As we have a quorum, the Committee of Inquiry into the Banking Crisis is now in public session and can I ask members and those in the public Gallery to ensure that their mobile devices are switched off. We begin our first session today which is a public hearing and the discussion with Mr. Fintan Drury, former non-executive director of Anglo Irish Bank. In doing so, I would like to welcome everyone to the public hearings of the Joint Committee of Inquiry into the Banking Crisis. Today, the focus of the inquiry is on Anglo Irish Bank and IBRC. At this morning's session ... or this afternoon's session we will hear from Mr. Fintan Drury. Mr. Drury is a former non-executive director of Anglo Irish Bank. He was a member of the bank's risk and compliance committee, which he chaired for one year. He was also on the committee established on recruit the new CEO in 2004. Mr. Drury, welcome before the committee this afternoon.

Before hearing from the witness, I wish to advise the witness that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect to their evidence to this committee. If you're directed by the Chairman to cease giving evidence in relation to a particular matter and you continue to do so, you will be entitled thereafter only to a qualified privilege in respect of your evidence and you are directed that only evidence connected with the subject matter of these proceedings is to be given and I would say that ... within the terms of reference of this inquiry. I would remind members and those present that there are currently criminal proceedings ongoing and further criminal proceedings are scheduled during the lifetime of the inquiry which overlap with the subject matter of this inquiry. Therefore, the utmost caution should be taken not to prejudice those proceedings. Members of the public are reminded that photography is prohibited in the committee room. To assist the smooth running of the inquiry we will display certain documents on the screens here in the committee room. For those sitting in the Gallery, these documents will be displayed on the screens to your left and right. And members of the public and journalists are reminded that these documents are confidential and they should not publish any of the documents so displayed.

The witness has been directed to attend this meeting of the Joint Committee of Inquiry into the Banking Crisis. You have been furnished with booklets of core documents. These are before the committee, will be relied on in questioning and form part of the evidence of the inquiry. So with that said, if I can now ask the clerk to administer the affirmation to Mr. Drury please.

Once again, thanks, Mr. Drury, for being here this afternoon with the committee and if I can invite you to make your opening remarks please.

Thank you, Chairman. Thank you, members of the committee. In July 2009 I was on the panel on the Marian Finucane Sunday morning show reviewing the papers and the events of the week. During a commercial break, Rachel English, who was sitting in for Marian, said that a couple of callers had phoned to ask that she would question me about my role on the board of Anglo Irish Bank. I dealt with this as best I could at the time by saying that, as a former director, I would fulfil my obligations to the letter and co-operate with any legal matters that might arise. I also said that morning that I believed I had a duty as a citizen of this State to participate fully in any and all inquiries established either by Government or by the Oireachtas. I was obliged, as a citizen, to give whatever insights I might have into the events around the banking collapse. Since then, I, like other former directors of Anglo, have attended interviews with the Office of Director of Corporate Enforcement and the GBFI investigating certain matters and I accounted in full for what I knew. I have been interviewed by Dr. Nyberg as part of his report, all of which was conducted in private. I am grateful, therefore, to have the opportunity to appear before this committee and, in full public view, deal with those issues that I can deal with. Where I cannot, I will say so. In my written statement of a month ago to this inquiry, I prefaced the response to the points raised by the committee by making some general observations.

The first is that the part of the definition of "non-executive directorship" is to be non-executive and that in accepting such a role in any business, there is what I have chosen to describe as "an unstated contract of trust" between you, the non-executive, and the executives or senior management in that business. The non-executive holds a part-time role on the board and he or she is dependent on the integrity and the openness of the senior full-time management who have access to all the information about the organisation's business. In 2009 Donal O'Connor, the then chairman of Anglo Irish Bank, addressed the board's failings and made a fulsome apology to all those who had been affected by its underperformance, from shareholders to staff. And as a result of the ... a result of what had happened - the ultimate fallout - an apology to the taxpayers. I was party to that apology, as a former director, albeit I had retired in June 2008. I want to recapture the essence of that apology this morning ... or this afternoon and restate it for my own part because with more ... the more that has emerged in the intervening period, I would want there to be no obfuscation when it comes to apologising for whatever part I may have played in the difficulties that arose. Quantifying that is for others, including this committee, to do.

This is all by way of context for these proceedings, Chairman. I will endeavour to deal with all the committee's lines of inquiry. I will do so as clearly and directly as I can, with my only interest being to add to the weight of knowledge that might assist you in your work to ensure that the lessons are learned and can be applied to future shock scenarios - better to protect the financial system, better to protect the economy and better to protect the people of this country. I believe there are valuable lessons to be learned from what we have experienced. That experience cannot be of value though, if those involved are not prepared to come forward and give an honest account of what they know and to do so without concern for protecting any individual's interests, including their own. Over a six-week period in the summer of 2002, I joined the board of Anglo Irish Bank and Paddy Power plc. I served for six years on the bank's board and eight on the board of Paddy Power, six of those years as chairman. At the time I fulfilled those roles, I had an equally high regard for the senior management of both companies. Interestingly, so too did the markets and, in the case of the bank, international rating agencies. I did my job with each company, with the same commitment, interest and the same integrity. In taking on the roles, I did so in the belief that I was working with management teams that would share all the information required with me, as a non-executive director, to allow me to fulfil my responsibility to the shareholders. Was that in any contract of employment? No. Did it need to be? No. This is business at a level where not everything should need to be documented, where management ... senior management knows that it has an obligation to keep its non-executive directors appraised of anything that is material to the well-being of the business.

There's been a good deal of comment on the lending approach of Anglo Irish Bank. Much of it is comment that could be applied to the many banks across the world that had or have a focus on one main sector, such as property.

Broader-based banks also got the emphasis wrong and continue to get the emphasis wrong. Considerable focus is placed on risk and the management of the risk function within the bank and its oversight by the board and, specifically, by the risk and compliance committee.

