The former chairman of Anglo Irish Bank has told a jury that he did not know the detail of the transactions with Irish Life and Permanent "because when I found out it was a shock to me."
Donal O'Connor, who succeeded Sean Fitzpatrick as chairman at the bank, said that he knew of a large deposit from ILP but was not aware of what he termed "the round the houses issue" until three months after the transaction.
He told Mary Rose Gearty SC, prosecuting, that the mention of a figure of €7.2 billion at a November 2008 meeting piqued his concern, but said he was assured by the director of finance that this was normal balance sheet management.
David Drumm, 51, 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 €7.2bn larger than they were.
The former Anglo Irish Bank CEO has also pleaded not guilty to false accounting on 3 December, 2008, by furnishing information to the market that Anglo's 2008 deposits were €7.2bn larger than they were.
Mr Drumm accepts that multi-million euro transactions took place in between Anglo and ILP in 2008 but disputes that they were fraudulent or dishonest.
Today Mr O'Connor told Ms Gearty that he dialled into an audit committee meeting on 18 November, 2008 as he was in Australia.
He told Dublin Circuit Criminal Court that he didn't have the requisite papers for the meeting.
The jury previously heard evidence that the documents were emailed by an employee at Anglo to Mr O'Connor's administrative assistant who was with him in Australia.
Mr O'Connor told Ms Gearty that towards the end of the lengthy meeting there was a reference made to ILP.
"I interrupted, butted in, and asked is that window dressing?' he said.
Mr O'Connor said Willie McAteer, former director of finance at Anglo, replied that it was "normal balance sheet management".
The witness told the jury he got the impression that the ILP transaction had been cleared and that there was no issue with it.
He said that he understood "window dressing" to refer to transactions which are legal but allow an organisation to disclose information in a way that is usually flattering.
Mr O'Connor told the jury that "everyone in Anglo" had believed the Financial Regulator and the external auditors, Ernst & Young, were aware of the ILP transaction.
He said in February 2009 Matt Moran, former Anglo Chief Financial Officer, challenged him about when he became aware of the ILP issue, asserting that Mr O'Connor had known since the November meeting.
"I was very, very upset that my credibility was questioned," he told the jury.
"Being the person that I am, I gathered all the information I could and wrote down my recollection of that meeting," he said.
During cross examination he told Brendan Grehan SC that at a board meeting on 13 January, 2009 there was great concern and alarm when the full details of the ILP transaction was discussed.
"We were all really concerned that we needed to make a disclosure about this," he said.
Mr O'Connor told the jury that employees of the Financial Regulator were "very exercised and excited" when he discussed the issue with them at a meeting the following day. He said Anglo were taken aback by the regulator's reaction.
When asked if he had a tense relationship with former Anglo company secretary, Natasha Mercer, he denied this and said it was a constructive one, and he really admired her.
In relation to evidence heard earlier in the trial, that he told Ms Mercer to "shut up" during the preparation of the minutes for the November meeting he denied this had happened.
He told the jury that anyone that knows him knows "he has never used a phrase like that in his life".
The witness agreed that of the three non executive directors at the meeting, he had the most auditing experience and was a member of the board of the Irish Auditing and Accounting Supervisory Authority.
Mr Grehan put it to him that perhaps he "simply missed" the mention of the ILP transaction at the 18 November meeting.
"In absolute terms you are right, but that's misleading because I raised a query, got an answer and it gave me comfort," he said.
The trial, which is now in its ninth week, continues before Judge Karen O'Connor and a jury of ten men and four women.