ANGLO IRISH Bank has told David Drumm’s bankruptcy proceedings in the US that it intends to sue him for his role in the treatment of Seán FitzPatrick’s loans and other controversial matters at the bank.
The bank has said it is going to pursue a claim for breach of fiduciary duty against its former chief executive arising from alleged misconduct and deception.
The bank has told the court the alleged breaches arise from actions carried out by Mr Drumm in relation to loans Mr FitzPatrick had from the bank and which were temporarily transferred to Irish Nationwide at the end of each financial year so they would not appear on the Anglo books.
Another alleged breach arose from Mr Drumm’s role in the creation of loan security letters for investors in Anglo shares at the time the Seán Quinn shareholding in the bank was being bought out with the bank’s own money in 2008.
The bank has further told the court it would be seeking damages from Mr Drumm arising from non-recourse loans given to directors, including former finance director Willie McAteer, mostly so they could buy Anglo shares.
No value has been put on the claims by the bank but they have the potential to be very substantial. The so-called Maple 10 were given €400 million by the bank to buy shares in the bank Mr Quinn and his family had bought at one remove through contracts for difference.
Mr FitzPatrick had more than €100 million loaned from the bank and it was the disclosure that these loans existed that led to the bank being nationalised.
Mr McAteer was given an €8 million non-recourse loan by Anglo in 2008 to prevent him having to sell shares on the market to settle banking arrangements he had with the Bank of Ireland. The only security against the loan was the shares and the shares are now worthless.
The bank has notified the Boston court that it would be claiming legal costs from Mr Drumm arising from Irish court proceedings between him and the bank. Anglo is already the largest single creditor involved in the bankruptcy case. It says it is owed more than €8 million it loaned to its former employee, who filed for bankruptcy in Boston in October of last year.
A crucial date in the case comes on March 18th next, as it is the deadline for any attempt by any creditor to prevent Mr Drumm being discharged from a particular debt. The creditor would have to show malfeasance or bad faith by Mr Drumm in relation to the debt.
Anglo questioned Mr Drumm in Boston last week at a deposition hearing held in private and will have studied that material and other information it has ascertained about events in 2008 when the bank was facing a grave crisis, before notifying the bank yesterday of its intention to make further claims.
Separate proceedings will have to establish the claims.
Mr Drumm and his family moved to the US after he resigned from Anglo in December 2008 when it emerged Mr FitzPatrick had hidden his loans over a number of years.
