Former Anglo Irish Bank boss David Drumm has told the Sunday Independent exclusively that he was not "hiding" any assets from the bank or the Irish taxpayer after he dramatically filed for bankruptcy in the United States last week.
I offered up everything I had in my possession, and everything was independently audited over here, so there would be no question of hiding assets or not showing my assets. I swore an affidavit as well as giving a list of my assets to the bank.
"Everybody knows that your pension can't be taken in an insolvency by your creditors. What I was trying to do was just simply stand up to my obligations and give everything that I had. I couldn't do any more than I was offering to do.
"I'm trying to understand that the bank is hamstrung by political considerations. I have to believe that if you took those political considerations out, that the bank would absolutely have taken my offer because it makes no commercial sense [not to].
"If you just look at the pension alone, forget about what it's worth and all the spin that's going on. Ignore what it's worth. They can't get it unless it's voluntarily given up and they wouldn't take it. And I'm sorry, that just doesn't make any sense. In relation to bankruptcy, no rational person wants to end up in bankruptcy. It has to be an absolute last resort having exhausted every other avenue. I didn't choose that course of action. It was chosen for me."
Commenting on his decision to uproot his family and move to America, Mr Drumm said that he had worked for Anglo Irish Bank in the US for six years, was well known there, and had a "family life" there to which he had now returned. "We had a family life here so moving back here wasn't moving away from home really like it would be for somebody else because we had some roots here. The negative, of course, is that all of my family is back in Ireland. There are eight kids in our family, and we miss them terribly. And our kids don't get to spend time with the wider family in Ireland and that's an issue for all expatriates."
In his first wide-ranging interview since resigning as chief executive of Anglo Irish Bank after the discovery of chairman Sean FitzPatrick's hidden loans, Mr Drumm said he took full responsibility for his time at the bank.
"I obviously can't accept responsibility for how the bank has been managed since, and I'll say no more on that. The issue I have is that the whole worldwide banking system collapsed in 2008, and it wasn't just one bank. A lot of people share responsibility, but Anglo has taken the brunt of it. I would say to you at a human level, there isn't a day goes by, all day, and sometimes all night, [that] I'm [not] haunted by what we, as a bank, as the management, as the board of the bank, could have done differently to not end up where we ended up.
"One thing that goes around and around and around in my mind is that we made a decision in 2004 to reduce our land and development exposures, particularly in Ireland, because right at that time we saw intense competition coming in from other banks, we saw land prices going up a ridiculous rate, and we made a conscious decision to pull back from it. We failed to execute on our own plan, and we never pulled back.
"That was because of the strength of the relationship, we just had very strong, longstanding relationships with our borrowers and we couldn't stand back from them. If I think back about that time and what we could have done differently. . . I can't get away from thinking about that quite frankly. You know, 2008 was just a nightmare year, just a perfect storm of everything going wrong. We had the Quinn stake which created massive funding problems because of the uncertainty they created for the bank. We had short sellers who were being fed by the Quinn stock because we had the highest availability of stock in the market at one stage. So our stock was available to borrow, and short sellers need to be able to borrow stock. And ours was cheap to borrow because there was so much of it. They were shorting us. They were sowing rumours. The world around us was in a very negative state anyway, and banks everywhere, everywhere, were going bust.
"Every day the media were asking which bank was going to go bust next. And if you think about it, what bank could survive that? By this stage, we tried our absolute best. We were having daily board meetings, and sometimes two board meetings a day. But I will say this: every step we took was hand in hand with our own [Financial] regulator, the Central Bank, and what really gets me now is the same people -- most of them are still there -- and their political bosses are trying to disown us. And if I'm going to take responsibility for my role, they must take responsibility too."
Mr Drumm said that it has always been his position that he would repay the €8m in loans he had from the bank.
"I had an agreement with the bank that they breached, and that is that I would be offered a long-term payment plan. I had €7.5m, now €8m worth of loans that were in shares, and I had an income from the bank, and between the dividends and the shares and the income and the collateral, that's how that loan was meant to run. When the bank was nationalised, the shares were rendered worthless.
"The money those loans were drawn down for, I didn't get any of that money. I invested that into new shares in the bank, so the money never left the bank. One cheque left the bank and that was to the taxman to pay tax on the [share] options. So in terms of my account with the taxpayer, I didn't get that money. The shares are worthless now, and again to go back on that, I have offered all of my personal assets and my pension to repay the loans in full, even though those assets weren't financed out of loans. They were financed out of asset-backed income.
