Ex AIB chief David Drumm files for bankruptcy

HE was part of the squalid triumvirate who lived the high life, paying themselves millions while driving Anglo Irish Bank towards a crash that would leave the country with €35billion worth of misery for generations to come.

And even at this late stage, when unemployed mothers and fathers, vulnerable patients and the frail elderly are paying for his actions, it appears the last thing on David Drumm’s mind is the struggling people back home.

Drumm, the former Anglo chief executive, who was forced to resign on December 19, 2008, just a day after chairman Seán FitzPatrick and non-executive director Lar Bradshaw, has filed for bankruptcy in Massachusetts.

In just three simple pages and a string of YES/NO tick boxes, he  moved swiftly towards bankruptcy by filing, shortly before 10am, at U.S. Bankruptcy Court office at Post Office Square in Boston.

The petition gave Mr Drumm’s address as 73 Old Colony Road, Wellesley, Massachusetts.

His principal asset was said to be located at 262 Stage Neck Road, Chatham, Massachusetts – a luxury mansion he and his family have been living in for the past six months.

Mr Drumm estimates that after all exemptions and administrative expenses there will be no funds available for unsecured creditors.

He estimates the number of his creditors as being between one and 49. He estimates his assets by ticking another box between one million and one dollar and ten million. His estimated liabilities are also between one million and one dollar and ten million.

On the second page he says he has been domiciled in this district for 180 days immediately preceding the date of the petition.

The third page consists of a signature by Mr Drumm himself and also by his attorney, Stuart Grossman.

The second document filed with the first declares that his debts are not primarily consumer debts. According to experts, this allows him not to answer the other questions on the form which concern his marital status and wages.

He also does not fill in any amount for unemployment compensation as a non-consumer debtor and he is not liable to fill it in.

The disgraced bank chief’s first move after he was forced out two years ago, was to turn tail and run – turning up in Cape Cod, Massachusetts, where he dismissed all appeals to return and help clean up the mess he helped create.

While gardaí and corporate enforcer Paul Appleby are painstakingly building a case for him to face, he cannot be extradited from the U.S. simply to answer questions.

The portly 44-year-old – seen cowering behind his front door when famously door-stepped by RTÉ’s Charlie Bird – is the subject of a number of investigations.

Central to them are the movement of more than €7billion to Anglo from Irish Life & Permanent, and the astonishing €122million of Anglo loans to FitzPatrick.

Drumm’s extraordinary defence of the notorious €7billion ‘bed and breakfast’ deal with Permanent, in September 2008, which artificially boosted Anglo’s books, appears to be that the bank did it all the time, ‘except this time the amounts involved were larger’.

He has declared that the bank routinely ‘flattered’ its balance sheets, and has admitted  to friends that Anglo had bumped up its accounts with short-term deposits from big customers for years to boost its credit rating.

The cash would be deposited with Anglo for a brief period just before the bank’s September 30 financial year end and so would appear on its annual accounts.

The money was usually withdrawn days later.

Anglo appeared to have a far bigger deposit base than it actually did, beguiling regulators, credit ratings agencies and trusting shareholders.

Drumm even coined a phrase for the dubious practice, he called it ‘balance sheet management’.

Although now living in America, Drumm still takes an interest in his Dublin property.

When he failed to sell his mansion in Malahide for €2.3million – down from an initial €2.7million – in October last year, he put it up for rent.

And last March, he hired a team of decorators to clean it up and get it ready for the letting market.

The letting agents were auctioneers O’Farrell Cleere, whose principal Brian O’Farrell is one of the ten ‘Golden Circle’ investors in Anglo Irish Bank.

The house is in Abington – the wealthy gated community that saw dramatic scenes recently when Ronan Keating was ordered out of the family home for cheating on his estranged wife Yvonne.

Drumm’s house was later leased for around €6,000-a-month. But it was his transfer of deeds in the property – named Sudbury after a Massachusetts town where he used to live – to his wife Lorraine in May last year that led to him being sued by Anglo.

The State-owned bank lodged its action to recover €8.3million in loans to him and for which he had used the house as security.

Audaciously, he responded by taking an action against Anglo for ‘mental distress and harassment’ as the bank sought to recover its money and unravel the transfer of ownership.

The ten involved in the Golden Circle were lent €451million to buy Anglo shares in a bid to artificially prop up the bank’s share price.

Details have since emerged about the massive salary he was paid. In 2008 he pocketed an astonishing €2.2million.

And his pension package benefitted by a change of rules within Anglo after Bertie Ahern’s Government, in 2006, placed a €5million cap on the value of accumulated pension payments that could be set against tax.

The rule change within the bank – which benefited just one member of staff, Drumm –  allowed executives affected by the move to take cash payments instead.

As a result, he received €1million cash in lieu of a pension. What has also emerged since his fall from grace is that Drumm spent more than $7million on two homes in Cape Cod as Anglo was teetering on the brink of collapse.

Not content with what he made from Anglo in the past few years of his reign there, Drumm launched a legal action against Anglo for unpaid bonuses.

He claimed that as some were paid in 2009, he was entitled to one – for €660,000, which he claims was deferred from 2006.

In March 2008, he paid $4.6million for a luxury three-storey home – for which both he and his wife took out two mortgages of $1million each.

And later that year, on September 30 – one day after Anglo crashed, slashing 46 per cent off its share value – he bought a second home for $2.6million.

In July 2009, a Irish Mail on Sunday reporter spoke to Drumm at his luxurious home overlooking the ocean in Chatham a beautiful up-market town on Cape Cod.

Drumm – who works as a consultant for a U.S. property investment firm – claimed he was in touch with the Irish authorities and that he was in America ‘for the summer’.

Asked if he was planning to return to Ireland, he replied: ‘That is being discussed but nothing has been decided.’

Crucially, when asked if he had anything to say to people in Ireland who had lost so heavily in the crash of the Anglo Irish Bank, he replied: ‘I am sorry I cannot say anything about that.’

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