FORMER ANGLO Irish Bank chief executive David Drumm is seeking court orders striking out the bank’s legal action against him due to its refusal to discover a small number of documents related to possible civil litigation arising from five regulatory investigations into the bank.
During the hearing of Mr Drumm’s application yesterday, Mr Justice Peter Kelly remarked 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.
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 Office of the Director of Corporate Enforcement 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 that did not differ materially from a tribunal of inquiry.
Declan McGrath for Mr Drumm said 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, which continues today, Mr McGrath said there had been a “spirited” dispute between the sides over the need to bring this motion and two issues were outstanding – the form of an affidavit of discovery of current Anglo chief executive Mike Aynsley and the claim of litigation privilege.
Counsel said Mr Aynsley was required personally to be satisfied 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 that 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 said it was premature. His side had done an “extraordinary” 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.
He argued the wording of Mr Aynsley’s affidavit provided an additional assurance that proper discovery had been made and there was nothing equivocal about that assurance.
Counsel also argued Anglo was entitled to assert litigation privilege over material prepared for possible litigation arising from the various investigations.
Mr Justice Kelly previously fixed October 26th for the hearing of the actions by Anglo against Mr Drumm over €8.3 million in unpaid loans and to set aside the transfer of the family home to Mr Drumm’s wife.
In the action over the January 2008 loans, Mr Drumm, who resigned in December 2008 as chief executive, claimed Anglo’s demand for immediate repayment was premature and in breach of loan agreements. He also counter-claimed his employment was not validly terminated in early 2009 and that the bank owed him some €2,620,695 in salary, pension and deferred bonus payments.
He was also seeking damages, including for mental distress arising from breach of privacy.
