FORMER CHIEF executive of Anglo Irish Bank David Drumm systematically began transferring his assets to his wife, Lorraine Drumm, in September 2008 at the height of the world financial crisis, a bankruptcy heariing was told yesterday.
Mr Drumm, who moved to Boston in June 2009 and declared bankruptcy in October 2010, is now a paid consultant to John McGrail, owner of JM Realty Management and the Mayo Group and a former client of Anglo.
These were the principal revelations elicited by lawyers for Anglo yesterday in what is expected to be Mr Drumm’s final “341” bankruptcy hearing.
In his statement of financial affairs, Mr Drumm claimed he owed Mrs Drumm more than $200,000. But attorney Kenneth Leonetti spent much of yesterday morning demonstrating that the money the former banker claimed to have borrowed from his wife was derived salary and bonuses from Anglo, which totalled some €13 million between 2004 and 2009. Starting in September 2008, Mr Drumm began transferring his earnings and jointly held property to Mrs Drumm, totalling some $1.6 million.
Mr Leonetti established a parallel between events and Mr Drumm’s management of his family’s finances. “Mrs Drumm set up her own account for the first time on September 24th, 2008, with €150,000 which you transferred,” the attorney said. “What was going on in the world?”
“The world was falling apart,” Mr Drumm replied.
“That day, Goldman Sachs issued a report on Anglo Irish Bank,” Mr Leonetti continued. “September 22nd was the day that you and other directors signed documents regarding loans from the bank to you. Six days hence, the bank was going to close its books for the year, and if the warehousing of loans to Mr FitzPatrick could not be refinanced, they were going to show in the books.” Mr Drumm said the loans to Mr FitzPatrick did not “come on the radar” until November. “In September, it was about Lehman and Anglo losing between half a billion and one billion a day.”
Mr Leonetti noted that knowledge of €100 million in loans to Mr FitzPatrick became public on November 3rd, 2008, but that conditions hardly improved in the meantime.
“September was Armageddon,” Mr Drumm said, but things improved after the government bank guarantee.
“Isn’t the real reason you transferred all this money because you wanted to keep it safe from creditors?” Mr Leonetti asked.
Mr Drumm said No. “It dawned on she didn’t know where the money was, so she took a lot of money over.”
Mr Drumm admitted he filled out cheques on his wife’s accounts, including those used to established his consultancy firm in Boston, and she signed them. “Really, it’s not a loan, is it?” Mr Leonetti said. “It is,” Mr Drumm insisted. But he later relented: “If you ask Lorraine about it, she’d probably say it’s for the family.”
John Hotchinson, one of four attorneys for Anglo present at the hearing, questioned Mr Drumm about his one-man consultancy in the US, which was called Harborlight, then Delta.
Mr Drumm said he has had only two clients. The first paid him a $7,000 a month retainer for the first 10 months of last year. The second paid him $25,000 in November 2010. Delta has lost money, he said. Mr Drumm said he has a confidentiality agreement with his sole client. Mr Hotchinson handed him a media report about the alleged financing of Delta by John McGrail and Mayo Group. “In what this article describes as ‘an act of chutzpah that will leave taxpayers gasping’, this purports that Mr McGrail or his company are paying your company $9,000 a month,” Mr Hotchkinson said.
