Thursday 29th May 2014
David Drumm’s massive mistakes never added up in the accountancy world,
Says a trustee
It was ‘very unusual’ for someone of Drumm’s banking and accounting background to have made such errors in his filings
It was only hours before David Drumm filed his so-called schedules and statement of financial affairs, or Sofa, to a US court giving the court-appointed trustee overseeing his bankruptcy what was supposed to be a full picture of his finances.
He had been working on a draft statement with his bankruptcy advisers at the Massachusetts law firm of Looney & Grossman but was unhappy with the draft’s description of two vehicles that he had owned and surrendered on October 21st, 2010, a week after he filed for bankruptcy,
“Automobiles – I’m still not happy!” he said in an email to Heather Zelevinsky sent at 10.42pm on Thursday, October 28th, the night before the documents were filed. “Can you remove the ‘MB’ reference as they have been surrendered and just leave it as ‘Sedan’ and ‘SUV’: if the trustee doesn’t care, she won’t ask and the media can go fish.”
Mr Drumm’s concern about “MB” was a reference to Mercedes Benz and the impression that the reference might leave with anyone looking at the form.
The stripped-down description of the vehicles as a “2010 Sedan” and “2011 SUV” in the eventual Sofa form he filed on October 29th, 2010 contained no mention of the prestigious motor marque. The values assigned to the vehicles – $47,000 (€34,300) and $64,000 (€46,700) respectively – were the only giveaway as to the brand of car.
The court was told that this was an example of David Drumm actively deciding what was to be included or excluded from his bankruptcy statements.
It wasn’t the only time that the former Anglo Irish Bankchief executive’s concern about the media’s interest in his financial affairs surfaced during his five-day bankruptcy trial in Boston which ran this week and last. Three days before he filed for bankruptcy, Mr Drumm told Ms Zelevinsky in an email that it would be good to file his financial statements early.
“Let the media get it out of their system this week while things are relatively calm and the fizz has gone out of the bankruptcy a bit,” he wrote.
The cat-and-mouse relations between the media and the Drumms featured several times during testimony at the trial. David Drumm told the court that the couple used his wife’s maiden name, Lorraine Farrell, to buy a new family home in Wellesley outside Boston in January 2010 “because she was afraid of media attention”.
The couple had “visitations” from the “tabloids” at their house on Cape Cod, he told the court, while Ms Drumm, in response to questions from her husband’s lawyer, David Mack, said she had been “ambushed” when she went out of the court building to get a sandwich on Wednesday.
“If my name appeared on it,” said Ms Drumm in testimony on Wednesday, referring to the Drumm name appearing on the title deeds of the Wellesley house, “the first thing that would happen is that the media would be on my doorstep yet again”.
The former Anglo Irish Bank, now Irish Bank Resolution Corporation, and Mr Drumm’s bankruptcy trustee claim that the financial arrangement agreed between the couple on the purchase of the Wellesley property was another example of a series of cash and property transfers that he failed to disclose in his original sworn bankruptcy statements in October 2010.
They argue he should not be entitled to have all of his debts prior to that date wiped clean with a discharge from bankruptcy because, they claim, he defrauded his creditors by making these transfers and because he made false oaths in his bankruptcy statements by omitting those transfers.
He has denied that he deliberated excluded cash transfers from his Sofa form, believing at the time that he had only had to list property transfers. (This is despite him listing the transfer of a half-share in a $2 million investment property in Cape Cod, south of Boston, in an amended Sofa form filed in May 2011 that he had not included in his October 2010 disclosures.)
During M/s Drumm’s testimony on Wednesday, the bank’s attorney Ken Leonetti put it to her that her husband transferred a total of about €2 million in cash and property to her. These transfers took place since the deepening crisis at Anglo in 2008 forced her to seek money of her own in the event that her husband was to “drop dead of a heart attack”, as she told the court.
She said she thought that the total was close to €1 million and admitted that she had no idea that he had transferred almost all of his cash to her.
