The story of David Drumm: The bank that ‘liked to party’, the €24k drinks bill and the €7.2bn ‘con’

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The story of David Drumm: The bank that ‘liked to party’, the €24k drinks bill and the €7.2bn ‘con’

  • David Drumm jailed for 6 years for €7.2bn fraud
  • Drumm begins life behind bars as prisoner No 102640
  • The prosecution said what Drum had done was a ‘massive con’
  • Judge says offense was ‘grossly reprehensible’

David Drumm is pictured at the announcement of Anglo Irish Bank’s preliminary results in September 2004
David Drumm is pictured at the announcement of Anglo Irish Bank’s preliminary results in September 2004

On Friday, September 5, 2008, just weeks before the government made its fateful decision to give a blanket guarantee to the State’s banks, the elegant Georgian interior of Dublin’s Mansion House rang to the sound of clinking glass.

The rain was falling in unrelenting torrents outside, as it had all summer.

Yet inside, the staff of Anglo Irish Bank toasted their young chief executive, David Drumm, who with typical creative flair had decided to buck up his employees’ spirits with a ‘Back To School Doombuster Party’.

After all it had been a rough few months. August was a wash-out and the markets seemed to be in the grip of an even more hostile climate as investors fled, intensifying the pressure on the State’s and, according to one organisation’s analysis, the world’s most profitable bank.

It was time for some bacchanalian revelry.

Drumm, who had out-muscled his more senior colleagues, like Anglo’s ex-chief operating officer Tiarnan O’Mahoney, to claim the top job in 2004, decided to loosen the bank’s purse strings – again – in an effort to boost staff morale.

The invitation read: “Dear colleague, the stock markets are down. They say the economy is in recession. It rained most of the ‘summer’. The holidays are over.”

Then came the inevitable kicker.

“This is Anglo so there is only one thing to do – party!”

Reports later recorded the drinks bill for that one night totalled €24,000 – not too far off the cost that each taxpayer would bear to bail the lender out to the tune of €32bn.

That’s roughly the amount of money drained from the economy between 2008 and 2014, when the partying and excessive lending at Anglo gave way to a long and painful era of austerity.

The epic hangover from the bank’s heady Celtic Tiger partying would prove painful to shift.

The tale of its meteoritic rise and calamitous fall will be forever etched in the history of the Republic.

But back then, just 10 days before Lehman Brothers imploded, the reality of the situation had yet to hit home.

And yet in December 2008, when the floor had well and truly fallen out of global stock markets, Anglo lavished €175,000 on another knees-up at the Mansion House – to finance its annual Christmas bash.

From today’s viewpoint this level of expenditure appears outlandish – but chimes with Anglo’s reputation as the chief offender behind the sector’s rampant property lending, which fuelled heady profits and drew AIB and Bank of Ireland into a similar hell-for-leather lunge for growth.

However, the bank that was named the best in the world in 2007 by experts Oliver Wyman and the World Economic Forum quickly became a black hole.

The Anglo Tapes revealed that it was January 2008 when crisis really set in as investors started to dump Anglo’s bonds, severely disabling the bank’s access to international wholesale markets. By March 2008, the first heavy blows tore through Anglo’s facade.

The so-called St Patrick’s Day Massacre of 2008 triggered a 23pc plunge in the share price and wiped close to €1bn off its value.

At the time the slide was attributed to the troubles engulfing the US banks, particularly Bear Stearns. In reality the problems were closer to home.

By September, amid an ever worsening global credit crisis, Anglo’s days were already numbered – not that the partying chief executive was likely to realise or admit it.

When Drumm took over the helm 14 years ago, he was regarded as an unknown quantity.

Former chairman Seán FitzPatrick had been widely expected to anoint one of his close circle on the board, which included O’Mahoney – a long-standing favourite for the succession – as well as head of wealth management Tom Browne, and John Rowan, then head of Anglo’s UK operations.

But Drumm had impressed his chairman with a fast-paced roll-out of the bank’s operations in the US, and FitzPatrick promoted his protégé to the head of lending.

He was just 35 years old then.

Two years later he walked into Anglo’s plush, palatial boardroom on St Stephen’s Green as the industry’s youngest-ever chief executive.

At the time of his ascent to the CEO role, Eamonn Hughes, an analyst at Goodbody Stockbrokers, described the appointment as “a surprise” and predicted it would “create a bit of uncertainty”.

“The jury’s out until we know a bit more about him,” he added.

A fortnight ago, a different type of jury found Drumm guilty of charges of conspiracy to defraud and false accounting, by unanimous verdict, after a trial that lasted nearly five months.

Today, many would argue there is little we don’t know about the man who led the bank that broke Ireland.

Irish Independent

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