DUBLIN (Reuters) - The former chief executive of the failed Anglo Irish Bank, David Drumm, was found guilty on Wednesday of conspiring to defraud depositors and investors during a banking crisis that crippled Ireland’s economy a decade ago.
Drumm, 51, had pleaded not guilty to charges of dishonestly creating the impression that deposits at the lender were 7.2 billion euros larger than they actually were in 2008 when the country’s banks began to get into trouble. The bank has since collapsed.
He was also found guilty of false accounting, a second charge he had denied, and was released on bail pending sentencing on June 20.
“The verdict today is the culmination of an investigation that commenced over nine years ago,” Detective Superintendent Gerard Walsh told reporters outside the court, describing it as one the most complex undertaken involving the analysis of tens of thousands of telephone calls and almost one million files.
Drumm was extradited from the United States two years ago to face the charges after spending five months in federal custody while Irish officials sought his return. He showed no emotion as the jury handed down its unanimous verdict after just over 10 hours of deliberation.
The charges concerned a circular transaction scheme between Anglo and bancassurer Irish Life and Permanent that took place between March and September 2008 and helped bolster Anglo’s balance sheet.
Irish Life placed the deposits via a non-banking subsidiary in the run-up to Anglo’s financial year-end, to allow its rival to categorise them as customer deposits, which are viewed as more secure, rather than a deposit from another bank.
Lawyers for the prosecution told the court during the four month trial that it was a prime objective of Anglo to make its balance sheet look as strong as it could, describing the transactions as being carried out with “lightening speed”.
The verdict completed a fall from grace for Drumm who in 2005 took over as head of then rapidly growing lender at the age of 38 before quitting less than four years later, just before the bank was nationalised.
He later left Ireland for the wealthy Boston suburbs, where he was arrested in 2015. Irish police objected to his bail on Wednesday, arguing that he was a flight risk due to his co-conspirators previously receiving serious sentences.
The three former senior Anglo and Irish Life and Permanent executives - Denis Casey, Willie McAteer and John Bowe - were jailed for up to three-and-a-half years in 2016 on charges of conspiring to defraud investors.
Scandal-hit Anglo, which the state began to wind down in 2011, became synonymous with the lending practices that drove the “Celtic Tiger” boom and subsequent bust, forcing the country into a three-year international bailout in 2010.
Irish Life and Permanent was broken up during the restructuring of Ireland’s financial sector and its banking arm, permanent tsb, remains under 75 percent state ownership.
Irish taxpayers had to stump up 64 billion euros - almost 40 percent of annual economic output - to cover the cost of the bank rescue that was the euro zone’s most expensive.
Writing by Padraic Halpin; editing by David Evans and Toby Chopra