Tremors were starting to reverberate around the financial world, witness tells David Drumm trial

By Sarah-Jane Murphy

A witness has told the trial of former Anglo executive David Drumm that he realised there was trouble ahead after receiving a phone call from a colleague to say that the interbank market was “drying up”.

Matt Cullen, former head of Treasury at Anglo Irish Bank, agreed with Paul O'Higgins SC, prosecuting, that tremors were starting to reverberate around the financial world at this time.

At the opening of his trial at Dublin Circuit Criminal Court last week, the jury heard that Mr Drumm (51), the former chief executive of Anglo Irish Bank, allegedly authorised deals which lead to the falsification of the bank’s balance sheet.

David Drumm arriving at an earlier sitting of court

Mr Drumm (51), with an address in Skerries, Co Dublin, has pleaded not (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.

This morning Mr Cullen said the interbank market was typically the one which would first indicate trouble.

He said that following a meeting in 2007 with the Governor of the Central Bank and representatives from the Financial Regulator, David Drumm set up a group in Anglo to look at ways of raising funding by way of incentives.

“John Bowe had responsibility for this group. I assume its setting up was as a response to the conversation that had been had at the Central Bank meeting,” Mr Cullen said.

Mr Cullen said that on Sunday March 16, 2008, he received an email from David Drumm, asking him to come to work the following day, St Patrick's Day, for an executive directors' meeting.

He said in the email, Mr Drumm asked his colleagues to put some thought into what the Governor of the Central Bank had said regarding how Irish banks could help each other.

Mr Cullen said the email asked him to consider what banks Anglo should speak to and how things might be structured.

He said Mr Drumm suggested that the various banks list their placings and takings and pool them into a 12-month facility, which would be shared by all financial institutions.

“He asked if this would work, or if there was a better way. He said he wanted to get into dialogue with the other banks as soon as possible,” Mr Cullen said.

Mr O'Higgins asked the witness what other global financial events were taking place around this time.

Mr Cullen said that there were “all types of rumours” regarding what was going on in various international markets.

He agreed with Mr O'Higgins that these conditions impacted on a bank's capacity to attract funds.

Last Friday, Mr. Drumm's defence barrister, Tessa White BL, told his trial that there were facts he wished to admit to which would reduce both the length of the trial and the complexity of the evidence.

Tessa White BL, defending, told Judge Karen O'Connor 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.

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

KEYWORDS: Court, David Drumm, Anglo


Most Read in Ireland