Courts

Saturday 26 July 2014

Drumm omitted information from bankruptcy files, US court hears

Donal O'Donovan

Published 28/05/2014|02:30

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Former Anglo Irish Bank chief David Drumm
Former Anglo Irish Bank chief David Drumm
Bankruptcy trustee Kathleen Dwyer
David Drumm

FORMER Anglo Irish Bank chief David Drumm "did not perform his duty to fully disclose transfers and assets," the official challenging his discharge from bankruptcy has claimed.

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Bankruptcy trustee Kathleen Dwyer was giving evidence as she and IBRC are trying to block Mr Drumm's discharge from bankruptcy in the US.

Ms Dwyer told the court that Mr Drumm had omitted "large amounts" of information from his original bankruptcy papers filed in October 2010.

She said it was the debtor's responsibility to file accurate paperwork, and fully disclose assets. Mr Drumm did not do that, she said. "We had to engage in an unnecessary investigation," Ms Dwyer added.

But Ms Dwyer admitted she could not remember what was allegedly "false" about sworn statements she has claimed in legal papers that he made in 2011.

Ms Dwyer, whose testimony was at times halting and unclear, was subject to an intense cross-examination from David Mack.

Mr Mack, acting for Mr Drumm, pushed her over an allegation that his client gave "knowingly false" testimony at a creditors' meeting on April 1, 2011. He asked her whether she believed Mr Drumm knew at that point that his bankruptcy papers needed to be amended but said nothing.

"Right now I don't recall," she said.

An error filling in Question 10 of his formal Statement of Financial Affairs – originally filed by Mr Drumm in October 2010 – is seen as pivotal to the case.

A former lawyer for Mr Drumm, Heather Zelevinsky, said she was told about cash transfers from David to Lorraine Drumm as early as September 2010.

But it was her view that cash did not have to be included under Question 10 because cash transactions were accounted for elsewhere.

When she became aware there was a problem, she emailed Mr Drumm on April 2, 2011 telling him that the statement should be amended, and warning him that IBRC might raise it as an issue once that happened.

But she told him in the email: "There is no evidence that you are trying to conceal the transfers in any way."

Ms Zelevinsky and Ms Dwyer both gave evidence yesterday at the David W McCormack Post Office and Court House in Boston. The case to block Mr Drumm coming out of bankruptcy has been taken by both the bank and Ms Dwyer as trustee.

All sides agree that there were large gaps in the information – including missing details about property deals and more than $1m (€730,000) in cash transfers made by Mr Drumm to his wife Lorraine, from his own and the couples' joint accounts, in the two years before he filed for bankruptcy.

Mrs Drumm is due to give evidence before the court in Boston today.

Yesterday, Ms Dwyer described as "tedious" the process of trying to extract information from Mr Drumm after his bankruptcy papers were filed.

He was a "sophisticated debtor" with good advisers, she told the court.

In relation to an allegation that a value of $10,000 (€7,300) that Mr Drumm placed on his household furnishings as part of his bankruptcy filing was false, she said it did not tally with what she saw in homes he owned.

Furniture

Furnishings in the Drumm homes in the US were "lovely," she said – including a "massive" kitchen with every accoutrement and furniture that had been brought over from Ireland, she said.

Earlier Ms Dwyer told the court that she was suing IBRC for $3.6m (€2.6m) allegedly owed to Mr Drumm's bankrupt estate for unpaid salary owed in lieu of a year's notice and bonus that was deferred in 2006.

The bank, owed €8.5m, is Mr Drumm's biggest creditor – accounting for 93pc of his debts.

The case will hear from the remaining witness today, but Judge Frank Bailey is not expected to rule on whether Mr Drumm can be discharged from bankruptcy for several weeks.

Irish Independent

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