Lawyers appeal for leniency as sentencing hearing of former Anglo chief David Drumm begins

Former Anglo Irish bank CEO David Drumm who was convicted this month of taking part in a multi-billion euro fraud scheme in 2008 may be sentenced this afternoon after a hearing began this morning.

Lawyers appeal for leniency as sentencing hearing of former Anglo chief David Drumm begins

By Sarah-Jane Murphy and Declan Brennan

Former Anglo Irish bank CEO David Drumm who was convicted this month of taking part in a multi-billion euro fraud scheme in 2008 may be sentenced this afternoon after a hearing began this morning.

An 87-day trial ended earlier this month when a jury at Dublin Circuit Criminal Court returned unanimous verdicts of guilty on two charges of false accounting and conspiracy to defraud.

It was the State's case that Drumm (51) had conspired with Irish Life & Permanent's former CEO, Denis Casey, Anglo's former financial director Willie McAteer and former Head of Treasury at Anglo, John Bowe and others, to carry out €7.2bn in fraudulent circular transactions in order to bolster the customer deposits figure on Anglo's balance sheet.

The State also alleged that this €7.2bn was falsely accounted for as part of the bank's customer deposits in preliminary accounts published on December 3, 2008, therefore misleading the market as to Anglo's true strength.

This morning, Detective Sergeant Michael McKenna gave evidence of the billion euro transactions which the State say were fraudulent and designed only to bolster the bank's balance sheet in September 2009.

After hearing the prosecution evidence and defence submissions, Judge Karen O'Connor has adjourned the case to the afternoon. She said she will endeavour to bring matters to a conclusion then.

Drumm, who was granted bail after his conviction, was present in court for the hearing this morning, dressed in a navy suit and an open-collared blue shirt.

The former banking executive has an address in Skerries, Dublin but lived in Wellesley, Massachusetts, US for a number of years including after the collapse of Anglo.

He was subject to lengthy extradition proceedings and was held in custody for five months in a US Federal Penitentiary before he ultimately consented to his extradition in March 2016.

Bowe (54) from Glasnevin, Dublin, McAteer (67) of Greenrath, Tipperary Town, Co Tipperary and Casey (58) from Raheny, Dublin were convicted in June 2016 on the conspiracy to defraud charges.

Judge Martin Nolan jailed Casey for two years and nine months after telling him that Anglo were the authors of the scheme but that he had behaved disgracefully and reprehensibly in co-operating with it. He jailed McAteer for three and a half years and imposed a two-year prison sentence on Bowe.

The maximum sentence for the conspiracy to defraud charge is unlimited. The maximum sentence for the false accounting charge is ten years.

During the 16-week trial, the state called 49 witnesses to give evidence regarding the transactions whereby Anglo lent money to Irish Life & Permanent (ILP) and ILP sent the money back, via their assurance firm Irish life Assurance, to Anglo.

The scheme, described by the prosecution as “a massive con”, was accounted for so that deposits came from the assurance company and were treated as customer deposits, which are a better measure of a bank's strength than interbank loans.

The prosecution argued that the objective of the conspiracy, in which the money moved “at lightning speed”, was to mislead anybody reading Anglo's accounts by artificially inflating the customer deposits number from €44bn to €51bn.

An expert witness for the State, Dan Taylor of BDO accountants, testified that there was “no commercial substance” to the transactions, and described them as misleading and inaccurate.

Lawyers for Drumm made a series of admissions on his behalf on the opening day of his trial, accepting the transactions as alleged took place, but disputing that they were fraudulent or dishonest.

The prosecution said these “so-called admissions” were self-serving and not based on the facts of the case. The defence called no witnesses during the trial.

Counsel for Drumm said he never set out to commit any kind of fraud, and “togged out for Ireland” when the Central Bank came to him during the international financial crisis and asked Irish banks to help each other out.

Drumm's barristers said he did his best in good faith, in the unrivalled circumstances which arose during the recession.

But the State said it was no defence that the financial market was under pressure and that Anglo was going down the tubes anyway at the time of the transactions.

“This does not exonerate those who acted to try to keep the bank limping on for another few days,” Mary Rose Gearty SC, prosecuting, told the jury.

She told the jurors that a recorded phone-call played in court between Drumm and his co-conspirators during which they discussed the “money going around in a circle” was clear, reliable and contemporaneous evidence that the men were discussing a criminal conspiracy.

Counsel for the State said it was such a monumentally fraudulent scheme that it was hard to understand why it had not been called out by people in the bank.

The prosecution argued that there was no evidence that the Central Bank or the Financial Regulator knew of the transactions before they happened and said even if they did, this was totally irrelevant to this trial.

Drumm, of Skerries, Co Dublin, had 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 had 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.

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