ANGLO IRISH Bank has been given time by the Commercial Court to provide evidence to support its claim of “regulatory investigation privilege” over certain documents being sought by its former chief executive David Drumm.
The documents are being sought by Mr Drumm for the action, fixed for October next, in which Anglo is seeking orders requiring him to repay loans of more than €8 million.
They include documents relating to director’s loans and e-mails between former Anglo chairman Seán FitzPatrick and Mr Drumm.
Mr Justice Peter Kelly ruled yesterday Anglo had not properly set out the basis for its claim the documents are privileged because they were prepared for the “dominant purpose” of defending some five regulatory investigations into the bank. Anglo is so far facing some 20 civil claims arising from matters under investigation, the court heard.
The judge said there appeared to be no authority in the common law supportive of a claim of “regulatory investigation privilege” but he would give the bank time to make its case and to supply the required affidavits and specific detail.
Anglo was also given an opportunity to deliver a fresh affidavit from its chief executive Mike Aynsley in a form which makes clear Mr Aynsley accepts responsibility relating to whether full discovery of documents has been made.
The bank is to supply the affidavits and information required by June 30th and the matter will be mentioned on July 5th when the court will be told whether or not Mr Drumm’s lawyers, on the basis of the material, accept Anglo can assert such a privilege. If not, the privilege issue will be determined at a later date.
The judge noted the documents over which privilege is claimed, while not specifically detailed, include internal Anglo e-mails including between Mr FitzPatrick and Mr Drumm on January 4th, 2009.
They also include e-mails between Anglo and Ernst & Young, plus documents pre-dating the investigations into the bank, including documents from 2004, 2006, 2007 and 2008.
Mr Drumm, who resigned in December 2008, claims the demand for immediate repayment of the January 2008 loans breaches loan agreements and is counter-claiming that his employment was not validly terminated in early 2009.
He claims Anglo owes him some €2,620,695 in salary, pension and deferred bonus payments and also wants damages, including for mental distress.
After the loans action concludes, the court will hear Anglo’s action against Mr Drumm and his wife Lorraine to set aside Mr Drumm’s transfer of the family home at Abbington, Malahide, Co Dublin, to his wife. Anglo claims the transfer is a fraud on creditors but the couple, now living in Cape Cod, US, claim it was for “taxation reasons”.
On Tuesday, Mr Justice Kelly began hearing an application by Declan McGrath, for Mr Drumm, to strike out the loans case on grounds of alleged failure by Anglo to make proper discovery.
John Hennessy SC, for Anglo, opposed the application and argued privilege attached to a small number of documents arising from five investigations 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.
Yesterday, Mr McGrath argued that there was a “clear distinction” between documents prepared for the dominant purpose of litigation and those prepared for regulatory investigation.
Anglo could not assert privilege on grounds of a “mere possibility” of litigation arising from the regulatory investigations, he argued.
When the judge asked why the bank was seeking to protect “someone else who may have a case to answer”, counsel said he did not know.
Replying, Mr Hennessy said, while the protection of others might be “a consequence” of Anglo’s claim, it was not the basis or motivation for that claim. The bank was not seeking to protect the good name of persons, the claim to privilege was that of the bank itself and was grounded on the principle of fairness in the administration of justice.
