A facility letter under which a €7.65m loan was given to former Anglo Irish Bank CEO David Drumm in 2008 to buy bank shares had described the loan as a 'non-recourse' loan, meaning the bank could redeem the loan only against the shares purchased, the Commercial Court was told yesterday.
Both Mr Drumm and the bank say this description was a 'mistake' and the loan was actually a 'recourse' loan. The bank denies Mr Drumm's claim that this acceptance by him was a factor in the bank's allegedly reaching agreement with him to allow him a reasonable time to pay off the loan and not to move against his family home or take legal action.
Mr Drumm, who resigned in December 2008, claims the 'non-recourse language' used in the January 10 2008 loan facility document was 'put in in error' and he later agreed with Anglo it would be replaced by a 'recourse' facility executed in 2009.
This acceptance by Mr Drumm was a 'valuable benefit' to Anglo because, when it was nationalised in 2009, its shares were virtually worthless and the entire loan to Mr Drumm would have had to be written down if it was a 'non-recourse' loan, his counsel Declan McGrath said.
Mr Justice Peter Kelly granted counsel an order requiring Anglo to make discovery of all documents relating to contact and negotiations between Mr Drumm and the bank between December 1 2008 and July 2009 related to repayment of Mr Drumm's loans, including contacts with Donal O'Connor and Declan Quilligan of Anglo.
Anglo denies it had given Mr Drumm any concession for his acceptance the loan was a recourse loan.
Mr Justice Kelly was dealing with matters concerning documents to be discovered for the hearing of Anglo's proceedings against Mr Drumm for €8.3m arising from the loan and interest. The full hearing is expected to take place later this year.
As well as opposing the bank's claim for the €8.3m, Mr Drumm has counterclaimed for some €2.6m over the termination of his employment and loss of bonuses.
