ANALYSIS:Letters between David Drumm and his former employer reflect the rising tension between the sides, writes SIMON CARSWELL

JUST A fortnight shy of the first anniversary of David Drumm’s resignation as chief executive of Anglo Irish Bank, the now State-owned bank’s legal proceedings to recover loans of €8.34 million from him have kicked off in court.

The bank is separately suing Mr Drumm and his wife Lorraine to overturn the transfer of a house in Malahide, Co Dublin, last May from their joint names to her sole name. Anglo claims that this has put the property out of its reach in the pursuit of his debts.

The bank claims it is entitled to demand repayment of the loans, a claim contested by Mr Drumm.

Central to his case are conversations he had in early January 2009 – the week before Anglo was nationalised – with the bank’s chairman Donal O’Connor and Declan Quilligan, a senior executive, following Mr Drumm’s resignation on December 19th, 2008, over the loans to Sean FitzPatrick.

Mr Drumm claims that he renegotiated his loans with the bank last January through new facilities, leaving him owing €7.7 million and a further loan of up to €325,000, allowing him to roll up interest due on his borrowings.

Two other loans – one for €400,000 (dated May 2007) and another for €8,400 – to Mr Drumm to finance an investment in a film company, Darkroom Productions, also remain outstanding.

Counsel for Mr Drumm, Brian O’Moore SC, told Mr Justice Peter Kelly that his client said the new loans arrangements were agreed on January 7th, 2009, with Mr Quilligan (currently head of Anglo’s UK operations) and endorsed by Mr O’Connor.

Mr Drumm claims the new loan deal ensured there would be no claim for repayment until January 10th, 2010, at the earliest, when the loans would be reviewed.

The court was told that Mr Drumm plans to counter-sue for €2.6 million from the termination of his employment and a bonus payment, which could be offset against his €8.34 million loans.

Letters between Mr Drumm and his former employer submitted to court reflect the rising tension between the sides over the loan arrangements and the transfer of the ownership of the house at Abington in Malahide.

The dispute moved up a gear following the appointment of Australian banker Mike Aynsley as chief executive last September.

The Drumms have argued that the property was transferred for “taxation reasons” on the advice of their lawyers in the US, where they are now based, and not to protect Mr Drumm from claims.

Mr Drumm repeatedly argues in his letters to Anglo that he is willing – and has the means – to repay the loans, and he wishes to reach an agreement to repay them when they come up for review.

He also claims the bank has breached the Irish Banking Federation’s code of practice on how a bank should deal with customers.

He accuses the bank of leaking details of his loans to The Irish Times “to harass and humiliate” him, a charge vehemently denied in correspondence by the bank.

Mr Drumm claims in a letter to Mr O’Connor that he is being treated unfairly, accusing the bank’s pursuit of his loans as “disgraceful behaviour”.