Drumm hires $250-an-hour lawyers to defend Anglo fraud claim
FORMER chief executive of Anglo Irish Bank David Drumm is facing a full US trial against his old employers, with the ex-banker agreeing to pay his lawyers $250 (€185) an hour.
Mr Drumm will be responsible for all expenses of his lawyers and he recently lodged an "initial retainer'' worth $150,000 to cover "fees and expenses in connection with the proceedings''.
The two legal firms are Morrissey, Wilson and Zafiropoulos, and O'Connor Carnathan and Mack.
The retainer comes from "Mr Drumm's earnings since October 14, 2010,'' according to legal documents in the US. From the start of November, Mr Drumm has agreed to pay an additional $10,000 to the firms each month to be applied to outstanding fees. Lorraine Drumm, his wife, has pledged collateral as an added protection to the fee arrangements.
Mr Drumm is denying a range of allegations against him from Anglo and the Boston bankruptcy trustee Kathleen Dwyer, reiterating his long-standing claim that regulators and senior directors at Anglo knew about a series of controversial transaction in 2008. Mr Drumm has also denied his US company, Harborlight Capital Partners, was set up with a "fictitious'' loan.
Mrs Drumm is asking for a chance to defend allegations made against her and a trust she is involved with in the US, known as Epiphany. Mrs Drumm is a beneficiary of this trust which owns a house at Wellesley, Massachusetts. Mrs Drumm has been in discussions to sell this house, but wants to make sure her "property rights are properly preserved''.
Meanwhile, a US court has ordered that Mr Drumm and the state-owned Anglo Irish Bank meet in an effort cut out what it calls "wasteful pre-trial activities".
The judge ordered talks to go ahead before the case involving the former Anglo boss and his ex-employer takes place.
The order comes after Irish Bank Resolution Corporation (IBRC), formerly Anglo Irish Bank, launched a legal challenge through the US courts in an effort to block Mr Drumm from exiting bankruptcy proceedings.
Mr Drumm filed for bankruptcy in Boston in October 2010 after moving to the US. He made the move through the US legal system after failing to reach a settlement with Anglo over loans of €8.5m.
The loans were run up during his time as a senior executive at Anglo, before the bank collapsed into state ownership.
In its case, Anglo is challenging Mr Drumm's right to use the US system, and has made a number of claims of fraud against the former bank boss. If proved, the claims could block Mr Drumm from exiting his bankruptcy and give Anglo a second chance to try to recover money owed.
Mr Drumm is fighting the Anglo action. This week he submitted court documents rejecting the fraud claims.
In a detailed submission Mr Drumm claimed he acted within the law while he was in charge of Anglo Irish Bank.
He said the Financial Regulator was "fully aware" a controversial "warehousing" arrangement where the bank shifted Sean FitzPatrick's loans off the books while accounts were being audited.
If Anglo fails in its challenge, Mr Drumm can emerge from the US bankruptcy system with a clean financial slate -- despite not being able to repay millions in loans he owes the bank. Mr Drumm was the CEO of Anglo when it effectively collapsed and taxpayers were forced to launch a rescue costing billions.