Jury told David Drumm was ‘man who called the shots’ as banking trial begins

A jury at Dublin Circuit Criminal Court was today told that Mr Drumm, the former chief executive of Anglo Irish Bank, allegedly authorised deals which lead to the falsification of the bank’s balance sheet.

Mr Drumm (51), with an address in Skerries, Co Dublin, has pleaded not guilty to conspiring with former bank officials Denis Casey, William McAteer, John Bowe and others to defraud depositors and investors at Anglo by “dishonestly” creating the impression that deposits in 2008 were €7.2 billion larger than they were.

He has also pleaded not guilty to false accounting on December 3, 2008, by furnishing information to the market that Anglo's 2008 deposits were €7.2 billion larger than they were.

Tessa White BL, defending, told Judge Karen O'Conor that Mr Drumm accepted all factual matters as set out by the prosecution, relating to the transactions that took place in September 2008.

However, she said, Mr Drumm disputes whether they were fraudulent or dishonest, or that there was any dishonesty in their reporting.

Ms White provided the jury with a detailed typed handout, setting out the parameters of a series of transactions, which will be discussed in evidence over the course of the trial.

She said Mr Drumm admits that on March 16, 2008, he disclosed to others in Anglo that the Govenor of the Central Bank raised an issue described as “How the Irish banks could help each other”.

This initiative, Ms White told the jury, essentially encouraged Irish banks to provide mutual support to each other in response to the global financial and liquidity crisis.

“David Drumm directed that Anglo give consideration to this initiative,” she said.

The first series of transactions outlined to the court in the course of Mr Drumm's admissions were referred to as the “March Transactions”.

Ms White said that on or about March 31, 2008, the date of Anglo's half-year end, Anglo placed €1 billion with Irish Life & Permanent.

Irish Life Assurance plc then deposited €750 million with Anglo.

Shortly after March 31, Irish Life & Permanent repaid the €1 billion and Anglo repaid the €750M to Irish Life Assurance. The court heard that the purpose was to increase Anglo’s non-bank deposits by €750m over its half-year end reporting period.

The court was then told of the “June Transactions” which took place on or about June 30, 2008, which was Irish Life & Permanent's half-year end.

At this time Irish Life & Permanent transferred bonds in excess of €3 billion to Anglo, Ms White told the jury.

Anglo then placed €3 billion with Irish Life & Permanent. Shortly after June 30, Irish Life & Permanent repaid the €3 billion to Anglo, which then returned the bonds to them.

Ms White said the purpose of these transactions was to reduce Irish Life & Permanent's reliance on ECB funding over its half-year end reporting period.

The court then heard of the set of transactions which form the subject matter of this trial, known as the “September Transactions”.

In the period coming up to September 20, 2008, Ms White said, Anglo placed approximately €7.2 billion with Irish Life & Permanent via a series of short term transactions.

In return, Irish Life & Permanent, on behalf of Irish Life Assurance, deposited approximately €7.2 billion in a similar manner with Anglo.

“The purpose of these transactions was to increase Anglo's non-bank deposits by €7.2 billion over its year end reporting date of September 20, 2008,” Ms White said.

Prosecution counsel had told the jury earlier that there was nothing illegal in itself about moving money around between banks.

The final transactions referenced by Ms White are known as the “December Transactions”.

Between September 30, 2008 and December 19, 2008, Irish Life & Permanent and Anglo agreed to enter into a transaction similar to the June Transactions.

The intention, Ms White said, was that this transaction would be reversed shortly after December 31, 2008.

“While the process had commenced, the transactions were never completed, and the parts which were completed were reversed prior to December 31, 2008,” she said.

Ms White concluded her submission by saying that Mr Drumm, as CEO of Anglo, authorised the March, June, September and December transactions, and assumes responsibility for their execution by Anglo.

Today at the opening of the trial, prosecutors described Mr Drumm (51) as “the man who called the shots” at Anglo Irish Bank.

They said the deals he authorised also made it appear deposits from customers were €7.2bn greater than they were in reality.

The court heard that Mr Drumm was involved in a conspiracy with others to dress up and falsify the bank's balance sheet during “very rocky” times for the banking world in 2008.

The trial continues before Judge Karen O'Connor and a jury of ten men and five women on Monday.