Money trail: Denis O’Brien, Michael Lowry and the Criminal Assets Bureau

The material sought by the Criminal Assets Bureau from AIB in the Isle of Man is connected to one of the more direct financial links between Michael Lowry and Denis O’Brien found by the Moriarty tribunal, which investigated payments to politicians.

A striking aspect of the transactions is that they began in July 1996, just two months after O’Brien’s Esat Digifone was awarded the State’s second mobile-phone licence by Lowry’s Department of Communications. Lowry was still a government minister at the time of the transactions.

Lowry and O’Brien both gave evidence at the tribunal that the payments the tribunal eventually decided were linked were in fact two separate transactions, one a house purchase and the second a loan, which, unbeknown to both men, saw the money go from the businessman to the politician.

But Mr Justice Michael Moriarty noted the use of offshore accounts, the clandestine nature of the transactions, and the fact that the ownership of the house was not transferred until two years later, when the documents were backdated to 1996, in deciding not to accept the men’s evidence.

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AIB Isle of Man

One of the witnesses was O’Brien’s accountant and financial adviser Aidan Phelan, who said that in July 1996 he opened an account with AIB’s Isle of Man subsidiary in his own name but in order to receive money belonging to O’Brien, after the businessman asked him to do so. He did not tell the bank that the money was O’Brien’s and not his.

He or someone else, acting on O’Brien’s instructions, transferred £407,000 from an account with Woodchester Bank, in Dublin, belonging to a subsidiary of O’Brien’s Communicorp radio group, to AIB in the Isle of Man. Phelan’s new account wasn’t ready to receive the money, Phelan said, so it was initially lodged to the account in the Isle of Man bank of a company he owned, Diest Trading (Pakistan) Ltd, which imported sports clothing from the Far East for sale in Europe.

That was on July 3rd. On July 10th the money was transferred to Phelan’s new AIB account on the Isle of Man. The same day a £50,000 cheque was written on the account to the late David Austin, a businessman who was not tax resident in Ireland and who was known to O’Brien. On July 19th £100,000 was transferred from the AIB account to Austin’s account with Bank of Ireland in Jersey. Austin then opened a new Irish-pound account at this bank, and the £100,000 was transferred to it. The cheque was lodged to the same account.

The remainder of the funds in the Phelan account were distributed during July, with payments being made to a number of individuals on foot of instructions from O’Brien.

Appleby document

A document from the Appleby law firm, contained in the Paradise Papers, refers to about eight payments, including those to Lowry. The names of the other recipients of the money were not disclosed at the tribunal, as they were not relevant to the tribunal's terms of reference. The leaked Appleby files show that initially the Isle of Man police were told that Allied Irish Banks' subsidiary on the island no longer had the records being sought, "but following further queries from the IOM FCU" – or Isle of Man financial-crimes unit – "two further entities connected to the former account holder that maintained accounts previously with [AIB Isle of Man] . . . were disclosed to us."

Based on that, the now-closed bank conducted further searches of local paper archives and found documents that had been disclosed to the tribunal. “In addition, the files also contained copies of bank statements for the bank accounts/transactions that appear to be still under investigation.”

The funds went from a company account to Phelan’s individual account “and were then used to make a further eight [or so] payments to a number of individuals including an Irish politician and connected individuals”, according to one of the leaked files.

On 21st October, 1996, £147,000 was transferred from Austin’s Irish-pound account in Jersey to an account with Irish Nationwide in the Isle of Man, in Lowry’s name, which was opened to receive the money. Lowry, then a government minister, described himself as a company director when opening the account – he was not a company director then – and asked that no correspondence be sent about the account.

House renovation

Lowry told the tribunal he borrowed the £147,000 from Austin to renovate a house he had bought on Carysfort Avenue in Blackrock, in south Co Dublin, but returned the money, as he had sold the house after resigning from the government, on November 30th, 1996.

Lowry resigned following revelations in the Irish Independent about his financial dealings with the businessman Ben Dunne. The money was returned to Austin the day the McCracken tribunal, into payments to politicians and political parties by Dunne or Dunnes Holding Company, was established, in February 1997.

During 1997 Esat held an internal inquiry into an allegation that O’Brien had made a payment to Lowry in the context of the licence competition. O’Brien told the inquiry he had thought of giving the minister money, but “it got stuck with an intermediary” and the payment didn’t happen. The inquiry questioned O’Brien and Phelan about transactions above a certain threshold on O’Brien’s accounts but was not told of the Phelan account with AIB on the Isle of Man.

O’Brien told the tribunal he had agreed to buy Austin’s house in Marbella, in Spain, and paid him for it in 1996. The shares of the company that owned the house were transferred to an Isle of Man trust for O’Brien’s benefit. No lawyers were involved, and the transfer did not occur until 1998, by when Lowry had given the money paid to him back to Austin.

The mobile-phone licence was the most valuable licence ever issued by the State and was the foundation for O’Brien’s enormous wealth. He netted about €200 million when Esat was sold, in 2000, and has since gone on to develop his Digicel group, and other substantial businesses.