As you said in your opening remarks, Chairman, I was a member of this committee for the duration of my time on the board, and its chairman for my last year as a non-executive. It's understandable, correct, that attention has been focused on this aspect of the bank's governance and it's reasonable to expect that the committee of inquiry would want to question me about it. Let me set some initial thoughts before you do. I believed that the risk and compliance function was well-resourced and that the senior executives responsible within the bank were competent, committed and focused exclusively on protecting the bank's interests against any lending that could damage it. I also believed that the overall structures, built around the executive function, were robust, comprising a risk statement which was reviewed and updated every year and, as part of that review, a comprehensive listing of all anticipated risks detailed and considered by the committee and the board. That was, in effect, our bible for the coming year and a programme to mitigate those risks was reported on at each risk meeting. Risk management as a function within the bank lived this on a 24-7 basis. It was monitored by internal audit and external audit and quarterly reports were submitted to the regulatory authorities. The risk and compliance committee reviewed the work of the asset and liability committee, which was a management committee, and we reported directly to the board. Separately, we brought in external consultants to review the risk committee's work and the risk function on a regular basis. In 2003, Bernard Somers and Associates was brought in to review the whole risk function within the function, post the Rusnak affair. In 2006, that exercise was repeated when PwC were brought in to review the performance of risk within the bank and the minutes will show that I had recommended, as I finished with the bank and the committee, that a further external report should be carried out in late 2008 to see how the committee could be strengthened further.

There are issues that have been raised by other contributors to the inquiry to date around the bank's credit policy, its loan growth and the concentration on development lending, which I am sure you'll want to explore presently. Before doing so, the Anglo collapse needs to be seen in context. Yes, the bank over-extended itself and, despite efforts from 2006 onwards to curb lending in Ireland, it took on too much in the Irish marketplace - even with the application of the foot to the brake - in new development lending that the board had approved at that time. Great efforts had been made over the previous decade to develop its franchise in the UK and North America with considerable success, the latter being down, in no small measure, to the work of David Drumm, a serious consideration when it came to his appointment as chief executive. Nonetheless, the bank's exposure to development lending was at 23% by the end of 2008, with 50% of total lending in Ireland. On the other hand, the board had supported the recommendation of the director of banking to stop new lending except to its top, most established clients and Anglo's share of major land deals in Ireland was less than half that of AIB and 10% lower than Bank of Scotland between 2005 and 2007.

My friendship with Brian Cowen has been much commented upon in the context of Anglo's demise. Let me deal with what I know. In doing so, I realise there's a significant number of people whose minds are made up on the issue and nothing anyone can say will undermine their belief in a conspiracy theory. Interaction No. 1 was a few days after St. Patrick's Day 2008. I received a phone call from Seán FitzPatrick, the chairman of the bank, asking me if he thought that Brian Cowen would take a call from him. I asked him why and he said it was about the ongoing liquidity issue, so I said that I knew Brian Cowen was overseas, but I would try and reach him. I made contact with Mr. Cowen within an hour or an hour and a half, explained the situation to him, and he said he would need to talk in the first instance with the Governor of the Central Bank, but that he would then revert to me. Within an hour or so later, he had called me back and he told me that the Governor was going to deal with the matter.

Interaction 2 - Heritage House, Stephen's Green, April 2008. The first point to make here is that this was not a special, set-piece event built around Brian Cowen or his position as Minister for Finance. Such events happened, on average, twice a year and had been in place since before I had joined the board in 2002. Over those years, the board had held lunches primarily, though sometimes dinners, with people in public life - senior public servants, politicians and others - with the emphasis very firmly on it being a social occasion where there would be an exchange of views and experiences. In my time on the board, I had attended, I would say, eight or ten and ... of those functions and among the attendees over those years had been politicians of different persuasion to what Brian Cowen's is. Brian Cowen just happened to be next on the list. I had undertaken to ask him to do the event and, indeed, the records in the Department should show that he had at least ... on at least two previous occasions been diaried to meet with us, but other priorities had got in his way.

The event was completely unremarkable. I recollect a general introduction by Sean FitzPatrick, as chairman, and then a broad discussion about all things other than banking, with the Minister going around the table asking each board member to set out their thoughts on their area of expertise or their view of the Irish economy or, in the case of those who had global experience, like Noël Harwerth, who was a former COO of Citigroup, the global economy; the same with Gary McGann, obviously through his role as CEO of Smurfit Kappa.

Interaction 3 - the Druids Glen golf outing. I understand that some people find it hard to believe that we didn't discuss the bank during the course of that afternoon and evening. I'm a sometime sceptic myself, so I understand the extent to which some people have difficulty in accepting this point. Let me, though, ask a few questions. Had we discussed the bank, what would we have discussed? The general liquidity issues in the sector at that time or how the Quinn CFD position had unsettled the market and added to the pressure on the stock? Perhaps we could have discussed those issues, but to what end? The then Taoiseach is a friend of mine. I saw him regularly, often in his offices, so why, if I, as a former director of Anglo at that time, wanted to lobby him or to bring undue and inappropriate influence to bear on him, would I choose such a convoluted and public route to do so, when I could have arranged to meet him in his office, closed the door, sat down and had the conversation well away from prying eyes? For me, the idea that the meeting, the golf and the dinner in Druids Glen was part of some conspiracy to capture the support of Brian Cowen for some kind of imagined need that Anglo had in July 2008 is more lacking in credibility. We met for about two hours, we went through an agenda that Alan Gray had prepared for the meeting and which did not have banking on it at all. Seán FitzPatrick, Brian Cowen and I then went and played ... I don't even remember was it nine or six holes of golf and then we went to the bar and had some drinks, where we were joined by Deputy Caoimhghín Ó Caoláin, who happened to be in the Druids Glen hotel attending a wedding, and he asked Mr. Cowen to join the bridal party for photographs, which the Taoiseach - the then Taoiseach - was happy to do. Later, Gary McGann and Alan Gray returned to join us for dinner. Alan had retained the agenda, but in classic Brian Cowen fashion, he remembered that his driver was outside and he said he would like him to join us for dinner, which, of course, he did.

We reviewed some of the matters we had discussed that morning and we closed business early. There are other material reasons why people should not believe the conspiracy narrative. Brian Cowen may represent something that some people do not like and do not admire. That is absolutely their prerogative, as all of us evaluate in our own minds, in our own hearts, people who are in public life. What should be acknowledged, however, as I know politicians who are not part of his party readily do, is that in public office, Brian Cowen would never make a decision that was not centred on what he considered to be best for his country.

Equally, this is about me and my standards. I would not act in a manner that is unethical. And were I to have attempted to pressurise Brian Cowen in the interest of a private business, at the expense of the State who's duty it was his to serve, I would have been behaving inappropriately, and for those who know me well, in a way that would be completely and utterly out of character. In my time as a director of Anglo Irish Bank and Paddy Power, and other private businesses of which I was a director, I never discussed the business of those organisations in any material way with Brian Cowen. Confidentiality is integral to who I am and how I conduct my affairs.

