Former Anglo CEO David Drumm ‘freaked out’ when dealing with lawyer

David Drumm was "freaked out" when he phoned his bankruptcy lawyer having learned of concerns over unreported cash transactions between him and his wife.

That was according to Stewart Grossman, the lawyer taken on by the former Anglo Irish Bank CEO when he filed for bankruptcy in October 2010.

The Boston lawyer spent the majority of the day in the witness stand prior to giving way to trustee Kathleen Dwyer on the third day of Mr Drumm’s trial, in which the former banker is attempting to discharge himself from bankruptcy and claim a fresh financial start in the US Bankruptcy Court in downtown Boston.

Mr Grossman was often, by his own admittance, “hazy” on his recollection of his dealings with Mr Drumm, much to the frustration of prosecuting attorney John Hutchinson, but did pre-empt an assertion subsequently made by Ms Dwyer that Mr Drumm was one of the “most experienced” financial professionals he had ever represented.

For her part, Ms Dwyer, who is representing creditors of Mr Drumm, said she had concluded the former Anglo chief was “very sophisticated” and “very knowledgeable” in his financial matters considering his education and career in accounting and banking, but that it took seven meetings and information had to be “drawn out from him... over a series of requests”.

“It was tedious,” Ms Dwyer added.

Mr Grossman testified that he had made it clear to his client that Mr Drumm would be required to swear to his schedules and that he would be responsible for their accuracy. He said he warned Mr Drumm that the trustees would be assessing whether fraudulent transfers had occurred so he had to disclose all transfers of cash and property.

He recalled telling his new client that it would be about “getting naked in public“, that he could not disclose transfers later after filing schedules and that leaving out assets in those schedules could lead to trouble — be it civil or criminal — while also causing him to fail in his bid to get a discharge.

Mr Grossman was also questioned by Mr Hutchinson as to an email from Mr Drumm, in which the former banker told his advisers that he would be examining his “stance in relation to Lorraine”, his wife.

“Is it fair to say he’s directing what dealings he wants with the trustee? Did you develop a strategy for Lorraine?” asked Mr Hutchinson to which Mr Grossman replied, no, adding that he didn’t know what stance really meant and that he thought it might have been a phrase specific to Ireland.

The trial is due to continue Tuesday and, although Lorraine Drumm is scheduled to appear before the end, it is not clear whether or not this will come to pass.