Omissions from Drumm’s files ‘above the norm’

The "large amount of omissions" from financial statements made by David Drumm was far above the norm, according to the experienced bankruptcy trustee liquidating his estate.

Kathleen Dwyer was testifying in the US Bankruptcy Court in Boston yesterday on day four of the former Anglo Irish Bank CEO’s bankruptcy trial.

Mr Drumm is attempting to have himself discharged from bankruptcy to acquire a fresh financial start.

However, this move is being challenged by the Irish Bank Resolution Corporation — formerly Anglo — and Ms Dwyer, representing the other creditors.

If IBRC and the other creditors are successful, Mr Drumm could end up being forced to hand over a share of his income for the rest of his career in order to repay the approximately €10.5m owed to his creditors, €8.5m of which is owed to IBRC.

Last week, during a two-day stint in the witness stand, Mr Drumm denied making a “conscious decision to exclude transfers to his wife” Lorraine from schedules.

However, when asked by her lawyer if Mr Drumm had satisfied his obligations as a debtor, Ms Dwyer responded “absolutely not”.

The prosecution alleges that the financial statements Mr Drumm filed on October 29, 2010, as he was declaring bankruptcy in the US, included both material misstatements and material omissions”.

“What is required is that a debtor discloses everything up front in the schedules,” said Ms Dwyer. “That’s what the bankruptcy code demands. Things just leaked out over time.”

She also elaborated on how she came to learn of the undisclosed payments.

“I would ask for documentation with respect to transfers and there was next to nothing in original schedules,” she said. “The information sought focused on bank statements [which] led to discovery of transfers.”

Under cross-examination, Ms Dwyer was challenged on her November 2010 decision to sue Anglo for recovery of Mr Drumm’s compensation, a strategic ploy to stop the bank from installing their own choice of trustee instead of her.

Taking the stand in the late afternoon was Heather Zelevinsky, a former employee at the Boston law firm Looney & Grossman, who helped Mr Drumm prepare his personal financial statement and supported the defendant’s view that he acted in good faith.

“I never believed that Mr Drumm was trying to conceal transfers and I was trying to reassure him that we thought we had the [statement of financial affairs] correct the first time,” said Ms Zelevinsky.

Mr Drumm said he was “devastated” when it became clear there were “voluminous” errors in those financial statements.

The trial continues today with both sides confident of closing arguments being made before close of business. However, it is expected that Lorraine Drumm will be called to the witness stand by the defence.