Director of Public Prosecutions -v- Casey,  IESC 7 (2019)
|Party Name:||Director of Public Prosecutions, Casey|
An Chúirt Uachtarach
The Supreme Court
O’Malley JSupreme Court appeal number: S:AP:IE:2017:000159
 IESC 007
Court of Appeal record number: 2016 nos 258 and 244
 IECA 250
Circuit Criminal Court bill number: DU529/2014
The People (at the suit of the Director of Public Prosecutions)
- and -
Judgment of Mr Justice Peter Charleton of Thursday 21
of February 2019
After a six month trial before Judge Martin Nolan and a jury, in the Dublin Circuit Criminal Court, the accused Denis Casey was convicted on 9 June 2016 of conspiracy to defraud and subsequently sentenced to two years and nine months imprisonment. The underlying crime concerned the accounts of Anglo Irish Bank plc and the misstatement of seven transactions as showing a positive balance of €7.2 billion as a deposit. This was that bank’s own money routed through Irish Life Assurance and Irish Life & Permanent plc, of which the accused was chief executive, so as to appear as a deposit from an outside source. The events occurred in the months leading up to the collapse of Anglo Irish Bank, nationalised in January 2009, and the government support, from September 2008 onwards, to Irish Life Assurance and Irish Life & Permanent. At trial, the accused raised numerous defences challenging any contention that the content and presentation of the accounts was at all misleading. Among the accused’s answers to the charge was that he had official authorisation for this form of misleading accounting. His multiple grounds appeal to the Court of Appeal was refused by judgment of Ryan P of 30 June 2017. By determination of 29 June 2018, this Court certified the following as a point of general public importance, later amended on 15 October 2018 at case management:
whether the defence of “officially induced error” or “entrapment by estoppel” is available in this jurisdiction and, if so, what its parameters are and whether it was open to the applicant on the evidence in this case.
The charge on which a conviction was recorded to the jury and which is relevant to this appeal was cast in the following form:
Denis Casey, did between the 1st of March 2008 and 30th of September 2008, both dates inclusive, within the County of the City of Dublin, conspire with John Bowe, Peter Fitzpatrick, William McAteer and others to defraud by engaging in transactions between Anglo Irish Bank Corporation plc., Irish Life & Permanent plc and Irish Life Assurance dishonestly to create the false and misleading impression that deposits from a non-bank entity to Anglo Irish Bank Corporation plc during the year ending 30 September 2008 were approximately 7.2 billion larger in amount than they really were, with the intention of inducing existing and prospective depositors with, existing and prospective investors in, and existing or prospective lenders to Anglo Irish Bank Corporation plc to make decisions concerning their deposits or investments in, or loans to the Bank on the assumption that the said Bank received larger deposits from a non-Bank entity during the year ending 30 September 2008 than it really did.
Section 149(1) of the Companies Act 1963, now replaced by such provisions as sections 282 of the Companies Act 2014, obliges those in control of a company to prepare accurate accounts. Accounts must show the real picture of the state of a company’s financial health. The statutory obligation, the one applicable here, from 1963 states:
Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of its financial year, and every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year.
Other accounting obligations arise for financial institutions under relevant legislation; section 32J of the Central Bank Act 1942 as inserted by the Central Bank Reform Act 2010 provides that banks “shall keep all proper accounting records of all its transactions.” The fundamental legal requirement, however, is most elegantly stated as the necessity for a company in its accounts to give a true and fair view of the financial health of that company. That obligation remains the fundamental duty of every company and every individual working in the preparation of financial statements. While at trial, it was advanced on behalf of the respective accused persons that the accounting treatment of this transaction was appropriate, that matter was determined at trial by the verdict of the jury. Consequently, this appeal must be approached on the basis that the accounts as presented created a false and misleading impression in respect of the relevant transactions. An appeal, the question for the Court is whether by reason of the matters advanced by the accused that trial should have been permitted to proceed.
On the appeal, the circumstances leading to the ultimate nationalisation of Anglo Irish Bank, and its later and still ongoing liquidation, were described by counsel for the accused as unprecedented. As a matter of history, however, many banks collapse. The accused at trial put forward that what was involved was merely the presentation of accounts in their most favourable light, in accordance with legal and professional standards, in order to make them ready for any snapshot examination. Given the accused’s argument that accounts are a snapshot as of particular time, it was argued that it was commonplace for businesses to take any steps that were permissible to make sure that the picture taken was as favourable as it could be. He claimed that the Financial Regulator was concerned that the accounts of his bank showed significant reliance on foreign borrowing, out of kilter with the mean for other European financial institutions. The case made by the accused was that the Financial Regulator was promoting support between Irish banks, a green jersey agenda, as it was called, and thus putting forward that each bank here assist the others. In transferring the funds, as of 30 September 2008 and on prior dates, it was asserted on the accused’s behalf that the transactions were promotional support and not ones intended to be described, or thought of, as being of direct, or perhaps real, benefit. That, he claimed, was his state of mind; that such transactions were permitted and that as these were subsequently not challenged, as he claimed, by those in officialdom who would otherwise have been expected to react, this affirmed his contention of official sanction, at least after the event. His point of view, as asserted at trial, was that after the transactions up to 30 September 2008, and the publication as of December the same year, a challenge might have been expected; and that consequently he could regard it as a tenable conclusion that no challenge by the Financial Regulator was equivalent to approval.
Neither the actual mechanism of the misleading transactions nor the appropriate accounting practice is fully admitted by the accused on this appeal. It is thus necessary to summarise. Anglo Irish Bank took its own money, by which is meant funds of depositors or such funds which were available through inter-bank borrowings, including liquidity available through subsidiaries, and routed it to Irish Life & Permanent on the basis that it would be almost immediately redeposited under a guise which would indicate to those scrutinising the Anglo Irish Bank accounts that some €7.2 billion of independent investors’ money had improved that bank’s balance sheet. It is unnecessary and inappropriate to comment on other practices. These manoeuvres did not in fact cause the loss of €7.2 billion to the bank but neither did it amount to the gain of that amount. The money went around in a circle, in and out of the same place but appearing as an investment or deposit. Even on the appeal, the accused was prepared to have argued on his behalf that it was a matter of opinion as to whether this kind of misleading circular transaction, dressed up as an investment, should or should not be the subject of a specific note on the bank’s accounts. This is of central importance in terms of his claimed resort to a form of response to this criminal charge which is based upon assurances from authority that this transaction was valid. By law, accounting is not a matter for argument: it consists of the imperative to truly and fairly demonstrate the state of financial health of a company.
In terms of evidence at trial, the relevant professional accounting standard, stated in argument as IFSR 32, but in fact based on IAS 32, was promulgated to establish rules for presenting financial instruments as either liabilities or equity and for the proper presentation of offsetting financial assets and liabilities. These rules, the prosecution asserted, were not abided by in the accounts published by Anglo Irish Bank on 3 December 2008. In terms of the mechanism of the actual deception, effected through separate transactions, taking either hours or in some cases a few days, these were effected as of 30 September 2008; hence the date on the indictment. Actual accounts, however, were not published until December.
On this appeal, it has been argued on behalf of the accused that a pattern of tolerance, amounting to acquiescence, was established at trial on behalf of the Irish Financial Services Regulatory Authority, or Financial Regulator, which was from May 2003 to October 2010 the single regulator of all financial institutions in Ireland. While then, as a matter of law, the Financial Regulator was a constituent part of the Central Bank of Ireland, it was for these purposes reasonably regarded as independent and would have been so regarded until absorbed into the Central Bank on 1 October 2010 when its board structure was replaced by the Central Bank of Ireland Commission.
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