BRUSSELS (AP) — German Chancellor Angela Merkel on Friday blasted newly disclosed comments by former directors of Ireland's most notorious bank, who mocked foreign depositors and conspired to conceal the true scale of their losses while winning a state bailout.
Irish Prime Minister Enda Kenny was quick to back Merkel, saying the 2008 telephone conversations among senior figures at the defunct Anglo Irish Bank in Dublin "show the contempt and the arrogance and the insolence of senior personnel working at that bank towards everybody."
Ireland nationalized Anglo in 2009, spent 30 billion euros ($39 billion) paying back Anglo's creditors, and put the remnants of Anglo into liquidation this year. Anglo was the most reckless gambler in Ireland's ill-regulated banking sector that used cheap foreign finance, much of it from German banks, to fuel a runaway property market that collapsed amid the 2008 global credit crisis. Ireland spent 64 billion euros ($83 billion) in total rescuing all six of its domestic banks — a cost that overwhelmed Ireland's financial firepower and forced the country to negotiate its own 2010 bailout.
One of several internally taped Anglo conference calls published this week by the Irish Independent newspaper featured Anglo's chief executive, David Drumm, telling his treasury director to attract depositors from abroad, particularly Germany, even as the bank teetered on the brink of collapse. The treasury director, John Bowe, replied by laughing and singing the "Deutschland ueber alles" line of the German national anthem, which has Nazi-era overtones and was dropped after World War II.
Asked about the comments at a European Union summit in Brussels, Merkel said their insulting comments and tone were "very, very hard to bear — if not impossible to bear — for people who go to work every day in a normal way and earn their money."
Such remarks were "really damaging to democracy," she said, adding, "I really have only contempt for this." Later at a separate news conference, Kenny said he couldn't agree more with Merkel, and said the public airing of Anglo chiefs' vulgarity-laced, deceitful conversations had hit Ireland like "a thunderbolt."
Kenny noted his government's intention to open a parliamentary fact-finding inquiry into why Anglo was allowed by the previous Irish government to bring the country to its financial knees. The Anglo tapes, he said, "shine a bright light on the vulgarity of what went on there. ... This has damaged our reputation."
Other international Anglo calls uncovered by the Irish Independent indicate that bank executives misled the Central Bank of Ireland into believing Anglo required only 7 billion euros in rescue money that would be repaid within months.
Three of Anglo's top directors face criminal charges for allegedly committing accounting fraud while hiding the true scale of losses from shareholders in 2008. Drumm, who has not been charged, fled to the United States and declared bankruptcy there in 2010.