ILP broke limits in allegedly circular Anglo transfers, trial hears

Irish Life & Permanent (ILP) broke its own internal limits when it took part in allegedly circular billion-euro transactions with Anglo Irish Bank in September 2008, a trial has heard.

Four former senior bankers from the two banks are accused of conspiring to mislead investors by setting up a €7.2 billion circular transaction scheme to bolster Anglo’s balance sheet in 2008.

Peter Fitzpatrick (63) of Convent Lane, Portmarnock, Dublin, John Bowe (52) from Glasnevin, Dublin, Willie McAteer (65) of Greenrath, Tipperary Town, Co. Tipperary and Denis Casey (56), from Raheny, Dublin have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions between March 1st and September 30th, 2008.

The transactions allegedly involved money being transferred by Anglo to Irish Life & Permanent and then ILP placing money on deposit with Anglo on behalf of Irish Life Assurance.

Look better off

This would result in Anglo having a much greater corporate deposits figure in their end of year accounts, which would allegedly make the bank look better off to the markets than it was.

Gerard Doyle, who was head of group financial risk in ILP in September 2008, told Sinead McGrath BL, prosecuting, that when dealing with each other, banks had "excess credit limits" which limited the amount, or exposure, that they would lend to each other.

He agreed that after the first of the transactions with Anglo went through, he received a “limits exceeded report” for that day which showed the limit for Anglo was €150 million.

He said the total exposure was €1.25 billion and the amount the limit was exceeded by was €1.1 billion.

He said he rang his boss, Hilary Flood, who was chief risk officer, who told the witness that he had received a call from David Gantly who said the excess had been an error and it would be corrected.

Loan maturity

The jury saw an email sent in January 2009 from the accused Mr Fitzpatrick, then ILP’s former director of finance, in which Mr Fitzpatrick asked the witness to check how the transactions were repaid when the loans matured in October.

Mr Doyle replied: “Group Treasury has confirmed that in the case of maturity of each of these six €1 billion amounts no physical payment was made or received by Treasury. Instead the payment and receivable amounts were netted to zero on the instruction of Dealers...”.

At the end of the day's hearing Judge Martin Nolan told the jury that the trial will resume on April 4th, after a two-week break for Easter.

He thanked the jurors for their time and said their attendance has been exemplary. He reminded them not to speak to anybody outside the jury about the case and not to investigate the case on the internet.

He told them: “Don’t worry about forgetting issues. All counsel will remind you of what happened. You’ll be in no doubt about the facts of the case. They’ll inform you plenty”