STATE-OWNED ANGLO Irish Bank has asked a US court not to allow former chief executive David Drumm walk away from bankruptcy, claiming he lied repeatedly under oath during his bankruptcy case.
In a further setback for Mr Drumm last night, the court-appointed trustee overseeing the proceedings has also challenged his discharge from bankruptcy.
The trustee, Kathleen Dwyer, alleged in a complaint to the court that Mr Drumm had failed to disclose numerous property transfers.
Mr Drumm “knowingly and fraudulently made numerous false oaths and accounts”, she claimed.
Anglo made a litany of allegations against Mr Drumm in two lengthy court documents filed last night, claiming that he committed numerous frauds on Anglo during his time as chief executive.
The bank has alleged Mr Drumm deliberately concealed information from non-executive board members and fraudulently removed or changed loans to himself, four executive directors and the 10 so-called “golden circle” investors who bought shares in the bank in 2008.
The changes to loans of about €27 million to the directors and €450 million to the investors removed them being personally liable.
Mr Drumm’s concealment and fraudulent acts were “a desperate attempt to avoid serious financial risk to himself, the other directors, and the favoured investors arising from AIBC’s [Anglo’s] sharply declining share price at a time when the bank’s very survival was rife with doubt”, the bank claims.
Anglo alleged that Mr Drumm’s acts of fraud breached his duties as a company director creating millions of euro in losses for the bank, its employees and shareholders, and ultimately, Irish taxpayers.
The frauds were “substantial contributing factors to a loss of confidence in the bank and its nationalisation in January 2009”, Anglo claims.
When confronted with “this massive pattern of wrongdoing”, Mr Drumm lied in the bankruptcy case “under oath again and again denying any involvement and knowledge that he clearly and demonstrably had at all relevant times”, the bank claims.
Attempts to seek a response from Mr Drumm were unsuccessful last night.
He resigned in December 2008 shortly before nationalisation after it had emerged that Anglo chairman Seán FitzPatrick had hidden loans of up to €120 million over several years.
Mr Drumm filed for bankruptcy in Boston, where he lives, in October 2010 following a legal action by the bank in the Irish courts to recover loans of €8.6 million from him.
Anglo filed the documents ahead of a deadline yesterday to prevent him leaving bankruptcy protection.
In her complaint to the court, Ms Dwyer claimed that Mr Drumm transferred funds to his wife to buy the family’s home in Boston through a trust and to lend money back to him.
Ms Dwyer alleged that he failed to disclose numerous transfers.
Mr Drumm faces a possible lengthy court hearing to consider the bank’s allegations and whether he should be discharged as a bankrupt.
The bank claims that “Drumm’s pattern of concealment, deception, falsehood, manipulation and intententionally fraudulent behaviour” should not allow him a fresh start provided under the bankruptcy process.
Anglo has also claimed that from September 2008, when the Irish banking crisis was at its peak, Mr Drumm began to transfer significant amounts of cash to his wife. The transfers, totalling about $1 million, “reached a fever pitch when AIBC’s fate – and his demise as CEO - become exceedingly obvious”.
Anglo alleges that Mr Drumm failed to disclose these fraudulent transfers in a statement of his financial affairs filed in October 2010.
The bank claimed Mr Drumm had “testified falsely” and engaged in a pattern of conduct to conceal from and defraud Anglo and the court trustee overseeing his bankruptcy.
