STATE-OWNED ANGLO Irish Bank is in talks with its insurers and lawyers to determine whether legal fees incurred by former directors and senior executives arising from the various investigations into the bank are covered by its insurance.
A number of former senior executives of the bank have sought to claim legal costs under the bank’s insurance policy covering directors and officers in the inquiries.
Anglo, like most publicly quoted companies, took out insurance policies known as director and officer (DO) liability insurance covering former executives against lawsuits arising during the course of their duties at the bank.
A spokesman for the bank said the board of Anglo had yet to make “a policy decision” on whether to allow the former executives to claim under the insurance. The insurers are being consulted on whether they would be covered on the policies and if they are legally entitled to make claims.
“The bank is currently in dialogue with its insurers and will not be commenting until these discussions have concluded, legal advice is considered and a policy decision has been taken,” he said.
No payments or claims have yet been made by the bank, but it is understood that a number of former Anglo managers have written to the bank seeking to have legal fees covered in relation to advice taken from solicitors on the investigations into the nationalised bank.
The bank is thought to be seeking clarification from insurers on whether former executives are covered in circumstances where charges are brought, or for legal fees incurred for seeking advice.
Once Anglo’s board decides on the issue, it is expected to go to Minister for Finance Brian Lenihan, the bank’s shareholder, for sign-off under Anglo’s relationship agreement with Government.
The Garda Bureau of Fraud Investigation and the Director of Corporate Enforcement are investigating three issues in the run-up to the bank’s nationalisation:
- the hidden loans of former chairman Seán FitzPatrick;
- the share transaction with 10 Anglo Irish customers which propped up the bank's share price;
- the €7 billion Irish Life & Permanent deposits which flattered Anglo's books and boosted its deposits at a key reporting date.
Mr FitzPatrick and former Anglo finance director Willie McAteer have been arrested and questioned in the Garda investigation.
Gardaí are seeking to interview former chief executive David Drumm, who is living in the United States.
