During the trial of four former executives of Anglo Irish Bank and Irish Life and Permanent for conspiracy to defraud, Judge Martin Nolan made a ruling about the admissibility of evidence relating to the Central Bank and the financial regulator.
The prosecution wanted matters relating to the regulator and the Central Bank excluded from the jury, saying they were irrelevant.
During the legal argument on this issue, Denis Casey, the former chief executive of Irish Life and Permanent, gave evidence.
Judge Nolan said if pushed he would believe his evidence.
Casey said he had been brought in by the authorities in early 2008 and told IL&P’s borrowings were too high.
He said the “green jersey agenda” was mentioned at around this time - this was how Irish banks could help each other in their hour of need while liquidity was drying up around the world.
During his ruling Judge Nolan said it was inconceivable the authorities did not know the banks were engaged in “balance sheet management”.
He said the regulator, Patrick Neary, and the then governor of the Central Bank, John Hurley, were “hands on”.
He said they put in Casey’s mind the issue of the green jersey agenda and Casey acted on that.
He said he thought the regulator condoned optics-based balance sheet management.
He said the authorities were frightened about what they had seen in the UK and did not want Irish banks to go down.
But he found, reluctantly, there was no defence of entrapment open to the accused.
He said entrapment cases usually involved drug dealers and undercover gardaí carrying out transactions where the sole purpose or intention was to prosecute criminals.
He said that was the only form of entrapment defence recognised by Irish law.
In this case there was no intention to prosecute until a look back exercise was undertaken some time later.
He found the financial regulator’s involvement would seep out during the trial and it was best to face it from the start and deal with it.
So he ruled the regulator could be mentioned in the trial.
But he said his firm conclusion was that the involvement of the regulator could amount to mitigation but not to a defence.
He told the jurors that the regulator could not condone criminal behaviour and could not give a defence to any party.