Much of the comment on Anglo is commentary that could be applied to the many banks across the world that had or have a narrow focus, rather than the larger institutions that offer a wide array of products and services. Much of the comment is also based on a view of the bank of its lending and of its growth, which has its source in the knowledge we now have of the cataclysmic global economic events of the mid-2000s. I know, Chairman, that you've all probably had your fill of witnesses coming into these sessions and talking of 20/20 vision or, "If I knew then what I know now." But while in normal circumstances, this may be a pretty poor line of defence, it is the case that the storm that broke in Ireland was a global financial tsunami that had its origins elsewhere and just took its time to crash over our small island and wreak the damage that it did. There is no doubt that the damage was accentuated by the fact that our own defences were very weak. We had gorged in the boom years and the banks had continued to feed our insatiable appetites. I know. I know because I was involved in both putting the menu on the table as a non-executive director of Anglo Irish Bank, and I know because I was one of the hundreds of thousands who sat there and ate more than I needed. This is not excuse time, Chairman; it is simply to acknowledge the fact that when the massive shock waves stirred by global financial events washed over us, we were already in a vulnerable position. We know now that Anglo Irish Bank most certainly was.

This statement is not an apologia. It is an honest attempt to summarise what I would consider to be the main insights of the time that could help the committee in meeting its objective to assess what went wrong, where and why in order that it can apportion responsibility where it believes it should rest, and provide guidelines or learning's from its review of the whole episode. I accept that to have been on the board of Anglo Irish Bank over the period leading up to the financial crisis, disallows absolutely any notion that one could claim to be in any way blameless. But, as I have said before, it is for the committee to determine where the lines of responsibility lie and to weight them according to people's roles across the banking sector and the other stakeholders involved. Thank you, Chairman.

Thank you very much, Mr. Drury. And we can commence questioning and in doing so if I could invite Deputy Eoghan Murphy. Deputy, you have 25 minutes.

Thank you, Chairman. And thank you, Mr. Drury, you're very welcome.

Thank you.

In the written opening statement that you provided to the committee, under the line of inquiry for the committee, "Appropriateness of the relationships between Government, the Oireachtas, the banking sector and the property sector", you wrote, "This is not something I believe I am equipped to answer." Why did you write that?

Because I felt that the issue is one which covers a very wide span. I was being asked by this committee, by the banking inquiry, to give my perspectives as a non-executive director of Anglo Irish Bank. I may have views on how our country is governed, how our economy is managed, how banks are regulated, how different institutions of the State interact with Government and interact with the Oireachtas, but those are views which I did not believe were particularly relevant to the specific role that I had as a director of ... a non-executive director of Anglo Irish Bank. And my sense is that if my involvement as a director of Anglo Irish Bank is what people want to inquire of me, then I'm happy to give whatever insights I can, but to-----

Okay.

-----to give a thesis, if you like, on the broader question that is ... was raised-----

Yes.

-----in the documents that I received from the inquiry, I felt it was better to just say, "I'm not really equipped to answer that."

Okay, well just on that then, in relation to your role as a non-executive director for Anglo Irish Bank from 2004-2008, in that role, did you establish contacts between the bank and the Government?

No. I mean, one of the things that was interesting about Anglo Irish Bank as an organisation, and I had worked previously with the bank as a consultant in the '90s. Prior to selling my communications company in 1999, I had quite an extensive involvement with the bank, part of which was to try and work with the senior management to transition, if you like, the bank from its position ... or positioning in the marketplace at that time, to being recognised as being more established, more substantive. And one of the interesting things about that, Deputy, was that there was a very significant resistance at the top level of the bank then and that was still there when I became a member of the board in 2002, to engaging with politics, to engaging with Government, to engaging-----

But-----

It was almost anathema to the senior people in the bank.

Are you saying that when you were a non-executive director of Anglo Irish Bank, you never made a contact with the Minister for Finance or the Taoiseach on behalf of the bank?

Yes.

Well, I'm sorry, how do you explain then the phone call that you organised between-----

Sorry, I beg your pardon. I thought you ... I assumed given that I'd given a clear account of that that you were asking, you know, beyond that.

No, no. I'm asking why-----

Sorry, okay.

-----in your written statement-----

Well, clearly ... sorry, I beg your pardon.

If I could just-----

I've acknowledged-----

In your written statement, you said you believed you were not equipped to answer on the appropriateness of relationships between the Government and the banking sector. And when I asked you to elaborate on that, you said that you were here to account for your role as a non-executive director of Anglo, and that that didn't pertain to that line of inquiry. And then I asked you if, as a non-executive director, did you make contacts on behalf of the bank with the Government. To which you then, I think, said in a longer answer, that you did not - but in fact, you did.

Yes, but, with respect, I mean, I absolutely accept that.

Yes, but I want to clarify that because-----

No, but it-----

Allow Mr. Drury to respond.

Yes, okay.

But I had ... it wasn't as if I wasn't alluding to that or never made that clear. I've made that clear in my opening statement this morning.

It's just that it wasn't acknowledged in the written statement that you supplied and I was wondering why. And you've tried to explain that. But can I just ask you then to clarify-----

Sure.

-----the contacts that you laid out to us in your opening statement, are they the only contacts that you made on behalf of the bank, with a member of Government?

As far as I can recall, yes, absolutely.

Do you recall a board meeting in early 2008, at which the possibility of the NTMA placing further deposits with the bank was discussed?

Well ... I ... if you wished ... if you wish me to deal with that-----

I'm talking about an article from the Irish Independent which discussed or which details a board meeting that was held in early 2008, at which the placing of deposits by the NTMA with the bank was discussed.

Well, the position in respect of this-----

Can I just ask Mr. Drury-----

-----with respect-----

Sorry, Mr. Drury, are you familiar with the article?

I'm not familiar with the article but I'm familiar of the source for the article, so I'm happy to deal with the question if that ... if-----

Okay, once you remain within the lines of inquiry and under ... and remain under direction.

Well, pretty directly, the article is based on information which it sourced ... the source of that ... for that article, we ... everyone in this room knows what source of that article is.

I don't know the source of that article.

What article?

This is an article provided by the legal team this morning, Chair, its from the Irish Independent. It's entitled, "The political contacts that led to controversy."

