Over 100 pages of damning findings against David Drumm
JUDGE Frank Bailey was not a happy camper. Throughout his 120-page ruling in an action concerning David Drumm’s efforts to discharge his debts, the judge uses plain language in describing Drumm’s efforts to lie and obfuscate.
The former chief executive of Anglo Irish Bank was being challenged by his former employer to declare all his assets before he could have any chance of being discharged of his €10m debt. IBRC, formerly Anglo, is his principal creditor.
At issue in the Boston court was cash and assets to the value of over €1m, which IBRC believed he has attempted to stash beyond the reach of the court. The court found that he repeatedly tried to avoid his obligations under the law.
Judge Bailey noted his contributions to the bankruptcy process included “knowing false statements, failures to disclose, efforts to misdirect, and downright lies”.
In one instance the judge stated baldly: “Drumm lied to the court.”
On another point, he was “being deliberately evasive”, and “hindering and delaying” proceedings.
In the round, Judge Bailey laid it out thus: “As for his suggestion that he has fully disclosed everything, I can make no such finding”.
On a total of 30 different counts, Drumm was adjudged to have failed in his obligations. Findings on only one count was required to prevent the discharge he was seeking.
Or, as the judge put it, the IBRC had “established cause to deny him discharge many times over”. As a result, he faces financial ruin, not to mention possible criminal charges for perjury.
The cash and assets which Drumm had attempted to move beyond the court came under four headings.
At issue were nine cash transfers between November 2008 and September 2009. The bulk of the $500,000 involved was transferring in the final months of 2008, as the bank was going up in flames.
The biggest transfer was $372,561 on December 15. All of the transfers, it was alleged, were made to put the money beyond the reach of bankruptcy.
The judge found that, throughout meetings with creditors and the bankruptcy trustee, Drumm was not coming clean about the money.
“By this point she [bankruptcy trustee] suspected Drumm of being up to something and did not think the omissions were simple mistakes: there were so many of them, for so much total value; he was highly sophisticated, not the sort to make this kind of mistake; he did not promptly correct any of his mistakes; and he had this strange desire to make his most important disclosures off the record.”
Only at the fifth meeting with creditors, on April 1, 2011, did he admit to the flight of money from his accounts. Then it was when presented with the evidence. The judge did not believe his claims of ignorance about the matter theretofore.
The four properties examined by the court included one in Malahide, Co Dublin, which was used to draw down a mortgage of €250,000. In dealing with this, Drumm claimed ignorance as to where the proceeds went. The former banker initially said he wasn’t sure where the money had gone, and then suggested it may have gone into a “household” account.
Not so, according to Judge Bailey. “In fact, Drumm did remember and know where the proceeds had gone.
“They had not gone to an account in his own name or into a joint account, much less a ‘household’ account. He was here hindering and delaying the trustee and all in attendance, being deliberately evasive.”
It was all pretty clearcut to the judge what had happened two cars which had been sold.
“In May 2009, Drumm sold a Range Rover that was titled in his sole name to a third party for €36,000 and deposited all the proceeds into an account in Mrs Drumm’s sole name; and in September 2009, Drumm sold a BMW that was titled in his sole name to his sister for €20,000 and deposited the proceeds into an account he held jointly with Mrs Drumm.”
He claimed the proceeds in question could be found in “bank statements and stuff”, but he did not tell his advisers or creditors about the real location. When asked for accounts associated with the transfers, he provided his own, and not his wife’s.
The court found Drumm had undervalued furniture in some of his properties. The value initially cited was just under $50,000, but he had made the valuation for $10,000. “This was a substantial understatement, by any measure,” the judge found.
There were 52 different incidents in which IBRC had alleged that Drumm had acted outside the law.
Each of them involved activity that suggested Drumm was attempting to move whatever he could out of the reach of the court. The judge found that on 30 counts, the bank had proved its case.
Drumm’s defence to a greater extent was what IBRC’s counsel had characterised as “so stupid”.
This involved pleading ignorance about financial matters, which can’t have been easy for a successful banker and accountant.
The judge said he agreed with Drumm that it would be stupid to lie under oath, especially with all that was involved for him, but, Judge Bailey declared, “People do stupid things.”
“I need not attribute Drumm’s conduct to stupidity,” the judge said. “Indeed it may well be the product of cleverness.
“Perhaps Drumm was emboldened by a sense that he could invoke the ‘so stupid’ defence against the consequences of his actions, the plausibility of the defence being directly proportional to the scope and brazenness of the offence.”
Overall, the findings were devastating to the poster boy for the banking balloon that was the Celtic Tiger. Equally notable is the characterising of Drumm in the kind of plain language not often seen in Irish courts.
He lied. He deceived. He did all he could to stash something beyond the reach of a bank now owned by the citizens. There was no way around it. Six years after Anglo’s banana republic was dragged out into the open, the man at the centre of it has had a reckoning of sorts.
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