It seems incredible the former Anglo chief did not keep a register of checking accounts, nor tried to reconcile them

KATHLEEN DWYER, the court-appointed trustee for David Drumm’s estate, trawled through his Irish and US bank accounts yesterday, at the former Anglo chief executive’s third bankruptcy hearing in Boston.

Mr Drumm was still captain of the Anglo Irish Titanic when it began listing in 2008. Ms Dwyer didn’t ask him why he didn’t see the iceberg coming. Rather, she quizzed him on where he moved the cash from his cabin.

Thus we learned that in December 2008, the month he resigned, Mr Drumm transferred €550,000 in two transactions to his wife Lorraine’s savings account at Allied Irish Banks. That same month, he received his last full monthly pay cheque of €92,000 from Anglo, as well as a bonus of €372,000, which he said covered the previous three years. He received a final pay cheque of €86,000 in January 2009.

A lawsuit filed by Ms Dwyer on behalf of Mr Drumm’s estate against Anglo last November 16th states Anglo “failed to pay the debtor (Mr Drumm) his earned bonus for calendar year 2006 in the amount of €661,000”.

The same lawsuit claims Mr Drumm was entitled to 12 months’ notice prior to termination of his contract, and therefore should receive €760,000 in unpaid pension contributions and employee benefits from Anglo.

Yesterday’s hearing highlighted the awkward duty of Ms Dwyer to maximise the amount of Mr Drumm’s estate so it can be distributed to his creditors, while at the same time suing his main creditor, Anglo.

Ms Dwyer and Mr Drumm claim Anglo’s elevation of a “non-recourse” loan – which he was not required to pay back – to a “recourse” loan – for which he was personally liable – constitutes “fraudulent conveyance”.

Anglo lent Mr Drumm €7.65 million to buy Anglo shares – thus helping to prop up the bank’s value – in 2008.

To justify their claim of fraud, Ms Dwyer and Mr Drumm submitted a letter from Anglo to Mr Drumm, apparently backdated to January 10th, 2008. It appears to have been drawn up by the bank in the autumn of 2008, because one of the directors whose names appear on the letterhead had not even been appointed by January.

Anglo would appear to have a weak case, demanding that Mr Drumm pay back money it lent him so he could buy now worthless Anglo shares. But Ms Dwyer also seems to have a weak case.

A source involved in the case said yesterday the two parties have decided to postpone their dispute until after Ms Dwyer liquidates Mr Drumm’s assets.

“If there’s only 100,000 left, it’s silly to fight over the assets now,” the source said.

“But if she collects 10 or 15 million . . . Once she’s done, we’ll see if it’s worth fighting over.”

Without Anglo’s claim, Mr Drumm would doubtless be able to pay the few hundred thousand euro he owes other creditors. The present litigation is eating up legal fees, and may well prove more costly to all parties than the settlement which Mr Drumm earlier offered Anglo.

Ms Dwyer yesterday rifled through Mr and Mrs Drumm’s accounts at Anglo, AIB, Boston Private Bank and the Cape Cod Five Cents Savings Bank.

Participants sat behind stacks of manilla file folders, which they pored over, identifying various accounts only by the last three digits.

It was a dizzying mish-mash of dollars and euros, deposits and transfers, joint accounts, sole accounts, savings and brokerage accounts.

It seemed incredible that the former chief executive did not keep a register of his checking accounts, never attempted to reconcile them and could not remember the provenance of entries totalling hundreds of thousands of dollars.

The man who came to Boston for Anglo in 1999, promising to “cherry-pick the best real estate investment deals” lost half a million dollars on a personal property investment in Cape Cod.