What's the date?

2014, I think.

I never discussed, at any board meeting, making contact with either an individual, i.e. Brian Cowen as Minister for Finance, or the Department of Finance, in respect of any issue regarding Anglo Irish Bank. I never would have allowed any discussion arise at a board meeting of Anglo Irish Bank, or Paddy Power for that instance, where there could potentially have been a conflict between my role as a board member and my relationship with Brian Cowen.

Okay. Thank you.

You're welcome.

We'll move on to the Heritage dinner, if we may.

Sure.

Just to clarify some things around that. You arranged the dinner. Is that correct?

Well, I-----

You-----

-----as I explained in my-----

Yes.

As I explained in my opening statement, Deputy, I ... it fell to me to see whether Brian Cowen would be prepared to attend what initially was going to be a lunch in the manner in which other public servant ... public servants and senior politician ... political figures had over the ten years or so, as I have explained in my statement. And, because I was known to be a friend of his, I approached him and asked him if he would do it. It was then the ... the organisation of the dinner would have been managed by other people within the bank.

Okay. Do you see a possible conflict of interest in using your friendship with the Taoiseach - or the then Minister for Finance - to set up these types of contacts, to set up these dinners?

Well, you're referring to "these type of contacts".

Well, sorry, this dinner, in particular.

Absolutely not.

Okay. And you attended the dinner with Mr. Cowen. And how long did it last for, do you remember?

I think about 90 minutes.

Ninety minutes, okay. And do you recall any formal presentations or document?

There was none.

None. Do you recall if Mr. Cowen arrived with a document?

I arrived with Mr. Cowen. He did not arrive-----

He didn't have-----

-----with any document.

Okay. And he didn't leave with any documents?

And he didn't leave with any document.

Okay.

Because I left with him.

And do you recall at the dinner any discussions around funding problems for Anglo?

Absolutely not. I mean, I can recall other things from the ... I would recall it if such a discussion had happened.

Yes. No discussions around the NTMA.

No, absolutely. But there was no general discussion about the NTMA, if you follow me.

Okay. Moving on to the other occasion then, the Druids Glen outing.

Yes.

That was ... was it lunch, golf and then dinner? Is that correct? How long was-----

It was a meeting ... a meeting over coffee-----

Okay.

-----and then three of us went and played golf and then the five of us had dinner with ... we were joined by Brian Cowen's driver.

Okay. So how long of a total engagement are we talking about in terms of the interaction between Mr. Cowen and the representatives from Anglo Irish Bank?

Well, first of all, they weren't representatives of Anglo Irish Bank. So let's be clear that ... Gary McGann was chief executive of Smurfit Kappa.

Yes.

Seán FitzPatrick was chairman of Anglo Irish Bank. Fintan Drury was a former director of Anglo Irish Bank, not at that time, and Alan Gray was a director of the Central Bank. So ... and they were ... they were selected for that discussion on the basis that prior to going on holidays, I had had a discussion with Brian Cowen about the value of having a number of smart people around a table to discuss with him some of the more substantive economic issues that ... and not just economic issues, but primarily economic issues that were facing the country at the time and which he, as Taoiseach, might need to get some outside perspectives on.

Okay.

And Brian Cowen was pretty concerned that there would be any misunderstanding by anybody who would be approached and asked to be involved in such an exercise that he was in some way creating a kitchen cabinet. This was a ... this was a kind of one-off discussion to explore areas that outside people might be able to give him guidance on. And the reason the people who were at that event were chosen was because it was a combination of people I knew and people that ... who Brian knew. Brian had great belief in Alan Gray, as many people in politics and in the Civil Service do. So he wanted him there. I knew Alan, but not well. He wanted Gary McGann there because, as I refer to in my opening statement, he had a view that Gary was very smart, very committed to public service. He was a ... I think at the time, a former chairman, if not still chairman, of the Dublin Airport Authority, and had committed himself to a number of roles in public service, but he was also chief executive of one of Ireland's largest companies, which had a global reach and Seán FitzPatrick was my suggestion and the suggestion was made at a time when Seán FitzPatrick was deified. It's an exaggeration but his reputation was, both globally and in Ireland, extremely high and he was seen as somebody who was extremely bright, extremely talented, and would have, therefore, value to add. And it was done on that basis.

Okay. At any point, was Anglo Irish bank discussed?

No.

At any point was liquidity or solvency issues in the banking sector discussed?

No. No. Actually, interestingly, the agenda, which Alan prepared and brought with him when we gathered, had, to my memory, no reference to the kind of issues which dominated subsequently, if you follow me, like the ones you've referenced.

But you were there to discuss the economy and what was happening globally-----

Yes.

-----is that correct? And at no point the banking problems that had already begun in 2007 came up, Northern Rock, Bear Stearns.

Yes, I mean, I'm not saying that, you know, there was no discussion about the fact that there was a very significant global ... the start of ... well, more than the start, the emerging economic difficulties which were partly being fuelled by significant financial difficulties. I'm not saying that that wasn't the backdrop, if you like, but what I'm saying to you is ... to be clear, Deputy, what I'm saying to you is that at no point was there any discussion whatsoever about Anglo Irish Bank. And the question I posed in my opening statement was to say, "Well, why would there have been?" Because at that time, Anglo Irish Bank was under pressure under two headings, as I saw it, as somebody who had retired from the board six weeks previously-----

So-----

And the two pressure points were liquidity and CFD in ... the Seán Quinn CFD issue. But there weren't other ... there wasn't concerns about, you know, the solvency or anything like that with regard to the bank.

Okay. And any discussion of the NTMA?

No.

And does the agenda for the meetings-----

Well, sorry, I want to be clear ... I want-----

Yes.

I should be more precise.

Yes.

Not that I recall. I'm-----

Okay.

I want to be definite where I can be. I'm just slightly hesitant to say "No" with that degree of clarity.

Does the agenda for the meeting still exist?

Pardon?

The agenda that you said, I think, Mr. Gray drew up.

Well, I'm sure it does. I mean, Alan had prepared it so-----

Okay.

-----well, perhaps ... yes, it wouldn't ... it would be wrong for me to-----

Yes. And at no point ... just to be clear on what you understand, Mr. Drury, at no point did you leave any of the individuals alone for a long period of time or any period of time at all in which to have a side conversation?

