AIB takes court action against managers

SIX senior AIB executives secretly and systematically colluded in the preparation and execution of a premeditated strategy to undermine and damage the bank’s International Financial Services business for their own gain, the High Court has heard.

Yesterday Michael McDowell, for the bank, told Mr Justice Barry White that following an internal investigation, AIB had been shocked and astounded at the conduct of “the six” top managers.

They are: Pat Diamond, Merlin, Elton Park, Sandycove, Dublin; Aidan Foley, formerly Grawn, Kilmacthomas, Wexford; Gerry McEvoy, formerly Shandon Park, Phibsboro, Dublin; Derek O’Reilly, Fernleigh Drive, Castleknock, Dublin, Andrew O’Shea, formerly Ashbrook House, Julianstown, Co Meath, and Joe Walsh, formerly of Grosvenor Terrace, Monkstown, Co Dublin.

The court was told they secretly schemed to take over clients, business and staff of International Financial Services Ltd (IFS), which the bank had put up for sale as part of its retrenchment and capitalisation.

Mr McDowell said the internal inquiry revealed that their actions had led to significant loss and damage being caused to the bank. From an original offer of €55 million from a preferred bidder, the bank was now in a situation of having to accept €33m, a loss of €22m.

Ronan O’Neill, AIB’s head of corporate and commercial banking, said IFS had operations across Europe and the US. As part of its response to the financial crisis enveloping the banking industry, AIB had been obliged to sell off the non-core IFS business.

A bidding process had been put in place where a several would-be purchasers participated in the sales process including a management buy-out team. The process led to the Capital Group (Capita) being granted preferred bidder status.

Mr O’Neill said that in the run-up to the finalisation of the sale to Capita, he heard rumours that senior directors and employees of AIB IFS were in the process of moving to a competing organisation and were encouraging significant members of staff to join them in the new venture.

The strategy included their targeting key staff and clients of AIB IFS for the purposes of setting up an enterprise which would directly compete with IFS or its successor within a Centralis corporate structure — Centralis SA; Centralis Switzerland GMBH; Centralis Hungary KFT and Nancyan SA.

Ultimately, the bank is seeking damages for unlawful conspiracy and economic interference with the bank’s businesses and breach of fiduciary duty, breach of contract and breach of confidence.

Yesterday, Mr Justice White granted AIB orders requiring the defendants to preserve all documents and computer records pending the determination of a full trial of the proceedings.

The proceedings were adjourned to a sitting of the Commercial Court on September 20.