Mr. Fintan Drury:

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.