M/s Drumm told the court that a separate property agreement signed by the Drumms stating that a $831,000 cash deposit used to buy the Wellesley house in January 2010 was drafted to show that this was her money and that it would be returned to her in the event that the house was sold.
The agreement said that Mr Drumm had no “past, present or future right or interest” in the money, though Ms Drumm acknowledged that her money had come from her husband’s earnings at Anglo, where he had made $18 million between 2004 to 2009 as the bank’s chief executive. (He owes the bank €8.5 million mostly from loans drawn to buy now worthless Anglo shares.)
Lorraine Drumm appears to have been as concerned about protecting her own money as she was about protecting her own privacy from the media.
Peter Covo, a conveyancing lawyer who was retained by the Drumms to buy the Wellesley property, told the court that at the meeting in his office after the closing of the Wellesley purchase, Ms Drumm kept saying “over and over and over” that the money was hers. “She kept saying: ‘It is my money, it is my money, it is my money,” he said.
The alleged Wellesley transfer still didn’t appear in the amended bankruptcy statement Drumm filed in May 2011, seven months after his original statement, which he admitted in court contained “a lot of errors”.
He claimed he was “in a state of panic” when he learned at a creditors’ meeting on April 1st, 2011, that cash transfers should have been included in the original statements.
His bankruptcy lawyer Stewart Grossman testified last Friday that he had warned Mr Drumm – before he filed for bankruptcy – that he could get in criminal and civil trouble if he didn’t disclose everything in a process that he described to Mr Drumm as “like getting naked in public”.
Mr Drumm’s trustee believed these mistakes didn’t add up. It was “very unusual” for someone of his background – a banker, an accountant and a businessman – to have made such mistakes in his filings, said Boston lawyer Kathleen Dwyer. Drumm’s errors took months to a fix and she felt like he was trying to “wear you out” by “dragging” her back into successive creditors’ meetings in order to seek further disclosures, she said.
“If you are an honest debtor and make an honest mistake, you fix it – there is no working on it or ‘we will have it done by next month’. That is what was going on this case,” said Ms Dwyer, who has administered 15,000 bankruptcies in a career spanning back to the mid-1980s.
Judge Frank Bailey will hear closing arguments from both sides in the case next Wednesday. His ruling is expected some time over the coming months. If he grants Mr Drumm a discharge, the 47-year-old former banker will walk away debt free from bankruptcy to start again financially.
If he doesn’t, Mr Drumm could face what Grossman warned him before he voluntarily chose to “get naked in public” in Massachusetts: a potential clawback of about €2 million in cash and property transfers to his wife.
Bullying of nurses and midwives in the HSE is linked to under-staffing
An INMO study is looking at reasons for soaring levels of bullying in the health service executive.
A steep rise in bullying of nurses and midwives is being linked to the pressures caused by understaffing in the health service.
The Irish Nurses and Midwives Organisation says it is dealing with 25-30 incidents of bullying at any one time. The issue is taking up half of the time of its officials, who have represented both those making allegations and colleagues who are the subject of bullying complaints.
The union has commissioned the National University of Ireland, Galway and the National College of Ireland to carry out a nationwide study of the profession with the aim of establishing the extent to which bullying is affecting the working lives of nurses.
INMO director of industrial relations Phil Ni Sheaghdha said the union wanted to find out what was driving the upsurge of investigations in which it was currently involved. “We believe it is not unconnected to staffing level and the general busyness of a high-stress working environment.”
While the Health Service Executiveoperates a policy on bullying and harassment in the workplace, the INMO says nurses and midwives continue to experience workplace bullying with negative consequences for their personal health and relationships.
Prof Maura Sheehan of NUI Galway, who is leading the study, said focus groups held with nurses revealed “shocking and very disturbing” levels of bullying.
“As researchers, it became clear that we need to conduct a survey of nurses and midwives to establish the extent of this problem and most importantly, to formulate recommendations on how bullying at work can be reduced and the type of support that victims and witnesses need.”
