Tuesday 25 June 2019

Jailed David Drumm will get to keep his €4.4m pension pot

IBRC loses out as just €3m is distributed to banker's creditors

David Drumm arrives at court for his sentencing hearing last month. Photo: Damien Eagers
David Drumm arrives at court for his sentencing hearing last month. Photo: Damien Eagers
Shane Phelan

Shane Phelan

Creditors of David Drumm have been unable to lay claim to the disgraced former Anglo Irish Bank chief executive's €4.4m pension pot.

Jailed Drumm declared the pension when he filed for bankruptcy in the US with debts of €13m in October 2010.

But a US bankruptcy trustee has concluded the massive pot is protected under Irish law. As a result, it could not be cashed in for the benefit of creditors, who include Anglo's successor IBRC.

Court filings indicate the pot was built up as part of a defined-benefit pension scheme at Anglo, where Drumm (51) worked from 1993 to 2008.

Financial sources said Drumm would not have to wait until retirement age to benefit from the pot and, if he wished, could place it in an approved retirement fund, from which he could draw an income.

He is currently serving a six-year sentence in Mountjoy Prison for conspiracy to defraud and false accounting over a scheme which made Anglo's balance sheet appear €7.2bn better than it was in 2008.

He was granted free legal aid for his trial on the charges.

Drumm will be sentenced next Monday for other offences after admitting he provided unlawful loans to a group of Anglo clients, also in 2008.

Eight years ago the Dubliner filed for bankruptcy in Massachusetts, where he moved with his family following the collapse of the bank.

Last week, the bankruptcy trustee handling his case, Harold Murphy, filed his final account and distribution report for Drumm's estate.

According to the document, a defined-benefit pension valued at $5.1m (€4.4m) was listed among Drumm's assets.

The trustee stated his "present information" was that "the benefits are protected under Irish law".

Under insolvency legislation a pension can only vest with a trustee if it is due to be accessed within five years of a bankruptcy adjudication.

The report revealed a massive shortfall for Drumm's creditors.

Just $3.49m (€3m) was distributed to claimants, with claims of $10.5m (€9.1m) going unpaid.

IBRC was the creditor most affected by the shortfall.

It had claimed $11.9m (€10.26m) in debts, much of it cash Anglo loaned to Drumm to buy shares in the bank.

However, IBRC secured just over $2m (€1.7m), according to the final report.

The document stated $7.2m (€6.2m) was recovered from the sale of assets which were owned or co-owned by Drumm.

These include a mansion in Malahide, Co Dublin, valued at $2.95m (€2.5m), and a waterside home in Cape Cod, valued at $5.9m (€5m). The properties realised $1.8m (€1.5m) and $3.8m (€3.3m) respectively for the bankruptcy estate.

The estate also received a sum of $1.1m (€946,000) from Drumm's wife Lorraine. In return, a previous trustee agreed to drop a legal action which alleged her husband had fraudulently transferred cash to her.

The report also reveals the huge cost of handling the bankruptcy, which involved lengthy legal proceedings in Boston.

Some $1.8m (€1.55m) of the estate went on administration fees and other charges, including almost $1.1m paid to lawyers.

In January 2015, a US bankruptcy judge refused to discharge Drumm from his debts.

The judge found Drumm was "not remotely credible" and that this conduct in concealing asset transfers was "both knowing and fraudulent".

Irish Independent

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