I'm not really a golfer but, you know, I hacked my way around so ... Brian's talent in that area is limited as well, so I think, you know, the chances of the three of us on the golf course being any way proximate to each other was limited.

Okay.

I don't mean to be smart but ... but, no, there was no time-----

Before and after-----

No.

-----any moment where someone said, "I'd like to speak to you for a moment, have you got ten minutes?" and-----

Deputy, I can only speak for myself-----

Yes.

-----and in that respect it's a bit like the question you asked me about the NTMA at the dinner in Heritage House, and you asked me was the NTMA discussed at the dinner in Heritage House. No, it wasn't. Was ... was there a discussion between two parties ... or two people who were at that dinner about the NTMA? I can't answer that. It would be wrong of me to. I can say that Fintan Drury didn't have any discussions at that dinner about the NTMA and, equally, I can say with complete certainty, that at no time over the course of the Druids Glen affair did, did we have a discussion about Anglo Irish Bank. However, you know, did I go out to take a phone call, did I, did somebody leave the ... our company at one stage? Well, I know people did, clearly. So whether there was or not, I don't know. I very, very much doubt it.

But, just to be clear-----

Yes.

-----the purpose of the ... the day itself-----

Yes.

-----was not to allow those types of informal contacts to happen-----

Oh no.

-----unbeknownst to you.

No. And what I've tried to ... and, I mean, I said in my opening statement I recognise, as a sometime sceptic, that, you know, people go "Well, look at everything that happened and look at the people who were there," and "How could they not have?" kind of thing.

But I would reiterate that if the purpose was to somehow bring an agenda in respect of this bank to the attention of the then Minister for Finance ... or, sorry, in July 2008, the Taoiseach, I had privileged access to Brian Cowen because of our friendship and if it was a case of me wanting to, on behalf of the bank, influence Brian Cowen, either during his time as Minister for Finance or his time as Taoiseach, to take a particular view on Anglo Irish Bank, I could have gone to see him, walked into his office ... I don't mean that ... I mean-----

I take that point.

-----and closed the door and had that conversation.

I take that point. Do you have a special access pass to Government Buildings?

No, no. I didn't have that level of special access.

You didn't have? No.

No.

Okay. Just then, one of the final areas I want to look at in this ... this area of questioning is the ... the phone call around St. Patrick's Day in 2008. Is it your understanding that Mr. Cowen did or did not speak to Mr. FitzPatrick following your intervention?

I would be 90% sure that he did.

He did.

And that was ... I don't know definitively but my ... my recollection is that he would have called him or ... and maybe he asked me to get Seán FitzPatrick to call him, I don't know. I think unlikely, but the purpose of the call was to say that he had spoken with the Governor of the Central Bank and the Governor of the Central Bank was dealing with the issue.

Okay. And did you speak to either of the participants in the phone call-----

Did I?

Yes, afterwards ... after they had had that chat. Did Seán FitzPatrick call you back to say "Thanks for arranging that. By the way he said X."

Yes, he could ... I would have ... I would've been ... I would be surprised if he hadn't. It would have been somewhat discourteous if he hadn't. But it ... it probably was a call back. If there was a call back, I would say the call back was to say "Thank you for organising that. I spoke to him and we're going in to meet the Governor of the Central Bank." I don't recall, again, with certainty.

So the end result of the phone conversation between the two that you set up was a meeting with the Central Bank. As far as you're aware, that was ...

That ... sorry, that's ... I'm certain that was the end result because that meeting then ... we were made aware of that meeting subsequently as a ... as a board.

Okay.

As would have been proper.

Okay. And that meeting took place when? Sorry, just to remind me.

Well, I don't know but I ... sorry, I don't know the exact date but I'm pretty sure it would have happened, you know, pretty promptly after the call in the days after Patrick's Day.

And just before I move on from this area of questioning, do you think that any of the contacts between yourself and Mr. Cowen - any of the contacts that you made or any of the contacts that you facilitated - resulted in any understanding at all in how the interests of the bank might be considered in a way that might have influenced Mr. Cowen's decision making in the run-up to the guarantee or in the guarantee itself?

If you know Brian Cowen as well as I do ... Brian Cowen is someone who you can give a view to on anything and ... and your view may be passionately expressed. But if Brian Cowen doesn't think it's the right thing, you've wasted your time. And to ... because I think it's an important question in terms of not just his integrity but I'm here to speak for myself, my own integrity. To presume, and I'm not saying that your question does make that presumption, but to presume for a moment that Brian Cowen would have been influenced to such an extent by me or by anybody else in respect of one bank and one bank's interests, that he would take a decision, or allow himself to be influenced in making a decision, in a manner that was not in the interests of the people of Ireland and the State is ... I think for anyone who knows Brian Cowen and anyone of any political hue who knows him well would say "That's not Brian Cowen". Now, it is all-----

Can I just stop you short a second and maybe, Mr. Drury, you might just give us an indication as to how many times you've met Mr. Cowen in the last 12 months.

In the last 12 months? Very, very irregularly. Partly, and I regret that, but partly because the truth is that we live in a very small country. We live in an environment where if I met Brian Cowen for a pint or we went to a match together, there is a percentage of people who would think we're up to no good. And so it ... all of this palaver, to use an unfortunate term, has constrained the friendship in a way which is regrettable but it is what it is and I think it's to protect each other in a sense-----

Sure.

-----because, almost, you can't win. If you meet him less often now than you would've done previously, then you were only meeting him because he was the Minister or the Taoiseach. If you meet him less often now than ... or more ... sorry, as often now, then, you know, you're talking about the upcoming inquiry and you're cross-checking each other's notes on what happened. And there is an element, to be truthful, of "You just can't win".

Okay. And just because-----

Sorry.

-----Deputy Murphy was just moving on to wrap up with his questions but you have quite categorically stated there your position with Mr. Cowen and how he would not be influenced by any information that was put before him. But were there discussions with you and Mr. Cowen about a pending guarantee?

I beg your pardon?

Was there discussions?

Absolutely not.

Okay, that's fine, I just wanted to get that clarified. Okay, thank you.

Sorry, absolutely not. And if I may finish, Chairman ... sorry, just the point that Deputy Murphy was asking me. I referenced, you know, Brian Cowen. I also want to reference again Fintan Drury because I am here to speak for myself.

Sure, indeed.