Irish Government suspends the mass review of medical cards
A person’s medical condition is to become a criterion for future eligibility
Minister of State Alex White (Above right picture) made a brief statement on the issue during the debate in the Dáil on the Bill providing for extension of free GP care to children aged under six.
The Government has ordered the suspension of the ongoing mass review of medical cards.
The review has been suspended while a new framework for awarding medical cards is drawn up, which will for the first time take account of a person’s medical condition.
Up to now, medical cards are awarded on the basis of financial means, although the HSE may exercise discretion where an applicant has major medical needs.
Minister of State at the Department of Health Alex White announced the U-turn in the Dáil today during a debate on the Bill to extend free GP care to children aged under six. The Cabinet sub-committee on health, which met this morning, ordered the change of policy following weeks of sustained criticism over the removal of discretionary cards from patients.
Mr White said the Government was very aware of public concern on the issue. As a result, the Cabinet sub-committee had decided that a policy framework should be drawn up in a manner in which medical conditions were taken account of in the assessment of eligibility for a medical card.
An expert panel will be convened to decide on the range of conditions which would be relevant in this regard, he said. It is likely the move will require legislation before it can come into force.
Mr White said that in the light of this, it had been decided that the current review of medical cards be suspended. The Department of Health is to draw up a policy paper setting out the path toward full rollout of free GP care for all and the Minister for Health would bring a memo to Government on the issue, he said.
Mr White pointed out that there are significant regional variations in the award of discretionary medical cards, from 24 per 1,000 cards in Co Cork to 4 per 1,000 in Co Meath.
Backbench Fine Gael TDs, who raised the issue at a parliamentary party meeting a month ago, welcomed the change in policy even before Mr White stood up in the Dáil to announce it.
The ongoing mass review of medical cards provoked huge controversy after a series of hardship cases emerged in which extremely sick children and adults were refused a medical card or had a card removed.
The issue is believed to have played a significant role in the Government parties’ disastrous performance in last week’s European and local elections, with 57 per cent of the electorate telling one exit poll it was the main issue which determined their vote.
Responding to criticism of his stance on the issue, Taoiseach Enda Kenny had pledged to “fix” the problem in relation to discretionary medical cards.
Any decision to restrict the HSE’s programme of reviewing medical cards will limit its ability to make the savings required of the health service in last month’s Budget. By the end of March, the HSE was already running €80 million over budget.
Brown University geology Researchers zone in on habitable environment on Mars
The slopes of a giant Martian volcano that was shroud in ice 210 million years ago may be one of the most habitable environments found on the red planet to date according Brown University geologists.
Arsia Mons is the third tallest volcano on Mars and, at nearly twice the size of Mount Everest, it’s one of the largest mountains in our solar system.
A new study out of Brown University speculates that microbial life may have existed at the foot of this mountain — and it could have been there for thousands of years.
Researchers believe that heat from volcanic lava and the presence of ice may have combined to create the hospitable conditions.
According to lead author Kat Scanlon, a doctoral student at Brown University, the icy lakes at Arsia Mons would have held hundreds of cubic kilometres of meltwater — a precursor to life — and that environment may have been sustained for centuries.
While 210 million years ago sounds ancient, it’s not as old as the more than 2.5 billion year-old potential habitable zones that Mars rovers have turned up.
“It’s all a really nice suite of land forms that together all point to the exact same process. So, that was really cool.”
The theory that glacial ice once existed on Arsia Mons has been around since the 1970s and it has been re-visited time and again over the years. In fact, Scanlon’s collaborator Jim Head believes that some of the glaciers may even still exist.
“Remnant craters and ridges strongly suggest that some of the glacial ice remains buried below rock and soil debris,” he said in a statement.
“That’s interesting from a scientific point of view because it likely preserves in tiny bubbles a record of the atmosphere of Mars hundreds of millions of years ago. But an existing ice deposit might also be an exploitable water source for future human exploration.”