Bankers fail in appeal against conviction for €7.2bn conspiracy

The Court of Appeal has upheld the convictions of two former bank executives, jailed last year for a €7.2 billion conspiracy to defraud the public about the true health of Anglo Irish Bank in 2008.

The former head of capital markets with Anglo Irish Bank John Bowe (53), from Glasnevin in Dublin and the former chief executive of Irish Life and Permanent, Denis Casey (57), from Raheny in Dublin, had pleaded not guilty to a single count of conspiring to mislead investors by using interbank loans to make Anglo appear €7.2bn more valuable between March 1 and September 30, 2008.

A jury at Dublin Circuit Criminal Court found them guilty following one of the longest criminal trials in the history of the State.

Judge Martin Nolan sentenced Bowe to two years and Casey to two years and nine months imprisonment on July 29th 2016.

The men had brought appeals against their convictions which were heard over a week in March. Publication of the appeal hearing was restricted for legal reasons but ton Friday, the three-judge Court of Appeal dismissed the men’s appeals and upheld their convictions.

In a 138-page-judgment delivered on Friday, President of the Court of Appeal Mr Justice Seán Ryan said the court had taken into account the “extensive” grounds of appeal advanced on the men’s behalf and the arguments concerning their convictions.

Mr Justice Ryan said the “lengthy and complex trial” ultimately turned on issues for the jury that were properly identified by the trial judge and the trial judge had exercised his function “carefully and correctly”.

The Court of Appeal found no fault with the trial judge’s rulings and directions and the jury had come to conclusions that were open to them to find, the judge said.

Myriad of issues

Despite “herculean” efforts by the men’s barristers and the “myriad of issues” raised on their behalf, the three-judge court was satisfied that the men’s trial was satisfactory and their convictions safe.

Mr Justice Ryan, who sat with Mr Justice George Birmingham and Mr Justice John Edwards, said the appeal must accordingly be dismissed.

Giving background, Mr Justice Ryan said the case had its origins in the “global banking catastrophe” of 2007/2008 and its impact on the Irish financial sector. More specifically it related to the existential crisis that befell Anglo Irish Bank Corporation PLC that ultimately resulted in its demise.

Between September 25th and 30th, 2008, and prior to Anglo’s financial year-end, a series of back-to-back transactions took place between Anglo and Irish Life Assurance Limited (ILA) in the total amount of €7.2 billion.

They had the effect of significantly increasing Anglo’s accounts in regards to deposits as at September 30th, 2008.

The prosecution submitted that these transactions were circular in nature and had no commercial substance, that the purpose was to deceive the market (potential and actual investors, depositors and lenders) by giving the false impression that Anglo had received customer deposits to that amount and that therefore the state of Anglo was better than it actually was.

Mr Justice Ryan said the men’s grounds of appeal included arguments about the role of the State authorities, among them the Financial Regulator; Objections to the admissibility of the evidence of the prosecution’s expert witness, Mr Mark Hunt FCA; Challenges to decisions of the trial judge as to evidence of events that occurred after Anglo’s year end accounts and also after the interim results were published; Submissions on rulings and directions to the jury by the trial judge; A ground based on the acquittal of the co-accused Mr Peter Fitzpatrick and other evidence issues.

It was submitted that the then Financial Regulator, following a meeting, understood the purpose of the transaction and had no concerns nor required any further action from the bank on the matter.

Entrapment

It was further submitted that the trial judge erred in ruling out the defence of “officially induced error and/or entrapment” due to the action of State authorities, particularly the Financial Regulator.

A draft report by the Financial Regulator on October 22nd, 2008, which referred to the transaction as being “unusual and worthy of attention”, was available to both the NTMA and the Department of Finance, according to the court’s judgment.

The trial judge held that the conduct of the Financial Regulator and State authorities generally did not furnish a defence to the accused, but could assist in mitigating any potential sentence.

Mr Justice Ryan said there was no evidence of entrapment. “There was no trap. There was no specific invitation or persuasion to the particular acts”. The fact the Regulator was generally “in favour of the ‘Green Jersey Agenda’, as described, whereby he wished for the institutions to help each other out to maintain solvency” was not a basis for suggesting entrapment could have possibly arisen.

Mr Justice Ryan said there was no basis for suggesting that Casey could have reasonably believed the Regulator would have approved or not approved.

“A belief that somebody else in authority in a supervisory and regulatory capacity would approve of what a person is doing is not evidence of entrapment.”

The position of Bowe in regard to entrapment was “even weaker”.

In relation to intent, Mr Justice Ryan said: “irrespective of whether the Financial Regulator was aware or, and in fact even if he had condoned what was done, that was irrelevant. It would not provide the accused with a defence and would not have rendered legal that which is illegal”.

Mr Justice Ryan said the general objections to the evidence of Mr Mark Hunt, and particular grounds of appeal, did not have merit and were rejected. The evidence of Mr Hunt, the prosecution’s expert witness, was admissible and it did not encroach on the jury’s function, the judge said.

Mr Justice Ryan said the court was satisfied that the trial judge did not err in the manner he charged the jury on the issue of intent for the common law offence of conspiracy to defraud.

It is sufficient for a conviction that the prosecution should prove merely that the accused intended to do the impugned act or to participate in the impugned scheme in circumstances where the relevant act or scheme would attract the value judgment, judged by the standards of ordinary reasonable men, that it was dishonest.

Acquitted

After the jury acquitted the men’s co-accused Mr Peter Fitzpatrick, Mr Justice Ryan said Casey’s lawyers were concerned that the jury might convict their client on the basis that he was the Group CEO of IL&P at the time, whereas Mr Fitzpatrick had been a lower ranking official in that company.

The apprehension was that because Casey had been Group chief executive, somehow or other a higher onus might be placed on him.

Mr Justice Ryan said the trial judge legitimately decided not to interrupt the jury’s deliberations for the purpose of giving them further instructions. The mere fact the jury addressed the case against Mr Fitzpatrick before that or Casey did not provide valid grounds to apprehend that they were minded to approach the case against Casey differently simply because he was the Group CEO.

Finally, the conclusion of the trial judge that Bowe had consented to the practice of recording phone calls was one that was entirely open to him. Bowe was a long term banker, a very senior figure in the Treasury Department and must have been aware of the long-established practice within the bank.