"In a situation where I was willing to hand over all my assets and my pension, what's the point in spending hundreds of thousands more in legal fees to go to court to waste two weeks, when the bank could never get what they were offered assuming they won everything in court, which I doubt [they would]."
Mr Drumm said that the bank had acted in what he says was a "totally uncommercial way" regarding its dealings with him and that it was being influenced by political considerations.
"I feel I've been discriminated against, although I don't expect any sympathy from people because of my previous role in the bank. I know from my time in the bank, just so many borrowers who are hopelessly insolvent, and they have not been dragged over the coals like I have to score political points. So there is discrimination going on. Now that might seem like an obvious point but that's what I see. That would be bad enough in itself, but when put against the fact that I had really done everything within my power to repay the debt with all my assets and my pension fund, it's just not right," he said.
Mr Drumm says he has been "in regular contact" with the various investigating agencies examining Anglo Irish -- including the gardai -- and would continue to co-operate with them.
"I would say in my own defence, that (as Anglo chief executive) I acted at all times in the interests of the bank and not only with the knowledge, but with the full co-operation and backing of our Financial Regulator and the Central Bank, and obviously with proper legal advice wherever it was required."
Asked about the scale of losses at Anglo Irish Bank he replied: "Can I start answering that question by talking about the starting point here which is a sort of a bone of contention for me? My last year at the bank was 2008, and we produced a set of results for 2008 which showed about €800m in profits and a net worth of around €4bn to €4.5bn. So that's the last set of accounts that I saw before I left. The Government nationalised the bank in the middle of January 2009, and then they went and re-audited the accounts that had been prepared for 2008 and they really went through them with a fine toothcomb. So they went through the whole internal process of being re-audited without change from the accounts we had produced with an €800m profit and a €4.5bn net worth.
"Now today, the spin out there is that there were all sorts of hidden losses on the books and reckless lending and so on and so forth, which just totally ignores the fact that the market began to melt really badly in early 2009, which has created some of the issues for all the banks.
"The Government has to decide which poison it wants to take. Did it agree with our accounts in 2008? I presume it did because it signed them. Or did they sign the accounts knowing that those accounts were misleading? You have to choose one. The next thing I would say is the horrendous losses that have been reported for the bank breaks out into two categories. There are the losses created through the transfers to Nama, and there are the ones that didn't go into Nama that would have occurred anyway because of the meltdown in the economy. Anglo, as a bank, was forced to sell half its loan book at a 50 or 60 per cent discount and the losses that transaction created were €22bn. So, in other words, that was a choice to create that loss. Anglo is now reported as having the biggest losses of any bank in the world. Does that seem right to you? Think about the huge American banks that are 10 times bigger than Anglo with massive real estate lending portfolios, not to mention all their subprime and consumer credit folders. How could Anglo's losses be a multiple of Citigroup or Bank of America, and I'm not even mentioning RBS or HBoS who were the most aggressive lenders in the property market in the boom years.
"So the question I'm asking is why is Anglo being treated so much worse than AIB? The answer is political discrimination. You've got one state agency selling loans to another. It's an inter-group transfer with one agency selling loans to another at a discount to the buyer, and creating this massive book loss. No other country in the world has adopted this approach, and the reason is we're in the worst recession since the Great Depression and there is absolutely zero market for real estate assets. In an environment like that, it makes absolutely no sense to force the sale of your assets to a buyer who can name his price.
"Ireland has done -- and the Government has stated rightly that it is taking a much more forthright approach, coming in and sorting out all the bad assets. It's very admirable, but they stand alone in this. But now the massive losses that are being reported are impacting on ratings from the rating agencies, and views of our sovereign debt and everything else. Having said that, I realise why the Government has done it. The message that it sends out is 'Jesus, Anglo has the biggest losses in the world'. Ireland is poorly represented, because other countries have not taken their medicine."
Mr Drumm says that his life has been turned upside down by what had happened to Anglo Irish Bank and the country. "I'm a bankrupt. I could never have imagined that would happen to me. I've got young children. It's about getting through today and tomorrow. I have to figure out now how to look after my family. That's my job. It's impossible to think of the future without just thinking of surviving, to be honest with you."