David Drumm: Ex-Anglo Irish boss guilty of €7.2 billion fraud
A FORMER Anglo Irish Bank chief executive has been found guilty of fraud.
David Drumm (51) faced allegations of conspiracy to defraud and false accounting after denying arranging dishonest or fraudulent multi-billion-euro transfers to boost the failed Irish lender's books in the months before it went bust in 2008.
Bailing out Anglo was to cost taxpayers billions of euro.
The defendant, who wore a dark suit and took notes while he was in the dock, had been charged with conspiring to "dishonestly" create the false and misleading impression that deposits in 2008 were €7.2 billion larger than they were.
He also denied knowingly presenting the false figures to the market in December 2008.
A jury of nine men and three women returned unanimous verdicts on both counts at Dublin Circuit Criminal Court on Wednesday, after deliberating for 10 hours and 32 minutes following a near five-month trial.
Drumm, of Shenick Avenue in Skerries, Co Dublin, sat quietly and did not react as the verdicts were announced.
- David Drumm: Who is he and how did he become head of Anglo Irish Bank?
- Timeline of demise of Anglo Irish Bank
The court has taken a short break while the defence team speaks with Drumm before it is decided when he will be sentenced.
Anglo was nationalised by the then government, a move which cost Irish citizens €29 billion.
Judge O'Connor previously told the court to remember these were "clearly very stressful and difficult times".
The Northern Rock building society in the UK was nationalised in 2008 as the international money markets stopped lending as part of a crisis involving sub-prime mortgages in the US. Investment banks Bear Stearns and Lehman Brothers collapsed.
March 17, 2008 became known as the St Patrick's Day Massacre as the effects of the global financial crisis began to take hold in Ireland and huge amounts were wiped off the value of stocks.
The Irish Government introduced a deposit guarantee scheme that year, then underwrote the entire banking system, the court heard.
Described as the man who "called the shots" at the bank, Drumm was Anglo chief executive from January 2005 until December 2008 when he resigned as the bank was collapsing.
He left Ireland for Boston in 2009 but was brought back to Ireland in March 2016 under an extradition warrant.
The case against him centred on a series of deposits which circulated between Anglo and fellow financial institution Irish Life and Permanent (ILP) in 2008.
Some of the transactions, worth billions, passed between Anglo and ILP and back again within hours, the court heard.
Meetings were held in Drumm's office about funding which had gone into "meltdown" as liquidity ratios (between assets and liabilities) had fallen, the court heard.
On September 29, 2008, Drumm delivered a letter to Ireland's Central Bank about Anglo's liquidity problems and its inability to make payments the following day. He sought 1.4 billion euro in emergency funding.
In the first day of evidence in the trial his lawyers told the court he does not deny the money was moved.
Tessa White, defending, said: "David Drumm accepts all of the factual matters relating to the mechanics of how the September transactions happened and the only issue that he disputes is whether they were fraudulent or dishonest or that there was any dishonesty in their reporting."
In a series of admissions on Drumm's behalf, Ms White detailed a series of transfers between Anglo and IL&P and ILA as the global financial crisis hit hard in 2008.
In March Anglo placed one billion euro with IL&P and ILA deposited 750 million euro in return.
In June that year IL&P moved bonds worth more than three billion euro to Anglo. In return Anglo deposited three billion euro.
In September Anglo moved 7.2 billion euro to IL&P. In return IL&P moved the same amount back to Anglo on behalf of ILA.
All the monies were repaid within weeks of each transaction.
The aims were to increase Anglo's non-bank deposits and to reduce IL&P's reliance on European Central Bank funding.
More transactions had been planned for December but they were never completed.
Ms White told the court: "David Drumm as chief executive officer authorised the March, June, September and December transactions and assumes responsibility for their execution by Anglo."
Paul O'Higgins, Senior Counsel for the state, told the court Drumm had arranged the 7.2 billion euro September transfer, adding: "This was a completely artificial process leading to a dressing up, a more than dressing up, a falsification of Anglo Irish Bank's balance sheet so that its non-bank deposits were 7.2 billion euro bigger than they really were."
Evidence in the trial included taped phone calls from Anglo's treasury department, including calls about the multibillion-euro transfers.
Mr O'Higgins said the money was moved at "lightning speed" and the prime objective was to "dishonestly create the false impression" at Anglo's year end in 2008 that its non-bank deposits were in the 50 billions.