Sunday 17 December 2017

How ex-chief's American dream turned sour

Shane Phelan Public Affairs Editor

UNOPENED letters have been cluttering up the mailbox of the Drumm household all week.

Neighbours in the Boston suburb of Wellesley say the family is away. It is hardly a surprise for David Drumm (46) to go missing when the heat is on.

The publication of the Anglo Tapes has reawakened media interest in the former bank chief executive who fled Ireland four years ago as the rotten institution collapsed, dragging the fortunes of the country with it.

He has refused to return home, knowing he will almost certainly be arrested by fraud officers.

Mr Drumm initially moved to Boston in 1998 when Anglo Irish Bank's then chief executive, Sean FitzPatrick, chose him as the man to establish its US business.

He and his wife, Lorraine, bought a house in Sudbury, a colonial-era town in Middlesex County, for around €420,000.

Anglo's business Stateside rapidly expanded and a second office was opened in New York.

Mr Drumm eventually returned home after five years, and went on to take over the chief executive reins from Mr FitzPatrick in 2005.

It was an amazing rise for the Dubliner, who left school without completing his Leaving Cert. Mr Drumm's bank balance was also boosted by a profit of close to €180,000 on the sale of the Sudbury house. But that was nothing compared with the package he earned while leading Anglo.

RESIGN

David Drumm and his wife Lorraine in Cape Cod in the US
David Drumm and his wife Lorraine in Cape Cod in the US
The house of former Anglo Irish Bank chief executive David Drumm in Wellesley, Boston

In 2007, his salary, bonuses and pension contributions were worth €3.2m.

After resigning from Anglo, he returned to Massachusetts for good with his family in early 2009. He claimed the move was to escape the "blame culture" in Ireland and Britain.

For a year at least, he lived the American dream. He started a financial advisory business in Boston, targeting clients of his former bank. These included Mayo-born developer John McGrail, who borrowed more than €90m from Anglo while Mr Drumm was there.

Weekends and holidays were spent in Chatham, Cape Cod, where the Drumms bought a home on the secluded Stage Neck Road for around €3.4m, the bulk of it in cash.

The Drumms had been drawn to the upmarket town years before, buying and renovating two other properties there before selling them.

They subsequently bought another home for around €1.4m at Old Colony Road in Wellesley, not far from where their two daughters attended a private school charging fees of more than €25,000 a year.

At the time, Mr Drumm owed his former employers €8.5m – money he used to buy shares in Anglo which were now worthless. His overall debts were more than €10m – money he knew he could not repay.

Records seen by the Irish Independent show that in the two years before he filed for bankruptcy in October 2010, he transferred more than €1.1m from his own accounts and assets into accounts held solely or jointly by his wife. He also transferred the ownership of the couple's €2m home at Abington in Malahide into his wife's sole ownership.

The looming cash squeeze did little to put the brakes on his spending, and he showed his cavalier attitude to repaying debt. His need for – to use his own word – "moolah" saw him max out credit cards, spending thousands of dollars buying furniture, fine wines and concert tickets.

With public anger increasing, Anglo began to step up its demands for the repayment of his loans. Mr Drumm's American dream had become an American nightmare. But there appeared to be no let-up in his spending.

Only a month after he filed for bankruptcy, decorators were hired to carry out work on the house in Wellesley.

Soon his personal finances and those of his wife were being picked over in a Boston bankruptcy court.

A court battle in Dublin led to the transfer of the Malahide house into Lorraine Drumm's sole ownership being reversed.

She was also forced to make a settlement of $1.3m (€1m) with the bankruptcy trustee. In return, the trustee agreed to drop legal action over allegations that her husband had fraudulently transferred cash to her. When the dust settled, she was left with half the proceeds of the €1.4m Malahide sale. She will also be entitled to proceeds from the sale of the Wellesley house. Altogether, it is expected she will net more than €1m.

Her husband's bankruptcy case trundles on and is expected to go to trial in Boston next January.

EFFORTS

Anglo's successor, the Irish Bank Resolution Corporation, now in liquidation, is opposing his efforts to get a fresh financial start. Once the case is concluded, it remains unclear whether he will be able to remain in the US.

His E-2 investment visa allows him to remain there as long as he is involved in a "substantial investment" in a US business. But his financial advisory operation has, unsurprisingly, floundered, given the publicity surrounding him.

Mr Drumm may soon find himself as unwelcome in the US as he is now in Ireland.

Irish Independent

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