Drumm trial: Money was circulated 'at lightning speed'
Former chief executive of Anglo Irish Bank David Drumm was involved in a conspiracy to dress up and falsify the bank's balance sheet so it looked like deposits from customers were €7.2bn bigger than they were, Dublin Circuit Criminal Court has been told.
Prosecuting counsel Paul O'Higgins has been outlining the prosecution case to the jury.
He said they would hear tapes of Mr Drumm - "the man who called the shots in Anglo'' - authorising the deals at the centre of this case.
Mr Drumm has pleaded not guilty to conspiring to defraud and to false accounting.
He has denied conspiring with the former Chief Executive of Irish Life & Permanent, Denis Casey, Anglo's former financial director, William McAteer, and John Bowe from Anglo's treasury department to create the illusion that deposits from non-banks to Anglo were much greater than they actually were.
He has also denied furnishing false information to the market.
Mr O'Higgins said the prosecution case was that money was circulated "at lightning speed" between Anglo Irish Bank, Irish Life & Permanent and Irish Life Assurance before going back into Anglo.
He said there was no commercial reality to the transactions.
Mr O'Higgins said the four men and others got together and caused these wholly artificial and completely unreal transactions to take place with the intention of deceiving investors, depositors and lenders.
Mr O'Higgins said the State did not have to prove that any particular person had lost money as a result of the conspiracy.
Mr O'Higgins explained to the jurors that deposits from "non-banks" are considered better on the bank's balance sheet than deposits from other banks.
A prime objective of Anglo coming up to its year end in September 2008, was to make sure its balance sheet looked as strong as it could look.
He told the jury that in 2007, banks began to have serious worries about where they were going to get money.
He said Anglo, which dealt mainly with lending for commercial property, found itself particularly under threat.
The jury was told the banking authorities, and the Governor of the Central Bank, wanted Irish banks to help one another with liquidity issues as far as possible.
But Mr O'Higgins said this was the background and could not excuse what happened.
He said contact from the Financial Regulator and whether or not the jury felt people, including the regulator, did not distinguish themselves was irrelevant when it came to deciding the charges faced by Mr Drumm.
He said the bank bailout on 30 September 2008 did not lead to the abandonment of the plans or a change to the figures published in December 2008 and was also irrelevant.
Mr O'Higgins said there was nothing illegal in itself about moving money around between banks. But he said the only purpose of these transactions was that when the bank published its financial results, it would suggest to the public that customer deposits were greater than they really were.
He said when Mr Drumm put forward the bank's accounts in December 2008, he knew the figures were not true.
He said the only logic of the transactions was to deceive people looking at the end-of-year figures.
Mr O'Higgins said Mr Drumm was the person who "called the shots" in Anglo. He said he was the moving spirit behind the bank's treasury department and he started a series of meetings to try to come up with funding initiatives for the bank.
These initiatives eventually came to nothing and the only plan left was the plan at the centre of this case.
He said Mr Drumm was central to authorising the transactions and they would hear tapes of him doing this.
He said the jurors might ask why would you not do what Mr Drumm is alleged to have done, in such dire circumstances, but he said banks must operate "by the law".
Lawyers for Mr Drumm made a number of admissions on his behalf.
The jury was told that Mr Drumm authorised the transactions at the centre of this case, as well as other transactions between Anglo and Irish Life & Permanent in March, June and December 2008.
His barrister, Tessa White, said Mr Drumm assumed responsibility for the execution of the transactions by Anglo.
She said he accepted all of the factual matters relating to the mechanics of how the transactions at issue in this case happened.
The jury was told the only issue he disputes is whether they were fraudulent or dishonest or that there was any dishonesty in their reporting.
In another admission, Mr Drumm's lawyers said from late 2007, Irish banks including Anglo came under sustained funding and liquidity pressure due to a worsening global financial crisis.
On 16 March 2008, Mr Drumm as CEO of Anglo, disclosed to others in the bank, that the Governor of the Central Bank had raised the issue as to "how the Irish banks could help each other".
This had encouraged Irish banks to provide mutual support to each other in response to the financial crisis. Mr Drumm directed Anglo should give consideration to this initiative.
Mr Drumm also made a number of other admissions relating to Anglo Irish Bank, Irish Life & Permanent and transactions between the two institutions in March, June and December 2008.
Judge Karen O'Connor said these were significant factual concessions. The jurors were told the trial was likely to be shorter as a result. They had been told the case could take up to five months.
Earlier, Judge O'Connor told the jury of ten men and five women to decide the case only on what they heard in the court room.