FORMER ANGLO Irish Bank chief executive David Drumm has challenged the bank’s lawsuit against him in his US bankruptcy case, arguing the Financial Regulator was “fully aware” of the transferring of Seán FitzPatrick’s multimillion euro loans off the books of the bank.
Mr Drumm has claimed in new filings lodged in the Boston court that the bank “regularly and fully reported the extent and nature of Mr FitzPatrick’s borrowings to the Financial Regulator as required by law”.
“The Financial Regulator was fully aware of FitzPatrick’s warehousing scheme,” said Mr Drumm in a 21-page submission filed in court on Monday.
Rejecting the lawsuit aimed at stopping him walking away from bankruptcy with a clean financial record, he said the transferring of Mr FitzPatrick’s loans of up to €120 million off Anglo’s books was “fully and properly signed off by the bank’s credit committee as well as several non-executive directors”.
Mr Drumm admitted to his involvement in advancing €451 million in loans to 10 long-standing customers of the bank in July 2008 to buy a 10 per cent stake held by businessman Seán Quinn, but he argued the transactions were “approved by the bank and the Financial Regulator”.
He said that the loans were not personally approved by him, but by Anglo, which is now known as Irish Bank Resolution Corporation (IBRC). The so-called Maple 10 transaction was organised by the bank to prevent the shares being sold in the market, a move that would have further destabilised the bank at the peak of the financial crisis.
Mr Drumm filed for bankruptcy in October 2010 after failing to reach a settlement with the bank over unpaid loans of €8.5 million.
Responding to IBRC’s claim that he fled Ireland in June 2009 to avoid his debts to the bank and the investigations at Anglo, Mr Drumm said that he moved to the US “for employment reasons”.
He denied a litany of allegations made by IBRC in August, rejecting the bank’s claims that he committed numerous frauds on the bank during his time as chief executive from January 2005 until his resignation in December 2008 over Mr FitzPatrick’s loans.
Mr Drumm rejected IBRC’s complaint that he should not be allowed a fresh financial start as he had testified falsely and concealed information during his time as Anglo chief executive and during bankruptcy proceedings.
He argued it was the bank, not him, that was “acting in bad faith by prosecuting a case under circumstances which the bank has publicly acknowledged makes no commercial sense”.
Anglo’s complaint that financial transfers totalling about $1 million to his wife, Lorraine, were “exposed” by the independent trustee – the court-appointed officer overseeing the liquidation of his assets to cover his liabilities – was “frivolous at best and false at worst”, he said.
Mr Drumm argued he voluntarily and fully disclosed information and documents relating to his financial affairs to the trustee “long before any alleged cross-examination”, as claimed by the bank.
Loans advanced to executive directors of the bank, including a loan to himself, to buy shares in Anglo in late 2007 and early 2008, were “approved by the banks board of directors”, he said.
A €8.25 million loan issued to finance director Willie McAteer on the day of the bank guarantee to prevent his shares being sold on the market was advanced “in the best interests of the bank” and was “properly signed off on by the appropriate individuals at the bank,” he said.
Mr Drumm acknowledged the bank had asked the regulator to issue “a reassuring statement” about Anglo after the collapse of US bank Lehman Brothers in September 2008 as Anglo had “experienced liquidity difficulties during this period”.
A Boston judge will hear the allegations made against Mr Drumm and determine whether he should be allowed to be discharged as bankrupt.
