Business Irish

Tuesday 25 July 2017

Drumm bids to have Anglo case against him thrown out

The Massachusetts (USA) house of David Drumm, former chief executive of Anglo Irish Bank, where
he now lives. The home is located in the exclusive ocean side section of Chatham on Cape Cod. Photo: Robert Scott Button
The Massachusetts (USA) house of David Drumm, former chief executive of Anglo Irish Bank, where he now lives. The home is located in the exclusive ocean side section of Chatham on Cape Cod. Photo: Robert Scott Button

Tim Healy

FORMER Anglo Irish Bank chief David Drumm wants a Commercial Court action against him thrown out over the bank's refusal to disclose documents in the case.

The documents relate to possible civil litigation arising from five separate regulatory investigations into the nationalised bank which is claiming legal privilege over them.

Mr Drumm has brought an application before Mr Justice Peter Kelly seeking to have the bank's action against him struck out because of its refusal to discover -- disclose for legal purposes -- the documents.

During the hearing of his application yesterday, Mr Justice Peter Kelly remarked that the bank was being investigated by five authorities and questioned why it wanted to claim privilege to protect the good names of people involved in running Anglo prior to its takeover by the State.

Justice

John Hennessy, for Anglo, said it "is still a bank" and there was a natural justice issue of protecting its good name.

It would be "a dangerous precedent" if the bank was required to hand over documents prepared in contemplation of potential litigation arising from investigations into it by the Garda Bureau of Fraud Investigation, the Director of Corporate Enforcement, the Financial Regulator, the Chartered Accountants Regulatory Board and the Irish Auditing and Accountants Supervisory Authority.

When the judge asked which of those five could take civil actions, Mr Hennessy said the ODCE could take actions against former officers. "And you want to protect those former officers?" the judge asked.

Mr Hennessy replied he was entitled to assert privilege over various documents, these were "uncharted waters" and there was potential litigation arising from investigations which did not differ materially form a tribunal of inquiry.

Declan McGrath, for Mr Drumm, said this "novel" claim of privilege was "very broad in the current climate where many investigations, some overlapping, were being carried out into banks. How many banks could claim the same privilege? he asked, adding it was "disquieting" that Anglo was refusing to discuss any details of the investigations on foot of which privilege was claimed.

Earlier, opening the application to strike out, Mr McGrath said there had been a "spirited" dispute between the sides over the need to bring this motion and there remained just two issues outstanding: the form of an affidavit of discovery of Anglo CEO Mike Aynsley and the claim of litigation privilege.

Counsel said Mr Aynsley was required to personally be satisfied that full and proper discovery had been made but had impermissibly delegated that duty to the bank's solicitors. While accepting millions of documents had to be checked and Mr Aynsley only joined the bank last year, he still had to swear proper discovery was made to his own knowledge.

Mr McGrath also argued there was no basis for the litigation privilege being asserted by Anglo concerning communications between bank officials in the context of regulatory investigations or in contemplation of litigation arising from such investigations.

Opposing the motion, Mr Hennessy, for Anglo, said it was premature and his side had done an "extraordinary" amount of work in addressing hundreds of queries from Mr Drumm's side relating to documents. Mr Drumm himself had been in serious default of discovery but the bank had not made an issue of that and just wanted to get on with the case, counsel added.

The hearing continues.

Mr Justice Kelly previously fixed October 26 for the hearing of the actions by Anglo against Mr Drumm over €8.3m unpaid loans and to set aside the transfer of the family home to Mr Drumm's wife, Lorraine.

In the action over the January 2008 loans, Mr Drumm, who resigned in December 2008 as CEO, claims Anglo's demand for immediate repayment is premature and in breach of loan agreements. He is also counter-claiming his employment was not validly terminated in early 2009 and the bank owes him some €2,620,695 in salary, pension and deferred bonus payments.

After the case against Mr Drumm over the loans concludes, the court will hear the bank's action against Mr Drumm and his wife aimed at setting aside Mr Drumm's transfer of the family home at Abbington, Malahide, Co Dublin, to his wife.

Anglo claims the transfer into Mrs Drumm's name is a fraud on creditors but the couple, now living in Cape Cod, US, claim it was for "taxation reasons".

Irish Independent

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