David Drumm: ‘There is a witch hunt ... I convince myself that this will pass’
An Irish Central exclusive interview with the former Anglo Irish Bank boss now in US
So you have got a liquidity problem, literally your daily cash flow is suffering. Now your loans are sitting there and it’s money you have already put out, are fully secured, are performing and so on. You’ve got your element of loans for are non-performing, or that you have made bad provisions in, they are just sitting there and nothing is really changing. The market is getting a bit tighter so your bad debt provisions are going up. But it is not like a catastrophic issue here. That issue of asset quality really only started to kick in, after the first quarter of 2009 when the Irish economy went off the deep end and then there was massive damage to all the banks loan books.
PWC did a review of Anglo’s loan book at the end of 2008 for the government and agreed with Anglo’s level of bad debt provisioning. I am sure they did the same with the other banks, I know they did they same with the other banks because of the year that was in it.
In 2008 they board of the bank agreed given the times that were in it that the non-executive board away from the executive should independently review it’s loan book and they did so under the tutelage of Donal O’Connor, who took over the bank after Sean went and Lar Bradshaw, who used to be the head of McKinsey. Experienced guys went and reviewed the reviewers, the risk department. They reviewed all of the loans, came back to the board when the 2008 accounts were being signed off and said we agree with the provisions and that they actually are prudential.
So this issue of lying about the bad debts is just not true.
NOD: But how about the Sean Fitzpatrick money, PWC didn’t know about that?
DD: Sean Fitzpatrick’s warehousing scheme was known to the financial regulator back to around December of 2007. The level of his loans, the Central Bank of Ireland got and still gets I am sure from all banks, every month a report with all the loans and large exposures from different categories. They can come in any time they want and review any loans.
Sean Fitzpatrick’s loans were not hidden in any way within the bank and they were on the central bank returns. When the financial regulator went into Irish Nationwide, it would have been late 2007. They found Sean’s loans sitting there. When they came back to the bank in December of 07, spoke to Willy McAteer about the loans, he was the finance director and said to Willy what is the story with these loans. Willy went and spoke to the chairman and said yeah he had discreet finance with him temporarily with Irish Nationwide. The first question they asked Willy was ‘is that reciprocal?, is Sean Fitzpatrick doing it for Michael Fingleton?’ The answer was no. The second question was are there any Companies Act implications, legal issues? So Willy went to out external council and got a legal opinion that it was not.
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