Wednesday 7 December 2016

AIB claims 'secret deal' was aimed at its business

Dearbhail McDonald, Legal Editor

Published 08/09/2011 | 05:00

SIX senior executives accused of conspiring to steal staff and clients from AIB Bank created a "secret deal" that would see them own up to 80pc of a rival firm, depending on how much business they poached from their former employer, the state-owned bank has claimed.

  • Go To

AIB, which says it lost at least €22m on a deal to sell its International Financial Services (IFS) business after 20 staff resigned from the company in a "sudden exodus" this summer, has filed details in the High Court of "a very elaborate" memo of understanding agreed between the six executives it is suing for alleged breach of trade secrets and poaching its business.

The bank, which secured temporary orders this week compelling the executives to preserve all documents regarding the headhunting of key staff from AIB-IFS, told High Court Judge Mr Justice Barry White that the success of Centralis -- a Luxembourg company established by the departed executives -- depended in turn on the success of business brought over from the unit.

Senior Counsel Michael McDowell told Judge White that the bank had obtained a copy of the memorandum of understanding, which detailed the planned ownership of Centralis.

The bank claims that the memo disclosed how the shareholding of Centralis would vary, depending on the successful build of new business.

If the executives took in €3m within a year, they would earn a 5pc shareholding, but if they took in €12m of business, their shareholding would increase to 80pc, Mr McDowell said.

Each of the six executives executed a "solemn undertaking" and "acknowledged the secrecy" surrounding ownership of the rival business, added the former minister for justice.

AIB is suing the former head of AIB-IFS, Pat Diamond, along with Gerry McEvoy, Derek O'Reilly, Andrew O'Shea, Joe Walsh and Aidan Foley, who were all senior executives at the subsidiary, which provided mid- and back-office services to international financial groups.

They will have an opportunity to respond to the bank's claims when the case comes before the fast-track Commercial Court on September 20. AIB put the unit up for sale earlier this year as part of its plans to raise cash.

It said that Mr Diamond, along with Mr Walsh and Mr Foley, had put together a €22m bid for the unit as part of a failed management buyout.

But after a bidding process, the Capita Group emerged as a preferred bidder in June, offering €55m for AIB-IFS.

However, weeks later, according to Ronan O'Neill, AIB's head of corporate banking, rumours began to circulate that a number of senior directors and employees of AIB-IFS were in the process of moving to a competing organisation and were actively encouraging significant numbers of its employees to join them in the new venture.

These rumours prompted an internal investigation by AIB, which later agreed to sell the unit to Capita for a vastly reduced price of €33m.

In addition to the €22m loss, the bank says the Capita deal had been placed in jeopardy by the alleged conspiracy of its former executives

Indo Business

Read More

Promoted articles

Editor's Choice

Also in Irish News