David Drumm Anglo Irish Bank
Former Anglo Irish Bank chief executive David Drumm has been denied a write-off of more than €10 million in debts after a US judge found him “not remotely credible” and his conduct “both knowing and fraudulent” in statements he made to an American bankruptcy court.
“not remotely credible”
“replete with knowingly false statements, failures to
disclose, efforts to misdirect, and outright lies.”
Former Anglo Irish Bank chief executive David Drumm has been
denied a write-off of more than €10 million in debts after a US judge found him
“not remotely credible” and his conduct “both knowing and fraudulent” in
statements he made to an American bankruptcy court.
In a damning judgment of the former banker that strips him
of a chance for a clean financial start, US Bankruptcy Judge Frank Bailey found
that statements made by Mr Drumm (48) were “replete with knowingly false
statements, failures to disclose, efforts to misdirect, and outright lies.”
“Such conduct disqualifies a debtor from the privilege of a
discharge in our system of bankruptcy,” said the judge in a ruling issued in
Boston.
Judge Bailey issued his 122-page judgment seven months after
the end of a six-day trial of a legal action taken by Mr Drumm’s former bank,
now known as Irish Bank Resolution Corporation.
Outstanding debts
Mr Drumm moved to the Boston area in June 2009, six months
after his resignation from Anglo, and filed for bankruptcy in October 2010
after failing to reach a settlement with the bank over outstanding debts.
The nationalised bank, which is owed €9 million by Mr Drumm
arising mostly from loans to buy shares in the now defunct lender, sought to
prevent Mr Drumm from writing off his debts through US bankruptcy.
IBRC alleged that Mr Drumm under oath knowingly and
fraudulently failed to disclose and otherwise concealed cash and property
transfers totalling more than €1 million, which amounted to most assets he
owned solely or jointly with his wifeLorraine, to his wife’s sole ownership.
The bulk of the cash transfers took place in the final four
months of 2008 at a time when he was chief executive of Anglo and the bank’s
share price was plummeting and the financial institution was facing collapse.
In a major win for the bank, the judge ruled that IBRC and
the other plaintiff in the case, the court official overseeing Mr Drumm’s bankruptcy,
had “established cause to deny him a discharge many times over.”
In all, the judge ruled that there were 30 counts out of 52
objections on which the bank and trustee had established cause to deny him a
discharge.
The ruling exposes Mr Drumm to further legal actions by the
bank, which can pursue him for any past income he has earned or future income.
Mr Drumm’s “so stupid” defence in the case - that he
mistakenly failed to disclose transfers to his wife in financial statements to
the court when he filed for bankruptcy in October 2010 - was rubbished by the
judge.
The judge said Mr Drumm’s co-operation with his trustee,
disclosing information about his finances in a piecemeal fashion from October
2010 to May 2011, was “limited, delayed and shaped to his purposes”.
Analysing Mr Drumm’s character, the judge described him as
“a quick thinker, adept in testimony intended to deflect, misdirect, avoid,
fabricate.”
“His accounting and knowledge of financial affairs is
detailed, precise, almost obsessive. He is confident in his strategising, and
by the time he filed his bankruptcy petition, he had been planning and
strategising for this eventuality for over two years,” said the judge.
‘Controlling type’
Mr Drumm was “no bumbler,” he said in the opinion, “and
clearly a controlling type, he knew what he was doing.”
Judge Bailey rejected Lorraine Drumm’s testimony that she
would “like a million euro” of her own in the autumn of 2008 because she feared
the worsening banking crisis might spell the end of her marriage or the death
of her husband from a stress-induced heart attack.
“Each of them was motivated first and foremost by desire to
shelter their assets from seizure by Drumm’s creditors, especially [Anglo Irish
Bank],” said the judge.
“Their salutary concern to protect Mrs Drumm and their
children gave rise to action because creditors would soon be seizing family assets.”
The judge said that Mr Drumm was “highly motivated” to
protect a home in Wellesley near Boston that the couple bought in 2009 for $2
million, accusing him of withholding information about the property and
controlling its release “for some perceived strategic advantage.”
The former banker elected not to disclose certain
information to the court showing that his withholding of information was “not
accidental.”
“He doled out the truth only when he sensed he could gain an
advantage in doing so,” said the judge.
Mr Drumm’s release of information about a €250,000 mortgage
drawn on a house he owned in Skerries, Co Dublin was intended to hinder and
delay his trustee and “even more, IBRC and the interested public.”
The judge found it “difficult to believe” that Mr Drumm had
failed to disclose to the court and “forgotten” about the sale of two cars, a
Range Rover and a BMW, and the transfer of a total of €56,000 in proceeds from
the sale of the vehicles to a bank account held solely by his wife.
“Drumm had no trouble remembering many other transfers he
had effected even further back in time, yet he omitted virtually every direct
transfer to Mrs Drumm and several that were liquidations whose proceeds he
transferred to Mrs Drumm,” said Judge Bailey.
keywords: David Drumm, Anglo Irish Bank, Bankrupt, USA Court
