The former chief executive of a bank that played a pivotal role in Ireland’s financial crash almost a decade ago has been jailed for six years.
David Drumm, 51, the former chief of Anglo Irish Bank, was sentenced to six years in prison after the judge took into account mitigating factors, including five months he spent in a US jail awaiting extradition.
Drumm was found guilty earlier this month of conspiracy to defraud and false accounting for his part in a €7.2bn (£6.3bn) fraud conspiracy.
He was convicted of working with two other senior executives at Anglo and the chief executive of a rival bank to give the misleading impression to shareholders that deposits in 2008 were €7.2bn larger than they were as the worldwide financial crisis began to bite.
Judge Karen O’Connor said the intention was to create a false and misleading impression, and Drumm was the driving force.
Sitting at Dublin circuit criminal court, O’Connor stressed that Drumm was not being jailed for “the financial crisis” or the economic crisis that followed but instead “only for the two specific offences for which he has been convicted”.
But, she said: “This offending was premeditated and planned, and in fact the evidence was that significant planning went into this fraud.”
The bank collapsed in 2009 after a run on its deposits and it was eventually bailed out by the state, leaving the taxpayer on the hook for €29bn.
Denis Case, the former chief executive of rival bank Irish Life &Permanent, Anglo’s former finance director Willie McAteer and Anglo’s former head of treasury John Bowe were convicted two years ago. They received sentences ranging from two to three-and-a-half years.
Anglo Irish was the poster boy of the reckless lending that brought Ireland to its knees. It was known as the “builders’ bank” providing loans that fuelled the Celtic Tiger property boom.
Drumm claimed during his trial that although what he did was a “huge error in judgment” he had done it in plain sight of other senior banking executives and civil servants worried about contagion.
His imprisonment came almost a decade after Ireland’s ignominious bail out by the International Monetary Fund.
The prosecution told the court ahead of sentencing that Drumm was “the driving force behind the initiatives” to bloat deposits with temporary transfers from a friendly rival.
His defence lawyer urged the judge to remember how “chaotic” the world was in 2008 following the collapse of Lehman Brothers in the US. “Those transactions did not cause Anglo’s collapse, it was a futile attempt to save the bank,” said Brendan Grehan.
He told the court that Drumm, who relocated to the US in 2009 but was extradited two years ago, was not entering any character references.
His life had become “an open book” since he was charged and he did not want any of his family or friends to become “collateral damage”.
The judge rejected his argument during the trial that Drumm was part of the “green jersey agenda” – a phrase used to suggest acting in the national interest – or had acted with the “green jersey” authorisation of the Central Bank and Financial Regulator, which encouraged the Irish banks to support each other during the crisis.
She said there was “no evidence in this case that the Central Bank or the Financial Regulator directed criminality”.
Grehan told the judge that his client was not acting for selfish gain, but insisted he was trying to save the bank, which at the time was “facing annihilation”.
He detailed Drumm’s rise from “humble beginnings” as the fourth of eight children born to his truck-driver father and hairdresser mother. He left school at 16, joined Anglo aged 26 and by the age of 37 was chief executive.The bank ballooned in size during the Celtic Tiger years.
He filed for bankruptcy after moving to Boston. In an excoriating ruling, the bankruptcy judge said Drumm was “not remotely credible”, and his sworn statements to the court were “replete with knowingly false statements, failures to disclose, efforts to misdirect and outright lies”.
A US bankruptcy trustee has since recovered £6m from the sale of assets he owned or co-owned including a lakeside mansion in Cape Cod, a house in Massachusetts and a house in the exclusive Abington estate in Malahide, Co Dublin, where Boyzone’s Ronan Keating was once a neighbour.