And, you know, I have a significant interest in politics. I have a great interest in the values that this State should espouse and I would, under no circumstances, allow myself to be used in a manner whereby I would be trying to influence a Minister or the Taoiseach of the day to do something which would be inappropriate or ... feathering my nest or other people's nests, relative to his responsibilities.

Okay. Deputy you have about five minutes left there.

Thank you, Chair.

Could I also ask for a clarification?

You can get it ... when you come around to your own questioning, you can get clar-----

No, it's directly related to the question you asked Mr. Drury - how many times did he meet Mr. Cowen in the last year? We don't know. He didn't answer the question.

Okay. Well, I take in general that a ... casual-----

Yes, I'm sorry, I thought I did answer the question, Senator, and let me-----

You just said just not as often as before.

Well, I-----

Reset it back to four minutes.

He asked you how many times and I was just asking how many.

Well, I mean, I don't keep a tab, a running tab, on how many people ... you know, I've lots of friends and I don't keep a tab on how many times I've met them. I have had, you know, different things going on in my life in the last couple of years, Senator, which mean that some friends that up to two years ago I would've seen very regularly I have seen less frequently. So I ... the point I was trying to make was that, rightly or wrongly, we made a decision as friends that we should see less of each other for fear that being seen together would be misunderstood or misrepresented.

Okay.

Okay? Thank you, Chair.

Clock is reset for you there, Deputy, just under five minutes now.

Thank you. Thank you, Mr. Drury. Let's move on to your interaction with Dr. Nyberg for his report. Because in his report, in paragraph 2.9.6 he says, "The Risk function in Anglo was inadequately resourced and did not have the conviction necessary to ensure compliance with credit policy." But I think in your opening statement you said that the risk function was well resourced so-----

Was well resourced?

Yes. Have you read the Nyberg Report and do you agree with that finding?

First of all, I said that ... in my opening statement I said I believed-----

Believed.

-----that the risk function in Anglo was well-resourced. I engaged fully with Dr. Nyberg. I found his approach very insightful, very fair and very comprehensive. And I'm not ... you know, I think one of the things I ... there's probably only one significant finding in Nyberg that I would really take issue with and ... and I think, as I said ... also said in my opening statement, Deputy, the truth is that whatever belief I had at the time that I was a director at Anglo Irish Bank, some of those beliefs have been if not shattered, they have been rendered inappropriate.

Okay. This also from Nyberg then, "Most Anglo Board members did not appear to have sufficient experience or specialist knowledge to fully recognise the specific risks attaching to a fast-growing monoline bank". Do you accept that finding?

I think with the ... the final part of the sentence, and I'm not trying to be Jesuitical here, but I think the final part of that sentence-----

Fast-growing monoline bank.

Yes, I think that is correct. I don't think there were directors available in Ireland who had experience of a fast-growing monoline bank and I'm not, I'm not trying to be smart. But I do think that the ... in other words what I'm saying is if you were to parse that sentence, I think that the idea of directors not having sufficient experience is not reasonable or correct but I think not, not having specific experience in order to be non-executive directors of a fast growing monoline bank, I mean, I think that's a statement of fact, truthfully.

Okay, well then ... moving into that in a bit more detail then; the monthly risk management reports ... at Anglo, noted on a continuous basis, the bank was in excess of the Financial Regulator's single sector exposure limit, which is 200% of own funds. By July 2008, just when you came off the board, the exposure was at just over 600% of its own funds. Were you ever concerned about this breach of the limit, over 200%, was it something that was raised with you, was it something that was discussed at the board?

I mean, it would have been discussed at risk ... and the engagement would have been with the Financial Regulator. I had ... I unquestionably had faith in the risk management function and the risk management team. I think there were errors made ... and rather than appear to be apportioning blame elsewhere, I think as chairman of the risk committee for that last year, and as a member of the risk committee for the previous five years, that I have to accept some of that responsibility. And what I mean by that is, for example, I think that the decision we made to have a ... merge the roles of chief risk officer with that of the finance director was a mistake. And that's not a reflection, important to state, of the, on the individual in question, you know, quite the opposite. But it's in the principle, when you look back, and I'm going to try avoid saying that ... too much, but the principle, at the time the principle should have been wrong. We should have, as a board, we should have recognised that that principle was not good, because the bank was at a scale where those two functions needed to be completely delineated.

Okay.

One supplementary Deputy, and then I'm moving on.

No, I can come back on the...

You can come back on that one, okay, thank you very much.

Thank you.

Deputy Pearse Doherty. Deputy you have 25 minutes.

Go raibh maith agat a Chathaoirligh agus fáilte, Mr. Drury. Can I begin maybe if we can get Vol. 1, page 15, of the books drawn up.

What page?

It'll be come up on your screen and I'll reference it anyway. It's the PAC report in July 2012 on the crisis into the domestic banking sector, and it noted, this is the quote, it says:

Anglo had poor governance structures and procedures and risk controls during its period of high growth. Weaknesses in these areas were identified by auditors and regulators in 2003, 2006 and 2008.

It goes on to say, "Management showed a lack of awareness of risk and focused their attention on business growth." Mr. Drury, how do you reconcile these comments with the positive statements on governance structure of the bank contained in the corporate governance statement each year, in the bank's annuals, annual report?

Well, I think the first point to make is, that those statements, if you juxtapose or juxtaposition one against the other, they are irreconcilable. If you ... but that's the view of the PAC reviewing what it saw as being the performance and the stewardship within Anglo at a moment in time or over a period of time, rather. And you are juxtapositioning that against the corporate governance statements in the annual reports, and I'm saying to you ... what I'm saying to you is that, if you simply take one commentary and put it against the other and present them as you have done, they are irreconcilable .

Which one is accurate?

I beg your pardon?

Which one is accurate? Did the regulator point out all of these deficiencies in 2003, 2006 and 2008?

As I hope the Chair will recognise, I have to be careful in, in this area but I also don't want to, in any way and at any point in these proceedings, appear to be elusive or evasive.

That's understandable Mr. Drury.

But what I would say is that the references to 2003, 2006 and 2008 are, or were, news to me when I received this documentation.

Okay. Were you satisfied as director of the bank, that as director of the bank you were provided with all the necessary information, and in particular, financial information necessary to fulfil your fiduciary responsibilities? Did you ever, ever have any concerns over the accuracy or timeliness of this information?

