DAVID DRUMM, the former chief executive of Anglo Irish Bank, faces two days of questioning today and tomorrow in connection with debts claimed by Anglo Irish and his declaration of bankruptcy in Massachusetts.
Today’s deposition will take place in the Boston offices of Kenneth Leonetti, an attorney for Anglo, and will be attended by Karyn Harty of the Dublin firm McCann FitzGerald, which also represents the bank.
It is scheduled to last four hours.
Under a protective order that was demanded by Mr Drumm and his lawyers in exchange for their co-operation, the session will be closed to the press.
The order compelling Mr Drumm to appear was filed by Anglo’s lawyers last month and subsequently approved by US bankruptcy judge Frank Bailey, who overruled objections by Mr Drumm’s lawyers. It outlines the topics about which Mr Drumm will be questioned.
These include: Mr Drumm’s role in the transfer of €87 million in loans to Seán FitzPatrick, his mentor and the former chairman of Anglo; Mr Drumm’s non-disclosure of the loans to Mr FitzPatrick in Anglo’s financial statements; Mr Drumm’s role in relation to the transfer of billions of euro in loans between Anglo and Irish Life Permanent in 2008 to bolster Anglo’s books; Mr Drumm’s role in changing the terms of loans to 10 property developers nicknamed the “golden circle” to enable them to buy shares in Anglo and Mr Drumm’s role in changing the terms of loans to five executives at Anglo, including himself and the former chief financial officer, William McAteer.
The above questions fall under the category of “fiduciary duty claims” and are based on an investigation by the Irish Chartered Accountants’ Regulatory Board.
Anglo is also demanding repayment of $11,911,938.51 in loans advanced to Mr Drumm so that he could buy shares in Anglo, and payment of its legal costs for litigation against him in Ireland.
Mr Drumm’s failure to produce documents as ordered by the court created tension between attorneys representing the former chief executive and Anglo between December 2010 and this month. These included an Irish Chartered Accountants’ Regulatory Board report and Mr Drumm’s submission to the board. The documents were provided in dribs and drabs and have ceased to be an issue.
Journalists will be allowed to attend tomorrow’s “341” hearing (after a section of the bankruptcy code) in the office of the lawyer of the court-appointed trustee Kathleen Dwyer. This is the fourth “341” hearing and expected to be the last one. It is unusual for a person claiming bankruptcy to attend so many hearings. Mr Drumm’s slowness in producing documents and his desire to limit the hearings to three hours or less are understood to be the cause.
After tomorrow’s hearing, Mr Drumm’s creditors will have a limited period to file objections to the discharge of debts owed to them by Mr Drumm.
Fraudulent misrepresentation and breach of fiduciary duty can be grounds for the non-discharge of debts. In some cases, the entire discharge is revoked under section 727, in which case the bankruptcy proceedings would have been a waste of time from Mr Drumm’s point of view.
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