Saturday 10 December 2016

Drumm: The accusations

Published 14/10/2015 | 02:30

Fugitive banker David Drumm
Fugitive banker David Drumm

Fugitive banker David Drumm will face 33 charges if he is extradited from the US.

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The charges were outlined in a submission to the United States District Court in Massachusetts.

Charge 1: One count of disclosing information in an interim management report which was false or misleading.

Penalty: Up to five years in jail.

The allegations: That on May 7, 2008, Anglo Irish Bank published a half-yearly report in purported compliance with regulations.

This report did not disclose the substantial contracts for difference (CFD) position built up by former billionaire Sean Quinn in Anglo.

This should have been reported as it constituted a "principal risk or uncertainty" for Anglo. Mr Drumm was responsible for the non-disclosure.

Charges 2-17: Giving unlawful financial assistance to a company or person to purchase shares in that company.

Penalty: Up to five years.

The allegations: Credit committee applications created by Mr Drumm for loans issued to the Maple 10 investors and Quinn family members portrayed these loans as normal commercial transactions.

Letters to the Maple 10 suggested the loans were intended for a "multi-currency share dealing facility", when they were in fact intended solely for the purchase of Anglo shares.

Charges 18-24: Forgery.

Penalty: Up to 10 years.

The allegations: Mr Drumm was responsible for creating "false loan facility letters". Amendments made by Mr Drumm to loan facility letters gave Maple 10 investors more favourable terms and had the effect that if Anglo's share value became greatly inferior to the money loaned, Anglo would not be able to recover any part of the outstanding loan by personal recourse.

Charges 25-31: Being privy to the falsification of documents.

Penalty: An unlimited term of imprisonment.

The allegations: Mr Drumm, as Anglo's chief executive, was privy to the falsification of the Maple 10 loan facility letters.

Charge 32: Conspiracy to defraud.

Penalty: An unlimited term of imprisonment.

The allegations: Mr Drumm gave instructions for Anglo to approach Irish Life & Permanent asking it to carry out a series of "back-to-back" transactions.

This led to deposits of €7.2bn being placed by Anglo with IL&P, who then returned the money through a subsidiary in September 2008.

Anglo presented the €7.2bn as a corporate deposit on its balance sheet as if the transaction had come from a non-bank entity.

Charge 33: False accounting with the intention to make a gain or cause loss to another by making use of an account that is false, misleading or deceptive.

Penalty: A maximum 10-year jail term.

The allegations: This charge also relates to the organisation of the so-called "back-to-back" loans.

Irish Independent

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