Money trail

David Drumm carried out a number of personal financial moves that coincided with Anglo’s demise, writes investigative correspondent Conor Ryan

ON the week David Drumm was taped brashly telling colleagues how to covertly abuse the taxpayers’ rescue of his bank, he was busy moving his personal assets away from its reach.

The then chief executive may have talked up the opportunity to outfox the markets and buy Anglo Irish Bank time.

But privately he was not solely preoccupied with picking the pockets of German banks to get at their deposits.

According to his former employers, Drumm was also engaged in a crude process of moving his assets across the Atlantic in a series of fraudulent transfers.

This was ahead of an eventual application for bankruptcy application in the US.

A Boston bankruptcy court has been told his plan was designed to avoid paying back an €8m loan he got from Anglo in Jan 2008 and which was secured against increasingly worthless shares in the bank.

Drumm has denied the allegations of fraud levelled at him and these will have to be teased out in a trial next year.

But, regardless of his motives, records from the Barnstable County Register of Deeds, covering Cape Cod, show that the transfers happened right as the tapes were rolling.

On one hand, he was meeting the financial regulator to plot a survival route for the bank. But at the same time he was laying out an escape plan ahead of its funeral.

In Sept 2008, the bank was crumbling as it braced itself for the end of its financial year in the wake of Lehman Brothers’ collapse.

The same month, Lorraine Drumm, David Drumm’s wife, started opening the first of 15 bank accounts in her own name.

It had been at least 10 years since she had accounts in her own name, because all of the family business was handled jointly or by Drumm.

On Sept 24, 2008, the Anglo team met the financial regulator for the last of its three meetings before the Government was panicked into guaranteeing the assets of the banking sector.

The same day, according to Anglo’s 2011 affidavit in Boston, Drumm transferred €150,000 from his own account into his wife’s personal account.

It was not the only significant movement of funds between the couple to coincide with an important date in Anglo’s history.

On Mar 19, 2008, he moved $200,000 from his Anglo bank account into a joint account in Cape Cod.

Two days earlier the so-called St Patrick’s Day Massacre occurred, when hedge funds got wind of the hidden position of Seán Quinn and started to bet against the institution’s future.

This drove down the bank’s share price and, more than any other event, set it on a course for almost inevitable demise.

That Mar 19 transfer was the first installment in a staggered series of payments to Mrs Drumm that totalled over $2m before her husband filed for bankruptcy.

Apart from cash, he was also moving property.

On Oct 2, 2008, the taped conversation recorded him telling his colleagues to stick the fingers up to international banks in order to exploit the State’s blanket deposit guarantee.

“We won’t do anything blatant, but… we have to get the money in… get the fuckin’ money in, get it in,” he said.

The next day, he an his wife attended a solicitor where he signed two sworn statements that helped to keep an American investment clear of Anglo’s grasp.

One document he signed confirmed he paid $1.6m, borrowed from another American bank, to get outright ownership of a multi-million dollar development site at Cross St in Chatham from an investment partner.

This deal had been finalised on Sept 16, when the man he bought the site with a year earlier cancelled a mortgage Drumm owed to him. This was the day after the collapse of Lehman Brothers and days before Anglo was due to finalise its annual accounts which still contained a gaping hole.

Three days later, Drumm dismissed the losses as “another day, another billion”.

On Sept 17, Drumm and the Anglo delegation met the financial regulator for the first of three crisis meetings.

The controversial conversation between Peter Fitzgerald and John Bowe took place the next day. This conversation revealed that it was at the Sept 18 meeting, which Drumm attended, that the €7bn rescue guesstimate was thrown on the table. This figure was bait to get the State involved in the fate of the bank.

When David and Lorraine Drumm met their solicitor, John O’Connor of Pembroke Road, on Oct 3, they conducted a second piece of business relating to the Chatham property.

This was to pass control of it over to his wife by assigning her his mortgage. Five days later he signed another deed which rented the same multi-million dollar investment property to his wife for $100.

A year later, the Chatham site was sold by the Drumms for $2.6m and half of the proceeds went into Mrs Drumm’s American bank account.

In an affidavit filed in 2011, his former employers included this transfer in a list of alleged fraudulent transactions. The bank said passing the $1.6m mortgage onto her was part of an attempt to shift assets beyond its reach.

It said this, and several other avoidable transfers, were designed to “hinder, delay or defraud” Anglo. It said the former chief executive retained control of his properties even though they had passed into his wife’s name.

The money he charged his wife for the assets was not in line with what the properties were worth.

During this time the bank also said he had issued a fictitious loan to Mrs Drumm.

The transfers he made were done after he had built up considerable debt to Anglo which he knew, or should have known, he would not be able to pay back.

But efforts to reclaim his assets have been delayed.

A bankruptcy trial in Boston was postponed earlier this year and is now likely to take place in early 2014.

More on this topic

SF planning to publish new Anglo TapesSF planning to publish new Anglo Tapes

Sinn Féin sent copies of 'Anglo Tapes'Sinn Féin sent copies of 'Anglo Tapes'

Drumm: Shut down the loans and brush up on GermanDrumm: Shut down the loans and brush up on German

Anglo tapes reveal bosses knew bank had breached limitsAnglo tapes reveal bosses knew bank had breached limits


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