Lengthy Anglo Irish Bank trial shows white-collar crime complexity

The marathon criminal trial involving a conspiracy to mislead investors and the public as to the financial health of Anglo Irish Bank in 2008 has illustrated the complexity involved in prosecuting certain white-collar crimes.

The trial began in January, involved four separate accused, heard evidence and the judge’s charge over 75 days, and saw the jury deliberate over its verdicts for an unprecedented 14 days, or 61 hours and 46 minutes.

However, the trial is just the end of a process that began in early 2009, when news of transactions totalling €7.2 billion emerged that, it was suspected, were designed solely to bolster the books of Anglo Irish Bank as it neared its September 30th, 2008, financial year end.

The transactions involved money going from Anglo to Irish Life & Permanent (ILP), only to be deposited back with Anglo by ILP’s life assurance division.

Officers from the Garda Bureau of Fraud Investigation (GBFI) began to investigate. A core group of 16 officers began a process that involved interviewing the bankers and others involved, not just in the two institutions concerned but also across the range of bodies involved in financial regulation and producing the ILP and Anglo accounts.

An interesting aspect of the investigations that featured in the trial was how telephone calls in the treasury departments of financial institutions are recorded, because verbal deals are part and parcel of the work done, and the recordings can act as proof of what was agreed. Calls made during 2008 that had to do with the Anglo/ILP transactions were mixed in with this treasury work , and helped the GBFI put its case together.

John Bowe, head of capital markets at Anglo at the time, began as a witness in the GBFI investigation, but became a suspect as the inquiry gathered pace. (This was also true of Denis Casey and Peter Fitzpatrick, of ILP, but not of Willie McAteer, or Anglo.) All Bowe's calls were recorded because of the work he did with Anglo, and the comments he made in the course of his work in 2008, were used as evidence in the trial where he was one of the accused.

‘Bigger picture’

During the trial the jury heard about one September 2008 call between Bowe and the bank’s then chief executive,

David Drumm

, where Drumm said that the “bigger picture” was that on September 30th “even with the six billion fixes which Mr f*****g Denis [Casey] confirmed for me this morning....we’re f****d”. Bowe replied: “We’re still in a hole.”

Drumm also said to Bowe: “We have to get a get-out-of-jail card before December 3rd. Unless we can fix the poxy balance sheet over year end, which is next weekend, which to me just does not look doable.”

Transactions

The reference to €6 billion is to a series of €1 billion transactions on September 29th and September 30th which totalled €6 billion. It was not possible to say if it was the same €1 billion that was going back and forth between the two institutions, as the money, when it arrived back in Anglo, would be mixed with deposits generally. The accounts were presented on December 3rd, with McAteer among those at the presentation.

The work done by the GBFI included interviews in other jurisdictions and checking up on suggestions from Anglo in 2008, to banks in other jurisdictions, that they could enter into arrangements similar to that agreed by ILP. These deals did not go ahead.

It was not until 2013 that charges were first brought. The preparations for the trial of the four men took such a long time not least because of the requirement in criminal trials that the prosecution provide to those charged, not just the evidence that is to be presented as supporting their conviction, but also the evidence that speaks to their potential innocence.

Given the vast amount of material involved in the investigation, this constituted a massive job for the GBFI and the Director of Public Prosecutions. A serious error could cause significant complications for the trial. No such complications emerged.

The trial involved the use of an enlarged jury of 15 members, something provided for in a new law introduced in 2013 and used for the first time in 2014 in another lengthy, if not so lengthy, trial linked to the affairs of Anglo Irish Bank.

Illness

The 15 jury members were empanelled in January for the Anglo/ILP trial, and by the time the trial ended on May 17th, two had dropped out. The jury was then reduced to 12, with a lottery deciding who would be sent home. By the end of the following week, one of the remaining 12 jurors had been hospitalised. A jury verdict must be supported by at least 10 jurors. The final verdict delivered yesterday was by a 10-to-one majority. If the new law had not been put in place, the trial would not have reached any conclusion at all, and would have had to be re-run.

The trial was in fact four trials being run concurrently for administrative convenience. The fact that the jury took so long in coming to its decision, and found three of the accused guilty, and one innocent, is considered an indication of the seriousness with which it approached its work, and its ability to cope with the details and the concepts it had to address.