A senior bank official has told a trial how he was left feeling “uneasy” after Bank of Ireland Private Bank managing director Brendan Mullin asked him to make a €500,000 payment to a client account.
Peter Gray, then head of financial control at New Ireland Life Assurance, which owed private banking half a million euro at the time, said the request from Mr Mullin in August 2011 was “unusual” and “not standard practice”.
Mr Gray was giving evidence in the Dublin Circuit Criminal Court trial of the former Irish rugby international.
Mr Mullin (60) is accused of stealing more than €570,000 from Bank of Ireland Private Bank, among other charges, between 2011 and 2013, when he was managing director. He denies all 15 charges against him.
As part of its case against him, the prosecution alleges Mr Mullin, of Stillorgan Road, Donnybrook, Dublin 4, stole €500,000 from Bank of Ireland during a breakdown in communication within various arms of the banking group, with the money ultimately being transferred to a company called Spice Holdings, registered in the British Virgin Islands.
The trial has heard that Bank of Ireland Private Bank and New Ireland – both arms of the bank’s Wealth Management Division – agreed to equally split a €1 million refund to customers relating to a payout of life assurance claims.
Mr Gray told the court that New Ireland made a €500,000 transfer to the private bank at the end of July 2011, but that this amount was then returned to New Ireland within a couple of days.
“That was the first sign there was something strange going on,” Mr Gray said.
About a month later, at the end of August 2011, Mr Gray said he had a phone conversation with Mr Mullin, during which Mr Mullin asked that the payment be made to another account. Mr Gray said Mr Mullin suggested “two possible accounts”, which he said were both client accounts on behalf of private banking.
Mr Gray said he could not recall whether Spice Holdings was the client in question. “I do recall he said the reason was it would be administratively more simple for private banking if the money was paid in this way,” Mr Gray said.
Mr Gray said he told Mr Mullin that if a payment was being made to another account, it would have to be agreed with New Ireland managing director Sean Casey or the head of compliance. He told the court that Mr Mullin’s explanation that it would be “administratively more simple” made him “uneasy”.
Mr Gray said he made a note of the conversation because “there were two things that were unusual”.
“It was unusual to receive a call from the managing director of another business,” he said. “And it was unusual there was a request for a payment to a client account.”
The court was brought through a series of emails in October 2011 in which Paul Gallagher, then private banking head of finance, emailed Mr Gray stating that a new client account had been set up in the private bank and asking whether the New Ireland payment could be made there.
This account was in the name of Spice Holdings, the court heard.
When Mr Gray emailed his boss, Sean Casey, and asked him whether he was happy to transfer to this account, Mr Casey queried: “Who or what is Spice Holdings?”
In further emails on the same day – October 24th, 2011 – New Ireland’s head of compliance told Mr Gray and Mr Casey that he was unable to establish much about Spice Holdings and there was no match for that business in the Companies Registration Office.
The court has previously heard that Mr Casey ordered that no payment should be made to a client account “in any circumstance”. Mr Gray said the payment was eventually made to the private bank in December 2011. It went to private banking’s “regular account”, Mr Gray told the court.
Specialist Property Group
Earlier, the court heard from Des Hanrahan, a director of Specialist Property Group in Bank of Ireland, which the court heard was set up in the wake of the financial crash to deal with significant debts relating to high-value properties over €10 million.
Mr Hanrahan said there was one case, referred to in court as “Case X”, which was highly litigious. As a result, an account was set up in the private bank to deal with the legal costs involved in this case.
Two out of the three Specialist Property Group directors had to authorise any transactions on this account, the court heard.
Mr Hanrahan said that at the end of March 2013, a McCann Fitzgerald invoice to the amount of €18,792.65 which had been processed through the “Case X” law cost account was brought to his attention.
The invoice, which was shown to the jury, was signed by Mr Mullin and another bank worker, the court heard. “Those parties had no rights to that account,” Mr Hanrahan said. The invoice stated it was for advice to Quantum Investment Strategies, which Mr Hanrahan said “had nothing to do with Case X”.
Mr Hanrahan outlined a phone call he had from Mr Mullin on March 20th, 2013, in which Mr Mullin advised him an error had occurred in relation to the invoice, and apologising.
“I was not happy with that phone call,” Mr Hanrahan said.
He said that following further inquiries with a colleague, he found out that Mr Mullin was one of the directors of Quantum.
Mr Hanrahan outlined a further two phone calls he received from Mr Mullin on March 25th of that year.
In the first call, Mr Hanrahan said Mr Mullin told him the invoice in question would be refunded, and asked whether this was OK with him [Mr Hanrahan]. Mr Mullin, he said, also asked whether the matter was now closed off on Mr Hanrahan’s end.
Mr Hanrahan said he answered: “Yes OK,” to both questions.
About half an hour later, the court heard Mr Mullin called Mr Hanrahan again to say the transaction had been rectified. Mr Hanrahan said Mr Mullin then said: “I was just wondering if this may have raised concerns at your end?”
“I said I would rather not comment,” Mr Hanrahan said, adding the call was then terminated.
Wealth Management
The court also heard from Mick Sweeney, then chief executive of the Wealth Management Division. He told the court he first became aware of an issue with an invoice – the McCann Fitzgerald €18,792.65 invoice – in March 2013, and met Mr Mullin on March 25th.
He said Mr Mullin told him he believed the invoices had been mistakenly put in a bundle of client invoices and paid in error. Mr Sweeney said Mr Mullin also told him that he believed McCann Fitzgerald had mistakenly put “Quantum Investment Strategies” on the narrative of the invoice.
The court heard Mr Mullin said the invoice should have been for “QIF”, which the court has heard stands for quality investment fund, with Mr Mullin saying the invoice related to advice the private bank had received in this area.
Mr Sweeney also said Mr Mullin told him he had picked up on the error and he had phoned Mr Hanrahan to alert him to it.
In a later conversation, Mr Mullin told Mr Sweeney the invoice related to private work McCann Fitzgerald had done for him in relation to Quantum.
Mr Sweeney said his superior at the bank, Liam McLoughlin, ordered that a review be carried out. He said when he next met Mr Mullin on April 2nd, Mr Mullin told him new information had come to his attention in relation to further invoices being paid in error by the private bank.
Mr Mullin went on to say that he had already paid these invoices in his personal capacity, the court heard.
The court heard Mr Sweeney informed Mr Mullin he was being placed on special paid leave on April 5th. Mr Mullin eventually resigned from his position the following July.
The trial continues before Judge Martin Nolan and a jury.
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