Founder of Gallagher Group put his trust in Cayman Islands

The founder of the Gallagher Group, Mr Matt Gallagher, had an estate with a gross value of £1.9 million and a net value of nil when he died. An affidavit to this effect from the Revenue was delivered to the High Court in June 1979.

Mr Gallagher, who died on January 7th, 1974, at his home in Hollywood Rath, Mulhuddart, Co Dublin, appointed his wife, Helena Patricia, and his son, Patrick, as executors and left most of his property to his family.

Estate duty was charged at varying rates in the 1970s depending on the value of the estate. It ranged from 4 per cent for estates valued at between £10,000 and £11,000, to 55 per cent for estates exceeding £200,000 in value.

The estate duty affidavit for Mr Gallagher detailed assets including lands and shareholdings, but also extensive debts totalling £4.2 million. Mr Gallagher, who had three sons and four daughters, made a number of settlements to trusts in the Cayman Islands in 1972.

The former adviser to Mr Charles Haughey, the late Mr Des Traynor, was a director of some of the Gallagher companies and is understood to have been instrumental in changes introduced in the early 1970s, which saw a holding company for the Gallagher group being created in the Cayman Islands. The company was calling Bering Estates Co.

The trust was managed by Bank of Nova Scotia Trust Co (Cayman) Ltd. The late Mr John Furze worked for this bank up to 1974, when he moved to start work with the bank founded by Mr Traynor and which eventually became Ansbacher (Cayman) Ltd.

Mr Gallagher established five trusts in 1972/1973. They were: the Baffin settlement; the Bering settlement; the Rath settlement; the Hollywood settlement; and the New Baffin settlement.

The beneficiaries of the discretionary trusts were Mr Gallagher's wife, children and grandchildren. The value of the trusts is not indicated on the affidavit.

In the case of the Baffin and Bering settlements, the trustees were the Bank of Nova Scotia Trust Company (Cayman) Ltd. In the case of the Rath trust, the trustees were Mrs Gallagher, Mr Diarmuid O'Hegarty and Mr Christopher Gore-Grimes.

In the case of the Hollywood trust, the trustees were Mr O'Hegarty and Mr GoreGrimes, and in the case of the New Baffin trust the trustees were a company called Red Cloud Ltd. The solicitors for all five trusts were Gore-Grimes solicitors, then of 6 Cavendish Row, Parnell Square, Dublin 1, the same address as Red Cloud Ltd.

The affidavit notes that Mr Gallagher sold household furniture and effects at Hollywood Rath to the trustees of the Rath settlement in 1972 for £51,282, and that the money was still due.

On the same date, May 2nd, 1972, Mr Gallagher sold 6/7ths of his machinery and livestock at Hollywood Rath to the trustees of the Hollywood settlement. The consideration, £347,026, was still due at the time of his death.

In the section detailing shares held in companies controlled by the deceased, the affidavit recorded that on April 27th, 1972, Gallagher Trusts Ltd sold shares in Gallagher Group Ltd, City Inns Ltd and Merchant Banking Ltd to the Cayman holding company, Bering Estates Co.

The consideration was £1 million, which was satisfied by the issuing to Gallagher Trusts Ltd of 200 ordinary shares in Bering Estates Co.

Where values were attributed to stocks held, Mr Gallagher was listed as having had shares in Abbey Ltd worth £3,900, shares in Unidare Ltd worth £3,750, and shares in Cork Cooperative Marts worth £1,000. Shares in Partnership Hollywood Farms were valued at £56,680.

Thirteen shares in Gallagher Trusts Ltd were valued at £84.24, and 66 10 per cent A preference shares in the Cayman company, Bering Estates Co, were valued at £66.

When small share dividends, travellers cheques and £339 in a bank account were included, the total came to £107,307. The large sums owed by the Rath and Hollywood settlement to Mr Gallagher were not included. When insurance policies and household goods were added the total came to £119,804.

In relation to debts the affidavit included a loan account of £102,000, amounts due to companies of £558,149, and debts to Gallagher companies of just under £600,000. This latter included a debt of £379,903 to Gallagher Group Ltd. Total debts came to £1,249,798, making for a deficit net personal estate.

The affidavit stated Mr Gallagher owned no property outside the State. Ganley Craigie conducted a valuation of Mr Gallagher's land in the State, comprising stud farms at Hollywood Rath, Co Dublin, and Ballymacarney, Co Meath.

The house at Hollywood Rath was described as being in excellent condition and having four reception rooms, six double bedrooms and one single bedroom. It had a three-car garage, two lodges and two stables. Ballymacarney House had three reception rooms, five double bedrooms and two single bedrooms. The "servants' wing" had another four bedrooms. There were two three-bedroom gate lodges, two double garages, and outhouses.

The estate had 784 acres of land "in good heart" and zoned agricultural. The two houses and the stud office were connected by an intercom telephone system. Total value of the property was estimated at £1,411,200.

Mr Gallagher was also detailed as having contracted to buy 54 acres in Co Wicklow worth £70,000 and to have owned another 198 acres in the same county worth £300,000. This brought the total value of real estate to £1,781,200.

However he was also listed as having created a mortgage in June 1972 with Baffin Estates Co, George Town, Cayman Islands, with an encumbrance of £500,000. He created a mortgage in December 1973 with New Baffin Estates Ltd, Peter's Port, Channel Islands, Guernsey, which had an encumbrance of £2,500,000. These made for a new real estate deficit of more than £1.5 million.

Mr Gallagher was an extremely successful property developer and builder who was a supporter of Mr Haughey and Fianna Fail. After his death his son, Patrick, took over the running of the group. In December 1979, Mr Patrick Gallagher gave Mr Haughey £300,000 to help the then newly elected Taoiseach settle his debt with AIB.

The £300,000 was described in a purported land sale agreement as a 25 per cent non-refundable deposit on land Mr Haughey was to sell to the Gallagher group within five years. However, the group collapsed in 1982 and the deposit remained with Mr Haughey.