Now Anglo sets its sights on Drumm's €3.8m pension pot
Published 16/02/2011 | 05:00
ANGLO Irish Bank plans to try to seize the €3.8m pension pot of its former chief executive David Drumm, the Irish Independent has learned.
Mr Drumm will be entitled to draw from the huge pension in 11 years' time when he turns 55.
However, the bank revealed yesterday it would seek to use the pension to offset money owed to it by Mr Drumm, who has filed for bankruptcy in the US.
Anglo is expected to seek legal approval in a US court for the move, which has never been tried in this jurisdiction before.
The revelation came as Anglo filed papers in a Boston court alleging misconduct and deception by Mr Drumm when he was at the Anglo helm.
The claims ramp up the pressure on Mr Drumm, who has filed for bankruptcy in Massachusetts, where he has been living since quitting Anglo in December 2008.
The disgraced banker is already at the centre of a joint garda and corporate enforcement probe as well as an inquiry by an accountancy watchdog.
In court documents filed yesterday, Anglo's current chief executive, Mike Aynsley, alleged, among other things, that Mr Drumm failed to meet certain legal or ethical obligations while running the bank.
Some of the allegations relate to his knowledge of over €100m in loans that were being kept off the books at key times by former Anglo chairman Sean FitzPatrick, as well as secret changes made to the terms of other loans.
Anglo said it now planned to sue Mr Drumm over his actions and will target his pension pot in a bid to recover money owed. The bank is Mr Drumm's single largest creditor, accounting for €8.5m out of the €10.26m that he owes.
US authorities have yet to decide whether Mr Drumm's creditors can have access to the pension. Anglo is now expected to force the issue by seeking a US bankruptcy court ruling on whether creditors can lay claim to the pension pot.
Mr Drumm may not be in a strong position to object as he previously offered his pension to Anglo in an effort to clear his debts.
In a court filing yesterday, the bank said that in the event of a determination that the pension can be claimed by creditors, it was reserving the right to set off amounts due to Anglo "against any and all pension obligations" due to Mr Drumm.
Documents obtained by the Irish Independent show Mr Drumm has two Anglo pensions. The first, a defined benefit pension scheme, was valued at just over €3.8m on November 29 last.
The second, a self-administered pension fund, was worth just €16,000 on the same date.
Prior to filing for bankruptcy last October, Mr Drumm had offered to surrender his pensions to Anglo to help meet his debts.
Actuarial, tax and legal experts were engaged by the bank to oversee the transfer.
However, Mr Drumm pulled the plug on the settlement before it was finalised.
In yesterday's court filings, Anglo made several serious allegations against its former chief executive.
The transactions at the centre of the claims include:
- The concealment of the FitzPatrick loans.
- Undisclosed non-recourse loan documents secretly created three months after loans totalling €400m were given to a group of customers, known as the Maple 10, so they could buy shares in the bank from businessman Sean Quinn.
- The granting of an €8m non-recourse loan to former Anglo finance director Willie McAteer so he could pay off a Bank of Ireland debt.