Browne continued to be given money, right through the peak of the bubble and beyond

FURTHER EVIDENCE of the dysfunctional nature of AIB and Anglo Irish Bank during the bubble years is contained in the affidavit that has been submitted to the Commercial Court by former Anglo executive director Thomas Browne.

As pointed out in a replying affidavit from Ciarán McAreavey, currently an associate director with Anglo, the bank’s Irish lending grew by 284.2 per cent in the years between September 2004 and September 2007, for most of which time Browne was directly responsible for Irish lending.

In money terms the growth was from €13.3 billion to €37.8 billion. Presumably a lot of that money has disappeared, leaving little in its wake but taxpayers’ debt.

Despite this performance, Browne, managing director of lending in Ireland from 2005 to November 2007, argues that he was a conservative banker.

Browne joined Anglo in January 1990, having come there from AIB. He became director of Dublin banking in 1997. In October 2000 he left the bank to take up a position with the Devey Group, a property development business. He rejoined the bank in February 2002 and in 2005 was unsuccessful in his bid to become Anglo’s chief executive, the position instead going to David Drumm.

According to Browne, his departure from the bank was “almost inevitable” after his failed bid for the top post. He was reassigned to the Irish lending division and “was instrumental in introducing a more conservative lending policy”.

Meanwhile, Browne himself was getting more and more heavily involved in property, sometimes in partnership with John Hughes, the head of business banking with AIB Galway and one of the most senior lenders with that bank.

The two have been doing business together since 2000 at least. At some stage Hughes and Browne set up the Ballybrit Partnership and bought commercial real estate in Galway, some of which continues to be rented to the OPW.

According to Browne’s affidavit they borrowed money from Anglo in February 2008 to buy property in Bishopsgate, London. The amount involved is understood to be in excess of €20 million. With interest it appears to have grown to more than €30 million.

A receiver, Kieran Wallace of KPMG, has since been appointed to get the bank’s money back by selling this UK property. Mr Hughes, it is understood, remains in his position with AIB in Galway.

A spokeswoman for the bank would not comment.

What is telling about Browne’s affidavit is the extent to which he continued to borrow, and continued to be given money, right through the peak of the bubble and beyond.

At the time of his departure from the bank in October 2007, Browne had a €3.6 million unsecured “staff loan”. In December 2007 he was given £2.7 million to buy property at Wilton Plaza, Victoria, London and €6 million to buy Anglo shares (through its share option scheme).

In March 2008 he borrowed to buy six apartments near Leeds and to invest in a Real Estate Partners fund. In August he was given a loan of £286,000 to pay interest on the Victoria loan.

Further “working capital” of €1 million was provided in November of 2008. By early 2009 this had increased to €1.9 million. At this time, according to Browne, the bank was “almost frantically anxious” to regularise its loans to previous staff against a background of expected recapitalisation.

According to Browne, at the beginning of 2009 his shareholding in Anglo was worth in the region of €28 million. However, some of this stock was already pledged against loans from AIB.

He sold off shares to pay a €4 million tax bill arising from his exercising of his share options, and further amounts in 2008 when the bank’s share price was in “turmoil”.

The latter sales were used to reduce his debts to AIB.

When the bank was nationalised in January 2009 he still had 1.4 million shares, which are now worthless.

The full extent of his debts is not clear. He owes €50 million in total to Anglo, with Bishopsgate accounting for more than 60 per cent of that, according to his affidavit. His debts to other financial institutions are not clear.