Saturday 10 December 2016

Court told how Drumm's cash transfers to wife hit 'fever pitch'

Emmet Oliver Deputy Business Editor

Published 01/09/2011 | 05:00

David Drumm: seeking bankruptcy discharge in US
David Drumm: seeking bankruptcy discharge in US

FORMER Anglo Irish Bank chief executive David Drumm's million-dollar transfer of cash to his wife reached "fever pitch" on the eve of his resignation, it was alleged in court documents last night.

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Fresh details emerged about the movement of large sums of cash to Mr Drumm's wife Lorraine as the banking crisis unfolded.

Court documents filed in the US by Anglo Irish Bank also claim that Mr Drumm knew about former chairman Sean FitzPatrick "warehousing" loans with Irish Nationwide.

But it is claimed that Mr Drumm failed to notify non-executive directors of the bank. Mr Drumm also approved loans for children of Mr FitzPatrick, it is claimed.

The documents also say that Mr Drumm set up a "sham'' business in the US and used money belonging to this business to pay for stays at two five-star hotels in New York.

Mr Drumm's business in the US had money in several business accounts and this money was used by him as a "personal piggybank'', the bank says.

It claims that the funds were used to rent property, buy two new Land Rovers, hire a decorator for a residence in Chatham and pay fees for an immigration counsel.

Anglo made the new allegations as it asked a court in the US to deny Mr Drumm a discharge under bankruptcy laws there.

Liabilities

Mr Drumm starting making transfers to his wife in September 2008 during the period when the government was thinking about guaranteeing all bank liabilities, including those of Anglo.

Explaining what happened, the bank said: "Drumm realised that his pattern of deception and wrongdoing as Anglo's chief executive would inevitably be exposed.

"Drumm transferred significant amounts of cash from his Anglo Irish Bank account to accounts held jointly with his wife or solely in her name.

"Drumm's fraudulent transfers to his wife reached a fever pitch in December 2008, on the eve of his resignation as Anglo's CEO,'' said the bank.

Transfers to his wife totalled approximately $1m (€695,000), the company said.

The documents were lodged in the Massachusetts bankruptcy court late last night.

"In or around September 2008, Drumm began to make substantial cash transfers to his wife from his Anglo Irish Bank account, sometimes immediately following a deposit into his Anglo Irish Bank account for bonus or salary payments,'' the documents claim.

"September 2008 was a very bad month for Anglo Irish. The bank faced enormous liquidity pressures, a plummeting share price, the prospect of government intervention and, potentially, loss of its independence.

"Drumm, as Anglo's CEO, faced the exposure of his wrongdoing and an emerging reality that he could very well be ruined financially,'' it added.

"In response to these mounting financial risks, Drumm opened or facilitated the opening of bank accounts in Lorraine Drumm's sole name.

"The purpose of opening new bank accounts in Lorraine Drumm's name commencing in September 2008 was a desperate attempt to make Drumm's monies 'legally' hers,'' said the bank.

Mr Drumm knew about "the ever-escalating loan warehousing transactions'' carried out by Mr FitzPatrick but did nothing to disclose them, the bank alleges.

"He never disclosed the practice to the board of directors or took any action to stop or curtail the chairman's loan manipulation, although he concedes that it was inappropriate for FitzPatrick to remain as chairman in light of these practices."

Irish Independent

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