Friday 21 July 2017

Drumm deal blocks garda access to 'sensitive' files

Shane Phelan and Dearbhail McDonald

FORMER Anglo Irish Bank boss David Drumm has secured a legal agreement that effectively blocks gardai from gaining access to confidential documents, which are about to be revealed in the US.

The records are set to be disclosed during hearings related to Mr Drumm's bankruptcy case in Boston next month.

The Irish Independent has learnt that Mr Drumm (44) has secured an agreement with Anglo that certain records about to be revealed cannot be used as part of any other proceedings.

The deal, which followed more than a month of negotiations, involved the bank agreeing with Mr Drumm the terms of a 'protective order', which prohibits Anglo from using the documents as part of any proceedings other than the American bankruptcy case against its former chief executive.

It also blocks the bank from handing over the documents to the Garda Fraud Squad or the Office of the Director of Corporate Enforcement (ODCE), which are investigating major irregularities that occurred at Anglo during his tenure.

It means that the ODCE would be forced to seek court orders of its own if it wanted to obtain the documents from Anglo.

However, there is no certainty that they would succeed if the material was destroyed after the bankruptcy action.

Under the terms of the agreement with Anglo, Mr Drumm can seek the immediate return of certain documents, or request that they be destroyed, once his bankruptcy case is concluded.

The existence of the agreement was revealed in US court filings, which have been seen by the Irish Independent.

A judge is set to decide whether to approve the joint agreement in the coming days.

The issue of confidentiality over certain documents has been a major sticking point between Anglo and Mr Drumm, who has handed over just a fraction of the documents sought by the bank. Lawyers for Anglo have requested a host of other material ahead of planned questioning of Drumm next month.

Misleading

The bank has raised questions over the accuracy of financial information provided to the bankruptcy court.

Mr Drumm could face a fine of up to $500,000 (€367,000) and/or up to five years in prison if it is proven he gave misleading information.

Anglo has also questioned whether he was involved in any "breaches of fiduciary duty", meaning failures to meet his legal or ethical obligations, while running the bank.

According to legal sources, Anglo reached terms of agreement with Mr Drumm to deal with confidential documents as there is no standard procedure in American law to deal with claims of confidentiality or restrictions on the use of sensitive material.

In Ireland and Britain, there is an 'implied undertaking' rule that parties who exchange confidential documents cannot use them for any other purpose or in any other legal proceedings.

Mr Drumm has already been questioned about his financial affairs at three separate hearings by bankruptcy trustee Kathleen Dwyer.

Ms Dwyer is set to resume her examination on February 14.

The questioning of Mr Drumm by lawyers for Anglo is set to proceed at a date to be decided in the second half of February.

Irish Independent

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