Drumm seeks €2.6m from Anglo over 'distress and harassment'
Heated battle ahead as former boss claims bank leaked details of his finances to media
Published 09/03/2010 | 05:00
THE former chief executive of Anglo Irish Bank is suing the disgraced lender for mental distress and harassment.
David Drumm, who was forced to resign last year after it was revealed in December 2008 that Anglo had concealed loans for eight years to its former chairman, Sean FitzPatrick, is also suing the bank for €2.6m over the termination of his employment and the loss of bonuses.
Mr Drumm, who is living in the exclusive enclave of Cape Cod, Massachusetts, has agreed to hand over to his former employers all doctor's letters and details of medical treatment and advice he received for his alleged mental distress in advance of the first major litigation between the discredited bank and its former executives.
He and his wife Lorraine have also agreed to hand over all documents relating to the transfer of their family home in Dublin to Mrs Drumm's sole name and details of the couple's move to the United States.
The stage is now set for a heated battle between Anglo and Drumm who is being sued by the bank for €8.3m -- representing the capital and interest on a loan he borrowed in January 2008 to buy shares in Anglo.
Mr Drumm, who is currently in America, has insisted that he has enough money to pay his debts but says Anglo's demand for immediate repayment is premature, in breach of loan agreements and amounts to harassment.
He has also claimed that his privacy rights were interfered with through alleged leaks by Anglo of his confidential banking details to others including the media.
Yesterday the Commercial Court, the big business division of the High Court, heard that when the bank loaned Drumm €7.65m in January 2008 to buy shares in Anglo, the loan was offered on a non-recourse basis.
This meant that if Mr Drumm defaulted on the loan, that the bank's only security was its own shares and he could not be personally pursued for the debt.
Both Drumm and Anglo moved swiftly yesterday to correct what both parties said was "an error" on the 2008 loan facility, insisting that although it was offered as non-recourse, it was intended to be a recourse loan, which meant that they could move against Mr Drumm and his assets. A second, recourse loan was executed in 2009, before the bank was taken into state ownership, although both parties are in dispute about its status.
Anglo says the 2009 loan was a renewal facility, but Drumm insists that it was a fresh loan.
Mr Drumm's lawyers have requested documents relating to the discussions between Anglo and Drumm in late 2008 and early 2009, around the time the second loan facility was executed, and claim the documents are a very important part of the "factual matrix" that underpinned the re-negotiations in 2009.
The second loan was agreed on January 7, 2009 and executed on January 28, weeks after the bank was nationalised on January 15.
The non-recourse/recourse error has renewed concerns about the status of loans issued to directors who received some €179m in loans from the bank.
It also comes as Fine Gael has called for the Garda Fraud Squad to be stationed at the Commercial Court to identify "instances of suspicious activity" that need to be investigated and prosecuted.
This follows the referral to the gardai of five high profile cases including Breifne O'Brien, solicitors Michael Lynn and Thomas Byrne, ex-Fianna Fail councillor Ger Killally and ACC Bank.