I have a pretty strong view on this, Deputy ... but I have to be cautious on how I might express it. So, let me be, or attempt to be, cautious and yet at the same time address the question and deal with it as substantively as I can. I think I made a reference to, in my opening statement, I made reference to ... I talked about the, kind of, contract of trust. And I think it is something which, you know, at the risk of labouring it, people just need to understand and accept that if you are taking on a position as a non-executive director, you have no choice but to vest a degree of trust, and I'm not talking about legal issues, I'm talking about ethics, I'm talking about moral responsibility. There is a two-way moral responsibility. I cannot function as a non-executive director of any organisation unless I can presume on the executives providing me with the information I need in order to be able to evaluate what is happening in that organisation. Okay? I think, I hope that people would accept that. Because otherwise, you're second-guessing everything, and you become an executive, and you're in the, you're in the institution or organisation every day of the week. So my, my answer to you is that without being specific or without being ... addressing very particular areas which might by implication identify individuals unfairly, there was a deficit and it's manifest in some of the documentation I've received from the committee.

Okay.

Okay. There was a deficit in information transfer.

Okay ... if we can go, look at Vol. 1, page 51, this is Anglo's annual report for 2007 and it shows over the period 2002-2007, profit before tax increased by 376%, earnings per share by 363% and total assets by 398%. The graphs speak for themselves in terms of the rapid rise of Anglo in those three areas. Do you think that these levels of growth were prudent or sustainable, in the context of the level of competition in the Irish banking market during this period? And in your opinion, did these levels of growth imply that the pursuit of growth was affecting credit quality and lending standards?

I think if you go back to when this annual report was published, it was well received. The view of Anglo Irish Bank, at that time, would have been still uniformly positive. The share price was coming under pressure for reasons we've discussed or have been discussed here already. I think that the growth story that Anglo was at that time, or had become, was one that was largely admired, was largely admired by all external audiences or most ... the vast majority of external audiences.

And so, at that particular time, I don't think that there was anybody that I can recall who was identifying and establishing in any definitive way or ... a problem with the growth story of Anglo Irish Bank. Now, that does not mean that the board of the bank at the time, including non-executive directors, wouldn't have had a responsibility to take a wider view and to look at the figures in the stark manner in which you have presented them, Deputy, and you're right, in which they look now when we look at them. We didn't, and that is again clear from the documentation you will have read, and all of you will have read and seen in preparing for these meetings that, you know, the view that was taken of the growth of the bank was that it could continue to grow. The problems that manifest themselves, both the global one, which I have stressed in my opening statement, but which I do not want to over-stress because I think it in ... if I was to do so, it would, kind of, try and negate what happened here - and I mean in Ireland and I mean not just in Ireland, within Anglo Irish Bank.

But the question isn't about ... we know that the bank grew-----

No, okay.

We know that the bank grew and we know that the bank stopped growing and rapidly went the other direction. The question is ... is in relation to the risk-----

Yes.

-----is, were you blinded by the growth? And I mentioned, for example, the earnings per share increasing by 363% over that five-year period. Now, 90% of employees of Anglo Irish Bank were shareholders with the bank. Were individuals blinded by the rapid growth and the rapid growth in share prices and took additional risks as a result of that? Was it affecting credit quality? Was it affecting lending standards?

Okay, the growth in share value - and I can only speak personally, clearly - the growth in share price ... value was not something that I ever believed in as being a make ... a means by which one should establish, or try and establish, the success or otherwise of any organisation, because I believe it is a particularly limited view to take of a business. So, for example, whether it was Paddy Power, Anglo Irish Bank or any other business that I was involved in, the growth - even a private business with shares that weren't traded on the Stock Exchange - the growth in the share value, for me, was not what the business and the people involved in the business should be focused on, or would be focused on. So, as a board in Anglo Irish Bank, I don't remember - and I'm sure there would have been discussions about share price from time to time - but I don't ever remember that being a focal point for the board in terms of determining whether or not the business was being ... was successful, and that the only means of judging the success of the business was where stood the share price.

Yes, that's not the question, sorry, Mr. Drury. The question really is: did the growth, and the pursuit of growth, by Anglo Irish Bank affect credit quality and lending standards, in your opinion?

No, I don't think so, and I do think that that was ... I do think that ... you know, one of the reasons why I gave the emphasis that you don't think was correct was because you referenced the fact that 90% of the people in-----

That's one part of it.

-----in the bank, 90% of the employees were shareholders, which gave the suggestion that actually people in the bank right across the board where share obsessed or share price obsessed. That was not the case.

Okay, you believe lending standards weren't reduced as a result of that. As an independent non-executive director, did you ever have concerns over the levels of exceptions to credit policies as detailed in the monthly risk management reports? And we can see from page 57 of the core documents there in relation to the level of exceptions which were happening in the period of 2008 which were averaging between 25% and 30%, but, in July 2008, had increased to 42%. Was this a concern of yours at this time as a member of the committee and former chairperson?

Well, I had ... the figures you show ... first of all, the figures that are showed in this document are averaging about 27%, 26%, 28% and the big jump is in July 2008 to 42%. I have ... I had retired from the board at that stage, No. 1, and, No. 2, my last board meeting, as it happened, was April 2008.

Yes okay, and during that time, in April 2008, it was 28%; the previous month it was 28%; the previous month it was 26%.

Yes.

These are exceptions to your own credit policy and which you were a member of that board. Did it raise concern to you as a member of that board, and as chairperson of that board?

I think that ... you know, one of the things that we would have done is monitored that on an ongoing basis, but these are figures and what these figures don't do is tell us what was behind those figures, what were the reasons for those exceptions. So, in the main, the exceptions to credit policy - and, ideally, if you're running a bank, you have no exceptions to credit policy or certainly as few as you possibly can - but the exceptions to credit policy were not running at a rate which would have caused concern.

Okay. Mr. Drury, were you aware of the concentration of lending at Anglo Irish Bank to a relatively small number of developers?

I am aware that at credit committee and then the risk committee that there would have been issues around certain developers and the ... there were developers who were very high profile, very large developers who the bank did not lend money to. There was another group, if you like, who the bank had established strong relationships with over many years, some of whom have already appeared at this committee-----

Yes but were you aware-----

Sorry-----

-----of the concentration of lending to a small group of individuals? I think half the loan book went to, what, 20 individuals.

