The hitwoman with Drumm in her sights
Caitriona Palmer reports from Washington on the unassuming US bankruptcy official who is uncovering the assets of Ireland's most notorious banker - one cent at a time
Published 24/09/2011 | 05:00
For nearly a year, in the luxurious conference room of a legal firm in Boston, an unassuming 63-year-old woman named Kathleen P Dwyer has quietly been making Irish financial history.
Demurely dressed in an elegant two-piece dark pant suit, Dwyer could easily pass for a kindly grandmother who has just popped into her lawyer's office to tie up some legal loose ends.
But the understated Minnesotan has unexpectedly become one of the most important players in Ireland's greatest banking scandal, and a prickly thorn in the side of disgraced former Anglo Irish Bank chief David Drumm.
"She is as tough as an old boot," said a member of the Irish press corps who has followed the Drumm case in Boston closely.
"She has played a poker face throughout the hearings and has never betrayed any emotion.
"But as the story started to unwind she went for the jugular, with her devastating rejection of all Drumm's arguments."
As a court-appointed bankruptcy trustee, Dwyer's job is to recoup as much of Drumm's estate as possible to pay back his creditors. She also has the sticky job of figuring out which part of the banker's estate belongs to Drumm, and which part to his wife Lorraine.
The Boston University graduate with an impressive legal record may have seemed like just another non-descript official when Drumm first laid eyes on her at the start of his Chapter Seven bankruptcy proceedings in late 2010.
But Dwyer, a shareholder in the Massachusetts legal firm Mac Lean, Holloway, Doherty, Ardiff & Morse, is no shrinking violet.
Over the past year, Dwyer -- or 'Kathy' as she is known to friends and colleagues -- has come across as a formidable force to be reckoned with. Laser sharp with an uncanny aptitude for numbers, Dwyer has exhibited a nose for deception and a steely determination in rooting out the true extent of the assets of Ireland's most notorious exiled banker.
Her assiduous research and laser questioning has broken more ground in revealing the tawdry financial life of Drumm than any Irish investigative efforts.
"She is a very fine attorney and she understands the big picture," said Jeffrey A Kitaeff, a bankruptcy attorney and former bankruptcy trustee in Andover, Massachusetts, who has known Dwyer professionally for over 20 years.
"She looks at a situation and she breaks the big picture down into components, and she can clearly focus on the components that need to be resolved without losing sight of the big picture.
"That's really important in bankruptcy because sometimes you can prevail but you have to decide what's the benefit and to whom," Kitaeff told the Weekend Review.
Since 2009, Drumm has been living permanently in Massachusetts, far out of reach of the Irish Government and baying public hordes who want to hold him accountable for the spectacular failure of Anglo Irish Bank, an epic crash that cost the Irish taxpayers billions of euro and helped fuel Ireland's financial crisis.
Drumm is now working as the sole employee of his own consultancy firm, Delta (formerly Harborlight), which pays him $9,000 a month -- barely enough to cover his monthly expenses, which include fees for his children's private school tuition.
In October 2010, just weeks before a Commercial Court hearing in Dublin about his case, Drumm, who owns multiple properties in the Massachusetts area, filed for bankruptcy under US law, a move which immediately stymied legal efforts against him in Ireland. Under the filing, Drumm lists debts of €10m -- €8.6m of which are due to Anglo.
Drumm is filing for bankruptcy under Chapter Seven of the US Bankruptcy Code -- a strategy, which if successful, offers immediate and complete relief of oppressive debts and the discharge of all of his unsecured debt. The bankruptcy would stay on Drumm's credit report for 10 years, after which time the former banker would be free to borrow again.
"Bankruptcy [in the US] is an opportunity to be able to jettison all of the accumulated debt which has occurred and be able to get a fresh start," says Kitaeff.
Although filing for bankruptcy in the US is more forgiving than filing through the Irish bankruptcy system, it can also carry its own risks, especially if the debtor has actively tried to hide or move assets, experts say.
Sources close to Drumm's bankruptcy proceedings say Dwyer's forensic aptitude for numbers and nose for sniffing out inconsistencies has allowed her to spot huge holes in Drumm's financial dealings.
"She cuts through the waffle and gets to the heart of the matter," said a source. "She unmasked a lot of transactions between Drumm and his wife that the banker hadn't revealed."
Last December, under cross examination by Dwyer, Drumm was forced to explain what he had done with his money in the months leading up to his resignation at Anglo.
Starting in 2007 and intensifying in September 2008 -- two months before he would resign as chief executive of Anglo -- it is alleged that Drumm began transferring significant amounts of cash into his wife's bank account, or accounts, held jointly in their name.
In December 2008 alone, €550,000 in two separate transactions were transferred by Drumm into his wife Lorraine's savings account at Anglo Irish Bank.
In a testy cross-examination in December 2010, Dwyer grilled the former chief executive about his personal finances, the amount of money that he had spent on birthday gifts for his children and the worth of his wife's engagement, wedding rings and household sofa and chairs.
Dwyer's questioning has revealed how, like so many Irish families, Drumm became caught up in the financial mania that swept Ireland at the height of the Celtic Tiger.
Dwyer revealed how the banker has $64,400 (€48,000) in credit-card debt and how he was forced to take out a $200,000 (€148,000) equity loan on one of his Boston properties in order to simply "live on".
In an indication of how the mighty have fallen, last year Drumm surrendered his $74,000 (€55,000) Mercedes-Benz and now drives a 2005 Ford Tarus bought from a friend for $1,000. His wife, Lorraine, rents her car on a monthly basis.
Those familiar with Dwyer's working practice says that she exhibits the classic qualities of an excellent bankruptcy official: humanity, diligence, superb organisational skills and a talent for cross examination.
"She is very even-handed, calm and certainly able to handle both the simple cases and the complex cases," said Kitaeff. Although described in other press reports as "dour", colleagues say that despite her solemn appearance, the bankruptcy lawyer is extremely "personable", humble and kind.
Kitaeff, who teaches a nightly bankruptcy course at the Massachusetts School of Law, remembers how eager Dwyer was to reach out to his students when he took them downtown to watch a recent bankruptcy hearing.
"Dwyer happened to be the trustee sitting that day. She was very kind to my students and gave them quite an amount of time, answering questions, clearing up matters that they were confused about," he said.
Depending on how much of Drumm's assets Dwyer can recover for his many creditors, there will be a financial incentive involved for her hard work. Bankruptcy trustees such as Dwyer can expect to be compensated by up to 3pc of assets worth over a million dollars.
But for someone like Dwyer, says Kitaeff, money is not the issue.
"Most trustees that I know of are not incentivised by the money; they are incentivised by the quality of the work that they do, the reputation that they have developed -- although the money doesn't hurt," he said.
For Dwyer, despite her tough cross examinations and the tense atmosphere inside the spacious meeting room of the Boston high-rise where the depositions have taken place, her case against Drumm is nothing personal.
"Her job is to protect the interests and the integrity of the bankruptcy system," said Kitaeff. "That's a great deal of what she does. The position is one of integrity and credibility."