A former Anglo Irish banker said external auditors gave “a clean opinion” on the bank's end-of-year accounts when they were published in December 2008.
Kevin Kelly agreed with lawyers for the bank's former CEO David Drumm (aged 51) that auditors Ernst & Young could have chosen to give “a qualified opinion” regarding the bank's financial health.
“There's a third option they could have gone for when signing off, but they gave a clean opinion. They said the accounts were a true and fair view of the bank's financial position,” he said.
Mr Drumm of 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.
Mr Drumm accepts that multi-million-euro transactions took place between Anglo and Irish Life & Permanent (ILP) in 2008, but disputes that they were fraudulent or dishonest.
Today on day 43 of the trial at Dublin Circuit Criminal Court, Mr Kelly, who was described as “an accountant of some experience”, said an Ernst & Young audit team moved into Anglo headquarters to carry out the audit in November 2008.
“We had shared a lot of information with our auditors prior to them coming on site,” he said.
He agreed with Bernard Condon SC, defending, that the fact Anglo's transactions with Irish Life & Permanent (ILP) were settled gross didn't change “the accounting treatment of it”.
When asked about inaccuracies in the document regarding the description of the transactions, he said it was a surprise when he found out in early 2009 that the deal had “settled net”.
“I was told they were settled gross,” he said.
He said he wasn't sure who had told him this, and added it could have been a misunderstanding “on our side or on someone else's side”.
Previously in the trial, Anglo banker Colm Golden said that the head of Ernst & Young's audit team, Vincent Bergin, shrugged his shoulders and described the transactions with ILP as “technically sound”.
Mr Kelly told Paul O'Higgins SC, prosecuting, that he didn't know about the transactions with ILP until 2009, when two Anglo executives gave him “a broad outline and mentioned the €7bn”.
He said he was told the transaction was settled gross, with no available legal right of set off.
When asked how large the transactions were in the general scheme of things at Anglo, he said they were “quite significant”.
The trial, which began eight weeks ago, continues before Judge Karen O'Connor and a jury of 10 men and four women.