Anglo Irish Bank’s china stands out in the memory.
The cups that dispensed tea and coffee to reporters during results presentations or private meetings were elegantly modern, with a smart design, cool even. But they were still fragile, like traditional wedding china; more style than substance, intended more to show off than to serve as mug-strong vessels of liquidity.
Just like Anglo.
Ireland's third-largest bank was ultimately shown to be more crock than crockery and, following this week's verdict in the trial of David Drumm, criminal too, running right up to the chief executive's office.
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A jury of nine men and three women unanimously pinned responsibility on Drumm, the highest-ranking executive in that bank, for a series of transactions aimed at pulling the wool over the eyes of depositors and investors, dishonestly masking the true health of the bank. He was, as one prosecuting counsel put it on the first day of his trial, the “man who called the shots”.
And this was, at the time of the offences, a very sick bank.
At that particular results presentation, on December 3rd, 2008, in Heritage House, it was still Sunday-best Anglo, china out. In the posh Georgian townhouse on Stephen’s Green Anglo used to impress outsiders, Drumm played it cool, putting on a brave face as a financial storm raged outside.
To reporters, he presented results remarkably showing an increase in customer deposits at the September 30th annual financial snapshot on a year earlier after what was well-known at that stage to be the worst-ever run on an Irish bank.
Now he has been convicted of that falsehood. The 87-day trial at the Dublin Circuit Criminal Court that ended on Wednesday exposed Drumm’s lie: the second count on which he was convicted: false accounting, for which he faces up to 10 years in prison.
Cooked books
For the first guilty count, for which Drumm faces a lengthy prison term, you have to go back more than two months from the publication of those results. That was when the books were cooked.
Cursing inaction by Financial Regulator "Freddie f*cking Fly" and those "f*cking shower of clowns" down in the Central Bank in September 2008 – captured in all its inelegance on Anglo's internal taping system – Drumm took matters into his own hands. He, with his co-plotters, conspired to defraud by circulating a billion euro around the houses with Irish Life & Permanent's non-banking business enough times that it clocked up €7.2 billion on the ledger. It was a phony number – "a massive con" the jury was told – and helped Drumm's performance that morning in Heritage House.
The passage of time has meant public outrage over Anglo has waned, even if the cost of that institution’s hubris to the public has not. It has been almost a decade since the events that have convicted David Drumm but it will be many more decades before the cost of his bank is paid off.
Drumm is the third Anglo banker to be convicted of transactions linked to the failed lender dating back to the time internal panic gripped the bank during the 2008 financial crisis.
The most galling feature for the public picking up the Anglo tab is that no criminal charges will be brought over the cost. Taking on too much risk in lending to the property market or incompetence in banking is and will never be a crime. If it was, the courts would be full to the brim with bankers. Drumm’s offences flowed from Anglo’s financial meltdown; they did not cause it.
So, almost 10 years after the crimes, was it worth it? Carrying out some of the most complex investigations ever conducted? Running the longest and some of the most expensive criminal trials the State has ever seen? Devoting scarce post-crisis State resources to pursue a man through foreign courts to face charges at home?
Investigated and prosecuted
Of course it was, though the full worth can only be weighed after sentencing.
Drumm’s convictions and those of his co-conspirators two years ago are seminal moments in the development of a fully functioning criminal justice system. They show its capacity to ensure white-collar crime – even around the most complex money-market transactions – can be investigated, prosecuted and convicted by a jury of everyday people with no financial background.
And this week’s case has the added benefit of proving that residence outside the State might buy you a few years but ultimately it will not protect you from the full weight of the law, even with some of the best lawyers dollars can hire.
The jury should still not be out on the question of who is best-placed to take these cases on. The botched investigation by the Office of the Director of Corporate Enforcement into Sean FitzPatrick’s multimillion-euro bed-and-breakfast loans showed that complex white-collar criminal investigations are best left to investigators with experience of carrying out those investigations, even if that experience starts with a prosecution over cheque fraud.
The time it took to pursue Drumm and others should not be a deterrent from future actions in similar cases either. The average length of a case taken by the UK’s Serious Fraud Office, which deals with complex, high-value fraud cases, is four to six years.
There is a reason why these investigations take time; they are complicated and require a high degree of expertise, particularly in the rapidly evolving world of high finance. Drumm’s case had the added complication of extradition and a truculent defendant who initially refused to return.
Det Supt Gerard Walsh and his team of detectives from the Garda National Economic Crime Bureau were right to use Drumm’s conviction to trumpet the work on “one of the more complex investigations undertaken” when he spoke to reporters on the steps of the Criminal Courts of Justice after Wednesday’s verdict.
Walsh concluded his brief remarks (which included two mentions of the Garda National Economic Crime Bureau) with a bigger point about what Drumm’s conviction means for business: the verdict, he said, “emphasises the importance of corporate responsibility at all levels and the very real obligation to conduct business with honesty and integrity at all times”.
The sentence handed down to Drumm in 10 days’ time will equally serve as a deterrent to those who don’t.
Simon Carswell is Public Affairs Editor of The Irish Times and author of Anglo Republic: Inside The Bank That Broke Ireland