June 20, 2018 / 4:16 PM / a month ago

UPDATE 1-Former Anglo Irish Bank CEO jailed for six years for fraud

* Drumm jailed for defrauding investors, false accounting

* Most high profile conviction of any banker in Ireland

* Ex-CEO went from “humble beginnings” to “dizzying heights” (Adds details, background, quotes)

By Conor Humphries

DUBLIN, June 20 (Reuters) - The former chief executive of the failed Anglo Irish Bank, David Drumm, was sentenced on Wednesday to six years in jail, the longest prison term arising from a banking crash that led to the euro zone’s most costly state rescue.

Drumm, 51, was found guilty earlier this month of conspiring to defraud depositors and investors and of false accounting, in the most high profile conviction of any bank executive in Ireland.

He 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.

“Clearly Mr Drumm and his colleagues were working in difficult circumstances. However the motivation to keep the bank open is irrelevant. This was grossly reprehensible behaviour and it does not provide any excuse for fraud and dishonesty,” Judge Karen O’Connor told a packed courtroom.

Describing Drumm as the “driving force” behind the circular transaction, O’Connor said the appropriate sentence for both counts was eight years, but imposed six years’ imprisonment taking mitigating factors into account.

Drumm, who attended the four-month trial on his own as his lawyer said he did not want to involve his family, will also receive credit for the five months he spent in jail in the United States awaiting extradition.

The sentencing draws a line under prosecutions stemming from the banking meltdown in Ireland, where taxpayers have been frustrated by how long it has taken to secure justice after they were forced to stump up 64 billion euros to save the banks.

Drumm’s conviction followed the jailing for up to three-and-a-half years of three former Anglo and Irish Life and Permanent executives in 2016 over the same scheme that helped bolster Anglo’s balance sheet.

At the height of the global financial crisis, Irish Life placed the 7.2 billion euros of deposits with Anglo in the run-up to its rival’s financial year-end, but did so via a non-banking subsidiary that allowed it to categorise them as customer deposits, which are viewed as more secure.

Drumm’s lawyers said his client believed he was engaged in balance sheet management with the tacit acknowledgement of the regulatory authorities, and appealed for as lenient a sentence as possible given the notoriety that will follow Drumm and his family “for the rest of his days”.

The sentencing completed a fall from grace for Drumm who, in the words of his lawyer, came from “humble beginnings” as an accountant’s apprentice to reach the “dizzying heights” of becoming CEO of the then rapidly growing bank at the age of 38.

Drumm quit less than four years into his term in 2008, just before the scandal-hit bank that became most synonymous with the reckless lending practices of the “Celtic Tiger” era was nationalised.

He later left Ireland for the wealthy Boston suburbs, where he was arrested in 2015. (Writing by Padraic Halpin; Editing by Jan Harvey)

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