Anglo silent on declining to pay directors' legal bills
Published 21/06/2010 | 05:00
Nationalised lender Anglo Irish Bank is declining to make payments to several former directors of the bank who are facing legal bills arising from the various investigations into the company's activities.
The bank has an insurance policy in place to pay the legal bills of the ex-directors, but the Irish Independent understands payments to several former directors have been withheld, at least to date. Directors in the normal course of events are covered in respect of legal actions brought against them "in the course of their duties''.
This insurance, known as directors and officers (D&O) liability insurance, has a number of key conditions, which if not fulfilled prevent payments being made. The bank last week declined to comment, but it is understood correspondence on the D&O issue between the bank and the various directors is extensive.
Several former directors, including Sean FitzPatrick and Willie McAteer, have been arrested as a garda investigation into the bank intensifies.
If the investigation moves into a phase where charges are preferred, the legal costs facing former directors would rise rapidly. Payouts from the D&O policy would greatly reduce the pressure on former directors, many of whom have outstanding debts to the bank.
The gardai and the corporate enforcement watchdog Paul Appleby are investigating a range of issues at the bank.
But the probes are primarily about the deposits which flowed between Anglo Irish and Irish Life & Permanent in September 2008.
The D&O issue could also arise at Irish Nationwide, where senior directors, including Michael Fingleton, are facing a probe conducted by the building society itself.
The Government has asked the building society to look at previous decisions to see if directors discharged their fiduciary responsibilities properly. A team of forensic accountants is also assisting the building society on this.
In May, the Government instructed the building society's current management to prepare a "legacy plan" that would consider whether action is needed on foot of previous decisions made at the society.
If legal action followed on foot of these investigations, Irish Nationwide's D&O policy might come into play.