David Drumm expelled from Chartered Accountants Ireland

Former Anglo chief found to have ‘brought discredit’ on profession

Former Anglo Irish Bank chief executive David Drumm has been expelled from Chartered Accountants Ireland (CAI) and fined €15,000 after a disciplinary tribunal found that he had "brought discredit" on himself and his profession for actions taken in the run-up to the financial crisis.

Mr Drumm, who is serving a six-year sentence for fraud imposed last summer, accepted allegations put forward by CAI’s conduct committee in relation to his involvement in 2008 in Anglo transactions with Irish Life & Permanent (IL&P) and his bank’s provision of loans to the so-called Maple 10 to buy shares in the bank.

Mr Drumm, who led Anglo between 2005 and 2008, was found guilty in June last year for his role in the bank’s fraudulent receipt of €7.2 billion of temporary deposits from IL&P in September 2008, giving investors the impression that the then-ailing lender’s financial position was stronger than it actually was.

Mr Drumm subsequently admitted to additional charges relating to Anglo Irish’s provision of €450 million of illegal loans to a group of 10 businessmen – known as the Maple 10 – to buy shares in the company that year.

Accepted allegations

Michael Staines, solicitor for Mr Drumm, told the 45-minute CAI disciplinary tribunal hearing in Dublin on Wednesday that his client accepted the allegations put forward by the CAI conduct committee, previously known as the complaints committee, in relation to both sets of transactions.

Ward McEllin, chairman of the disciplinary panel, said that its three members had decided to “exclude” Mr Drumm from future membership of the CAI and imposed a €15,000 fine, plus VAT, to cover some of the costs in relation to the investigation.

“We are in agreement that unfortunately Mr Drumm’s conduct was in the most serious end of the scale,” Mr McEllin said.

The body was entitled to levy a fine of up to €30,000, but the amount charged – which matched an offer put forward by Mr Drumm – took into account his acceptance of the charges and his current circumstances.

“He has lost everything,” Mr Staines said.

Barrister Ronan Kennedy, representing the conduct committee, told the hearing that the “co-operative attitude of Mr Drumm and Mr Staines has been most helpful” and saved the tribunal “considerable time, resources and expense”.

“If Mr Drumm had adopted a more belligerent course . . . this hearing could have taken a number of days, if not, perhaps, a number of weeks,” Mr Kennedy said.

This is the first Anglo-related disciplinary tribunal to be completed by CAI’s conduct committee.

A preliminary report carried out by former comptroller and auditor general John Purcell in 2010 for the accountancy body found that there were cases of liability to disciplinary action relating to four of its members: Mr Drumm; his former chairman, Seán FitzPatrick; Anglo Irish’s one-time finance director Willie McAteer; and former IL&P finance director Peter Fitzpatrick.

Prima facie

Mr Purcell subsequently concluded that there was prima facie evidence that EY – then known as Ernst & Young and earning €1 million in audit fees from Anglo Irish – had a case to answer on major errors in the bank’s 2008 accounts.

However, the Director of Public Prosecutions (DPP) asked CAI’s professional standards unit in April 2011 to hold off on various disciplinary hearings pending the outcome of a series of criminal trials stemming from the bank’s implosion.

The DPP withdrew its ongoing request for deferral last August after Mr Drumm’s criminal conviction, marking the end of a number of Anglo-related criminal cases to go to trial in the past five years.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times