from Malahide, Dublin, who had been ILP's former director of finance and John Bowe (52), from Glasnevin in Dublin, who had been Anglo's head of capital markets .
They have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions to make the bank appear €7.2 billion more valuable than it was between March 1st and September 30th, 2008.
The trial resumed in evidence before the jury on Tuesday after six days of legal argument when Diarmaid McGuinness SC, defending Mr Bowe, continued his cross-examination of Matt Cullen, the former director of treasury at Anglo.
Mr Cullen said that during a meeting with David Drumm, the then CEO of Anglo, Mr Drumm asked him if he would approach ILP “to ask Irish Life for six or seven billion for us in September”.
He said he was sitting beside Mr Drumm and he was specifically asked to approach David Gantley, his counterpart at ILP. Asked if he was "acting under Mr Drumm's direction" the witness replied "absolutely".
Mr Cullen previously testified that the scheme to raise “six or seven billion” in corporate deposits involved money being transferred by Anglo to ILP. It would then be put back on deposit by Irish Life Assurance (ILA), the non-banking entity owned and managed by ILP, so it would appear in Anglo’s accounts as a corporate deposit.
He said the money had to come from ILA so that it would show up as a corporate deposit as opposed to an interbank loan. Non-banking deposits, from the likes of life assurance and pension funds, have a greater value than inter-bank loans from the point of view of the markets as they were considered “stickier” or more long term, the trial has heard.
The corporate deposits figure was for publishing in the bank’s full year accounts, when the money would be seen as deposits coming in from ILA.
Mr Cullen also gave evidence about a similar “back to back” transaction between Anglo and ILP which took place in the run up to Anglo’s half year accounts on March 30th.
He said he had not been given instructions to conceal the deposits of €750mn and €1bn from either within Anglo or from the financial regulator. He agreed that the transactions were real transactions.
He said he didn’t think there was anything improper about Anglo placing the money with ILP or with them taking the deposits.
Counsel asked him about the practice of “trying to fine tune” a balance year for the year end account, asking: “Is there anything wrong in your view of the bank trying to look it’s best on the day”?
Mr Cullen replied: “I assume not”. Counsel compared it to Mr Cullen asking his wife and children to go out looking their best on an important day, to which Mr Cullen replied: “I want to go home tonight”.
The trial continues before Judge Martin Nolan.