€7.2bn loans to ILP approved ‘post-transaction’, David Drumm trial told

The former head of treasury risk at Anglo Irish Bank has said the €7.2 billion loans to Irish Life and Permanent in September 2008 were approved "post-transaction" and signed off by David Drumm and Willie McAteer.

On day 25 of David Drumm's conspiracy to defraud trial at Dublin Circuit Criminal Court, Michael Nurse outlined the procedure used by the bank's risk committees for approving such transactions.

Mr Drumm (51), with an address in 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.

He has also pleaded not guilty to false accounting on December 3rd, 2008, by furnishing information to the market that Anglo’s 2008 deposits were €7.2 billion larger than they were.

On Monday, Mr Nurse told Sinead McGrath BL, prosecuting, that Anglo’s treasury credit committee met on a weekly basis to approve interbank credit limits.

Once a limit had been ascertained it was then signed off by four employees at the bank – two senior managers and two junior managers. In addition, Mr Nurse explained there was a “fast track process” designed to respond in a quicker way to an interbank request.

The fast track process only needed one senior manager’s sign-off and then went to the next credit committee for ratification.

Credit limit

He said a €1 billion transaction between Anglo and Irish Life and Permanent on March 31st, 2008, was fast-tracked. He agreed with Ms McGrath that it had exceeded ILP’s credit limit by 400 per cent.

He said percentages for previous deals with ILP were all under 100 per cent, with some being as low as 7 per cent of that bank’s credit limit.

“We had to find a way of investing our cash as we were above limit levels,” he said.

The witness said the €7.2 billion transaction with ILP on September 30th, 2008, had not gone through the same process.

“It was dealt with at an executive management level and my signature wasn’t needed,” he said.

He said he had approved it “post-transaction” by signing off on a report generated the day after the transaction.

“The team performing the transaction were dealing with David Drumm and Willie McAteer,” he said.

Mr Nurse told the jury he became aware of the total size of the transactions between Anglo and ILP on either September 30th or October 1st, 2008.

Not common practice

He said he and Willie McAteer signed a “retrospective sign-off”, and said this was not common practice.

The jury also heard evidence from the former company secretary at Anglo, Natasha Mercer.

She said the board of directors met 33 times in 2008, which greatly exceeded the usual annual schedule of eight or 10 board meetings.

Ms Mercer said she was absent for six meetings in 2008, and said Willie McAteer acted as secretary on one of these occasions.

She explained Anglo’s organisational structure, and agreed with Mary Rose Gearty SC, prosecuting, that in 2008 Sean FitzPatrick was the bank’s chairman, while David Drumm held the role of chief executive officer.

When asked whether the March transactions with ILP appeared in any minutes of meetings that she prepared, she said they did not.

She said the bank held three board meetings on September 29th, 2008, and that she was not given advance notice that they were to take place.

Ms Mercer said at no time during any of these meetings were the ILP transactions referred to.

‘Customer accounts’

She said that two months later, in November 2008, the minutes of the September meeting referred to the ILP transactions as “customer accounts”.

When asked by Ms Gearty why she had originally left all mention of customer deposits out of the draft minutes she circulated, Ms Mercer said her focus was on other matters.

“It was a two-hour meeting, the customer deposits were a two-minute discussion, it didn’t seem like a big area to me at the time,” she said.

On the opening day of the trial, Tessa White BL, defending, said Mr Drumm wished to admit to certain facts which would reduce both the length of the trial and the complexity of the evidence.

The trial, now in its third week, continues before Judge Karen O’Connor and a jury.