€7bn deal did ‘zero’ for Anglo cash flow
Move helped bolster financial reports, trial hears
TRANSACTIONS moving billions of euro out of and into Anglo Irish Bank had ‘zero’ impact on the bank’s cash flow, a court has heard. Former Anglo banker Stephen Fox said the purpose of the deals was ‘to replace inter-bank funding with customer funding’ to bolster the bank’s financial reports.
His statement to gardaí was read to the court during the trial of former Anglo chief executive David Drumm.
Mr Drumm, 51, from Skerries, is accused of false accounting and conspiracy to defraud.
The charges relate to what the prosecution has claimed was a ‘wholly artificial’ €7.2billion transaction between Anglo and Irish Life and Permanent (IL&P) in September 2008, which was allegedly designed to create the illusion that Anglo was bringing in billions of euro at the time of the global financial crisis. Mr Drumm has admitted authorising the deal, but denies that he acted fraudulently or dishonestly.
Mr Fox, the bank’s former Head of Liquidity Reporting and Analysis, said he had been asked by gardaí if that transaction, and another €750million deal in March 2008, had any effect on liquidity, or cash flow. He replied: ‘They had zero effect on liquidity. We provided the money and received it back in as a deposit, hence there is zero funding increase due to the transaction,’ he replied.
He said he did not discuss the deals with the Financial Regulator, the Central Bank, or the bank’s external auditors, EY.
Mr Fox also said he had no knowledge of the deals, and no involvement in them. He recalled that the days leading up to the end of September 2008 were extremely stressful.
He added that there were unprecedented flows of money out of Anglo, and that the bank lost up to €6billion ‘in the day or two’ leading up to September 29.
Such was his concern for the future of the bank, Mr Fox said he was not concerned by the IL&P transaction at the time. In October 2008, he said he had drafted a report on the bank’s liquidity, which went to the Central Bank.
It was not queried by them, he said.
Steven Hiles, a former manager in liquidity risk at Anglo, also said the transactions had no benefit from a liquidity or cash flow perspective.
Emma Hillier, whose evidence was also read to the court, said she worked as a banking operations supervisor for Anglo Isle of Man in 2008.
She said she had received a request for a payment from the bank to IL&P on September 25, that year, for just under one billion euro.
She considered the request unusual because it did not come from the usual group email, but from Mike Darcy, Anglo Dublin’s liquidity and interest rate risk manager. One large amount was to go to IL&P instead of being shared around the usual three organisations, she told gardaí.
The trial continues before the jury on Monday.
‘Provided cash and received it back’