I think if you look at the decision that was made in 2006, which was to stop lending in the Irish market, we were very conscious of the importance of staying committed to exactly the group you're talking about because they were the people who we had ... who had over the years had demonstrated themselves to be extremely good clients of the bank, and clients of the bank who could be supported and should be supported. So I was aware that there was a relatively small ... that the ratio, if you like, in terms of the number, a relatively small number of clients who had quite a significant percentage of ... of the lending, yes. Was I concerned about that? Not particularly.

Okay. I'd like to refer to core booklet, Vol. 1, again, and it's page 97. These are the minutes of the risk and compliance meeting that was held on 24 May 2007. The issue being discussed is the suggested revision of Anglo's minimum capital ratio requirements. It says in the document:

The committee reviewed and considered the proposal and in particular the key reasons for the Group's suggested reduction in Minimum Regulatory Capital, namely

- The Group has constantly held a surplus over the minimum regulatory capital requirements, thereby creating a significant buffer in the event of an unanticipated and sudden losses in the Group.

- The high propensity of the Group to generate significant and new internal capital equity each year due to the

- maintenance of strong average gross lending margins

- low cost-income ratios

- loan loss provision track record

Following consideration, the proposal in the paper was approved on the basis of very compelling arguments outlined therein.

Now this is to reduce the amount of capital that would be held by Anglo bank just over a year before Anglo bank lost its capital. Why did you take a decision to place the capital at risk?

I mean, I don't know is the answer to that question. I'm sure I knew at the time but I don't know why that decision was taken at that time. What I would say is that the decisions, and I think that the documentation in terms of the risk committee demonstrates the point that I made in my opening statement - and I'm not avoiding your question; I will come back to it - demonstrates the extent to which the risk and compliance committee was interrogating and pushing for the risk function within the bank, or the risk management team within the bank, to establish cause, establish reason why any changes in policy would be taken. So, if group management was making up ... advocating a change of policy, then that would have been interrogated very, very carefully at the time and the decision would have been taken on the basis of such an approach.

Do you regret that decision now?

I'm not going to say that I regret specific or particular decisions in respect of items on an agenda, whether it's one particular meeting and there's eight or ten substantive items on that agenda, which occurred seven, eight years ago. You know, it would be wrong for me to turn around and say, "I regret that decision." Because it might be the right thing to say from a public relations point of view but, you know, I have to genuinely regret it. I can't say to you with any honesty, Deputy, that a decision that was made, I'm sure and certain, on the basis of full facts at that time, and would have ... and the presentation or view that was brought to the committee would have been interrogated ... and that that decision was taken, do I regret it, no.

But even knowing what you know now, for example, if you didn't reduce the capital in the bank at that time, the Irish taxpayers would have had to put less money into the bank that you were a director of. Do you not regret that fact? That was the consequences of the decision that was taken at a meeting-----

Well, I think you are endeavouring to lead me into a path of ... what the Irish taxpayer, the losses that the Irish taxpayer has endured and narrow it down to a specific decision that was taken as I've said to you seven or eight years ago, which I was party to, because I was chairing the committee at the time, and saying do I remember why that decision was taken, and if I don't remember why that decision was taken, but I'm saying, it wouldn't have been taken lightly or fecklessly, that I, at the same time ... in light of what happened subsequently, do I regret it? And the reason why the Irish tax ... the reasons why the Irish taxpayer has endured such losses are multi-faceted, as I think we would all accept. They are not all down to Anglo Irish Bank; they cannot all be laid at the door of decisions that were taken at a moment in time by directors be they non-executive or executive directors or senior management in Anglo Irish Bank. Was that material to the losses that the taxpayer has endured? Of course. I'd be a fool to sit here and try and suggest otherwise.

Okay, Mr. Drury. My colleague, Deputy Murphy, was talking to you in relation to your relationship with Brian Cowen. Can I ask you in relation to your knowledge of Anglo Irish Bank, if the board of Anglo, or, indeed, an executive within Anglo, to coin a phrase, wanted access to the political ear, who would be the persons that they would approach?

Anglo was disinterested at the top level, where decisions like that are made in organisations, Anglo was disinterested in engaging with politics, in engaging with politicians, and ... to the ... certainly in respect of the former chief executive who became chairman, the level of disinterest was acute. So in all my time, both as a consultant, Deputy, in the '90s and then later as a non-executive director of the bank, and with the greatest respect to everybody in this room, I never came across, or I rarely came across an institution that I worked with, or had an engagement with in Ireland, that was less interested in politics and less interested in lobbying, or less interested in engaging with the body politic.

But we do know that Anglo did engage with politicians at the most senior level. We know that you provided ... you were a conduit for some of that engagement in terms of the telephone call from Mr. FitzPatrick and in terms of the board meeting with the Minister for Finance and within a couple of weeks, would be the Taoiseach of the State. So in relation, if as I said, executives in Anglo or the board wanted access to the political ear, who would be the persons in that bank that they would approach?

I mean, you're jumping from three instances, each of which I have explained in detail, very directly and very bluntly, and you are assuming that because of those three incidents or episodes, which related to one politician and which were very different ... each of them very different by nature, whether people are prepared to accept that or not, that there was therefore a general interest in engaging with the body politic in ... within Anglo Irish Bank. I'm saying to you definitively there was not, and, therefore, I don't know, because I never ... I don't ever recall anyone in Anglo Irish Bank, when I was a consultant to the bank and when I was a director, lifting the phone to me, or asking me to meet them for a cup of coffee, and saying, "We're trying to get to see the Minister for the environment about planning issues to do with some of our client stuff." Never.

But hang on a second there, Mr. Drury, you've already testified to this inquiry that you were the conduit between Anglo Irish Bank and the board meeting which the Minister for Finance attended-----

Sorry, he didn't attend a board meeting.

Sorry, well the dinner in Heritage House, which was made up of executives and members of the board, and also that you were the conduit in relation to the phone call. So the point you're making about never was you asked to do anything like that, it's coming against the evidence you've already testified to.

That's your perception of the evidence that I have provided, Deputy, with respect. I think, ultimately, people can make their own judgments.

Okay.

I had a personal friendship with Brian Cowen. I'm happy to go back over this again and I've ... I mean, I think in fairness you're ... you are moving from the particular of a relationship, a friendship, which I as an individual had, and was known to have and never hid the fact that I had a friendship with Brian Cowen ... that I had that friendship with Brian and that when it came to a function ... let's deal with the phone call first, and I won't go into the ... I won't delay you-----