€7.2bn Anglo transaction had no commercial substance, court told

A €7.2 billion transaction between Anglo Irish Bank and Irish Life and Permanent had no commercial substance because Anglo's asset profile did not change, a jury has heard.

An expert accountancy witness said the objective of the transactions was to increase the balance on Anglo’s end of year accounts.

Dan Taylor, a chartered accountant and partner at BDO in London, was giving evidence on day 66 of David Drumm's conspiracy to defraud trial at Dublin Circuit Criminal Court.

Mr Drumm accepts that the multi-million euro transactions took place between Anglo and ILP in 2008 but disputes that they were fraudulent or dishonest.

On Tuesday, Mr Taylor told Paul O’Higgins SC, prosecuting, that he was asked to look at the transactions between ILP and Anglo in 2008 and compile a report for the purposes of the trial.

He said he believed the transactions, which were circular in nature, could have continued ad infinitum.

“They were only limited by the amount of time available to put them through the banks’ payment system,” he said.

Mr Taylor told Mr O’Higgins he saw nothing to indicate the loans were secured.

“Everything I saw indicated they were unsecured, passing cash with no underlying security,” he said.

He told the jury he did not see any contract between the two banks, but added that this was not uncommon with interbank transactions.

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 €7.2 billion larger than they were.

The former Anglo Irish CEO has 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.

The trial, in its thirteenth week, continues before Judge Karen O'Connor and a jury of ten men and four women.