Anglo 'paid bonuses' to departing managers

STATE-OWNED Anglo Irish Bank paid deferred bonuses to five senior managers who left the bank late last year, the bank’s former chief executive David Drumm has claimed in his legal action against the lender.

Mr Drumm, who is being sued by the bank over unpaid loans totalling €8.3 million, is counter-claiming for €2.6 million from the bank, which includes a €661,000 bonus deferred for 2006.

Counsel for Mr Drumm told the Commercial Court on Monday that Mr Drumm’s side had the names of Anglo employees who had left the bank and had received their deferred bonuses.

It is understood that Mr Drumm is claiming in his action that Anglo paid deferred bonuses to Pat Whelan, the former head of the bank’s Irish business; chief risk officer Peter Butler; director of finance and former chief financial officer Matt Moran; and two senior lenders at the bank, Joe McWilliams and Owen O’Neill. This was despite the fact that the five managers were not employed by Anglo at the start of this year, he claims.

All five executives left the bank before last Christmas as Anglo’s new chief executive Mike Aynsley installed a new management team.

Mr Drumm claims he is entitled to his deferred bonus just as the other managers received theirs.

A spokesman for the bank declined to comment.

Anglo is believed to have had to pay deferred bonuses where the bank had a pre-existing legal obligation to make the payments.

The court told Mr Drumm’s legal representatives on Monday that he could seek replies from Anglo to questions relating to deferred bonus payments to employees who left between January 2005 and January 2010.

Mr Drumm is also understood to claim that Anglo paid deferred bonuses to senior executives who left the bank over recent years. They include the former head of Anglo’s Irish business, Tom Browne, who left the bank in 2007, and the bank’s former chief operations officer Tiarnan O’Mahony, who departed in 2005.

Annual bonuses at Anglo are deferred over a three-year period with the gap of a year. For example, a bonus for 2006 is paid over three years, from 2007 to 2009, provided the employee is still with the bank at the time.

Mr Drumm was paid a performance bonus of €2 million in Anglo’s financial year to September 30th, 2007, as part of a total pay package of €4.65 million.

He is also suing Anglo for mental distress arising from an alleged breach of privacy and failure to protect confidential information relating to him in respect of news reports published in The Irish Times last autumn.

The bank’s loans to Mr Drumm include a €7.7 million facility that was used to buy shares to support the bank during the credit crunch in early 2008.

The shares became virtually worthless after the bank’s nationalisation in 2009.

The legal action between Anglo and Mr Drumm is scheduled for a full hearing later this year.