Background: David Drumm’s role in alleged criminal transactions

David Drumm will appear before a magistrate judge in Boston's Moakley Courthouse for extradition proceedings on Tuesday.

The legal complaint in the case involving the “extradition of fugitive from foreign country to United States” outlines Mr Drumm’s role in some detail in the Maple 10 and Irish Life & Permanent transactions.

Both transactions were carried out as the financial crisis was deepening to make Anglo’s financial position appear better off.

The Maple 10 transaction was carried out to shore up the bank’s share price, while the Irish Life & Permanent back-to-back deposits helped Anglo to present its funding position as more favourable.

Assistant US Attorney Amy Harman Burkart presented evidence of both transactions to the court in the legal complaint so that the fugitive may be arrested and brought before this court "to the end that the evidence of criminality may be heard and considered," the legal complaint states.

The complaint was sworn before US Magistrate Judge Donald Cabell on October 5th, 2015.

The US attorney says that Mr Drumm was fully aware of Mr Quinn’s CFD position in the bank as witnesses can attest because he attended a meeting with the businessman on September 11th, 2007.

“Drumm was responsible for the non-disclosure of the matter on the financial report, as demonstrated by the fact that he signed the report’s responsibility statement,” said the attorney in the court document.

This statement “confirmed that the report’s financial statements had been prepared in accordance with international accounting standards and provided a true and fair view of the assets, liabilities and financial position of Anglo,” the legal complaint says.

The document says Anglo loaned members of Mr Quinn’s family about €175 million to purchase shares in the bank in the unwinding of his CFD investment which was destabilising the share price.

“The lending was issued despite the bank’s awareness of Quinn’s family’s weak financial position, as demonstrated by the extensive lending to meet margin calls,” the attorney says.

“The lending was not done in the ordinary course of the bank’s business as it was motivated by the bank’s attempt to unwind Quinn’s CFD position and to stabilise its share price.”

The complaint alleges that the loan applications to Anglo’s credit committee to lend €45 million to each of the 10 customers of the bank to buy shares backed by Mr Quinn’s CFD position were inaccurate.

“The letters to the Maple 10 were inaccurate in that they suggested the loans were intended for a ‘multi-currency share dealing facility,’ when they were in fact intended solely for the purchase of bank shares,” the complaint states.

“Further, the letters inaccurately suggested that the borrowers approached the bank seeking the loan to buy shares, when each of the Maple 10 was approached by Drumm.”

Prosecutors claim that the 48-year-old Dubliner forged and falsified documents by changing the terms of the July 2008 loans to seven of the Maple 10 customers in October 2008 by altering the loan facility letters “to give a false impression of contemporaneity.”

The changes gave more favourable terms to the borrower and less favourable terms to Anglo as they waived the bank’s entitlement to pursue the customers for 25 per cent of the value of the loans.

“The effect was that in the event Anglo’s share value became greatly inferior to the money loaned, Anglo would not be able to recover any part of the outstanding loan by personal recourse of the Maple 10 investor,” the complaint states.

“This amendment to the loan facility letters constituted an interference with Anglo’s entitlement to recover the value of the loan from the Maple 10 investors.”

The legal document alleges that “Drumm was responsible for creating the above mentioned false loan facility letters.”

As chief executive of the bank, he was “privy to the falsification of documents (the loan facility letters) which affected the financial affairs of Anglo,” the complaint alleges.

Mr Drumm is alleged to have asked Anglo employees from October 2007 as the financial crisis was worsening “to approach other financial institutions and inquire if they would ask ‘non-bank’ subsidiaries to place funds with Anglo, to enable the funds to qualify as corporate customer deposits as opposed to interbank placements.”

The complaint says that Mr Drumm instructed Anglo's director of treasury Matt Cullen to approach Irish Life & Permanent and ask the rival bank if they would carry out another series of "back to back" transactions.

This led to deposits of € 7.2 billion being placed by Anglo with Irish Life & Permanent who then returned the money to Anglo through their corporate subsidiary, Irish Life Assurance, in September 2008, similar to earlier transactions carried out in March 2008.

“Anglo presented the €7.2 billion as a corporate deposit in the year-end balance sheet and financial statements on September 30th, 2008, as if the transaction had come from a non-bank entity,” the complaint says.