Anglo directors ‘knew’ of €7bn plan

Anglo Irish Bank went to the Central Bank for €1bn in emergency funding at the same time the bankers were allegedly processing €7.2bn in a conspiracy to mislead investors, a court has heard.

Four senior bankers, including former Irish Life and Permanent (ILP) CEO Denis Casey and Anglo’s former group finance director Willie McAteer, are accused of conspiring to mislead investors by using interbank loans to make Anglo appear €7.2bn more valuable.

Mr McAteer, aged 65, of Greenrath, Tipperary Town, Co Tipperary and Mr Casey, aged 56, from Raheny, Dublin, ILP’s then group finance director Peter Fitzpatrick, aged 63, of Malahide, Dublin, and John Bowe, aged 52, from Glasnevin in Dublin, who had been Anglo’s head of capital markets have all pleaded not guilty at Dublin Circuit Criminal Court to the four charges. The charges allege that between March 1 and September 30, 2008, they conspired together and with others to mislead investors, by engaging in transactions between Anglo, ILP, and Irish Life Assurance to make Anglo appear €7.2bn more valuable than it was.

On day two of the trial, Anglo’s former head of treasury Matt Cullen told prosecuting counsel Una Ni Raifeartaigh SC that the executive directors of the bank were aware of the purpose of the transactions and he assumed the board was also aware. He also testified that ILP agreed to complete the transactions on September 30, 2008 after the government banking guarantee had been put in place.

Judge Martin Nolan sent the jury home until Monday at the earliest after a legal issue arose.

Mr Cullen testified that 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 interbank loans from the point of view of the markets as they were considered “stickier” or more long term, the trial has heard.

Mr Cullen said 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. He said he didn’t think the transactions created liquidity for the bank as they were short term and didn’t consider that they would have “any commercial purpose apart from being in the account, which might directly influence the markets”.

He said the executive directors were aware of the purpose. He believed it was to be discussed at the board meeting on September 30. The witness said the funding initiative was discussed at the weekly Friday meetings which were attended by Mr McAteer and Mr Bowe that summer.


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