Anglo requested Drumm to assist in bank inquiries

ANGLO IRISH Bank sought agreement from the bank’s former chief executive David Drumm that he co-operate with the various investigations into the bank as part of a counter-proposal to settle its action over debts of €8.5 million.

Taoiseach Brian Cowen and Minister for Health Mary Harney have called for Mr Drumm to return to Ireland from the US, where he now resides, to face up to his responsibilities.

Mr Cowen said it would be helpful if he returned and he felt everyone hoped this would happen. It would be helpful to restore public confidence, said the Taoiseach.

Ms Harney agreed that it was time for him to return to face his responsibilities. “Yes, I would love that to be the case,” she said.

Anglo is understood to have claimed that Mr Drumm’s settlement proposal to the bank last month would have left the taxpayer with a €4 million shortfall, leading it to reject his proposals.

The bank is intent on taking all steps available to it to pursue the repayment of the substantial sums due and Minister for Finance Brian Lenihan, the shareholder of the nationalised bank, is supporting its actions.

The bank had rejected Mr Drumm’s September 24th settlement offer and, in a counter-offer on October 8th, included a proposal that he co-operate with the investigations into the failed bank.

The bank wanted Mr Drumm to hand over his properties to be sold to pay down the €8.5 million debt and to agree a loan repayment schedule from his future earnings.

Mr Drumm had offered to sell properties in Malahide, Co Dublin, and in the US, on top of his €5.4 million pension fund at the bank. He claimed that he was offering assets worth €10.8 million, a figure rejected by the bank.

Anglo disputed Mr Drumm’s assertion that his Anglo pension was worth €5.4 million, claiming that it was worth less than half this amount after taxes were deducted.

Both sides had been working with experts to find a solution to transfer the pension to the bank at the maximum possible value.

Anglo had proposed a meeting to discuss its latest settlement offer of October 8th, but Mr Drumm did not reply and instead filed for voluntary bankruptcy in a Boston court near his home on Thursday afternoon Irish time.

The bankruptcy action casts doubt on whether the trial of Anglo’s High Court loans case against Mr Drumm will proceed as scheduled on October 26th.

However, Anglo plans to continue to pursue its separate legal proceedings against Mr Drumm and his wife Lorraine over the May 2009 transfer of their house on the Abington estate in Malahide, Co Dublin, from their joint names into the sole name of Mrs Drumm.

The bank has claimed that the transfer of the property was fraudulent and was not disclosed to it.

This will be the subject of Anglo’s action against the couple.

While Mr Drumm’s bankruptcy application caught Anglo by surprise, the bank had been aware that, as a US resident, he could have filed for bankruptcy in Boston.

The bank had been negotiating in good faith on a potential settlement with Mr Drumm and it now believes that he had been taking steps to bring his bankruptcy application for some time while continuing those negotiations.

Mr Drumm filed for bankruptcy in the US as he expected he would eventually be forced into bankruptcy in Ireland because Anglo would not agree to settle its action on terms acceptable to both sides.

Sources questioned how he could claim to be insolvent in the US when he argued that he could repay the bank in full in Ireland.

Mr Drumm said he could not afford to incur further costs defending the bank’s action and pursuing his counter-claim for €2.6 million.

Mr Drumm’s bankruptcy applications casts doubt on whether he will return to Ireland to assist with the investigations into the bank by the Garda Bureau of Fraud Investigation, the Office of the Director of Corporate Enforcement (ODCE) and an independent inquiry for the chartered accountants’ representative body.

He had been in discussions with investigators about meeting them.

A source familiar with Mr Drumm’s position stressed that Mr Drumm was willing to assist investigators but that meeting the investigators was “up in the air” following his bankruptcy action.

There have been “nine pieces of communication” between Mr Drumm and the Garda fraud bureau, the most recent on September 30th, said the well-placed source. There have also been “nine pieces of communication” between Mr Drumm and ODCE, the most recent on October 7th.