Living beyond his means

Moriarty Tribunal: Charles Haughey had an extravagant lifestyle that his earnings could not support. Colm Keena reports on what the Moriarty Tribunal discovered.

Charles Haugheyon board his yacht, Celtic Mist.

If the McCracken (Dunnes Payments) Tribunal exposed the truth concerning the finances of Charles Haughey then the tribunal which came in its wake filled in many - though not all - of the details.

A picture emerged of a Taoiseach and party leader who lived the lifestyle of a multi-millionaire using money given to him by some of the wealthiest businessmen in the State. Moreover, Mr Haughey gave the impression he thought this was his due.

In September, 2000, he was asked while giving evidence to the Moriarty (Payments to Politicians) Tribunal if he believed it would be inappropriate for a Taoiseach to be financially beholden to anyone.

"Well, it all depends on beholden, the meaning of the word beholden," Mr Haughey said. "I would think that it would be valid for individuals or institutions to support a political person, because they believed in him or her or what they were doing, for absolutely disinvolved motives."

"I am thinking of the sort of situation where a group of friends would come together and, out of purely altruistic motives, assist a particular politician in a particular way." He said he saw no "big line of differentiation" between this and making contributions towards a particular politician's campaign expenses.

Public-spirited persons could make such donations without expecting anything in return and not because a politician had particular policies but because the politician was doing a "good job".

When asked whether such support could be permissible to whatever living standard the politician aspired to, Mr Haughey gave no clear response. He was of the view, he said, that a person should not be helped purchase a house he could not afford, though it might be permissible to help someone who had accumulated debts.

In Mr Haughey's case, however, the general picture was that he lived in a large house on a 250-acre estate, the upkeep of which he could not afford. This meant he was constantly in debt and in need of financial assistance.

A nexus of businessmen who came to know Mr Haughey by way of his father-in-law, Seán Lemass, and Mr Haughey's accountancy firm, Haughey Boland, began to provide financial support to Mr Haughey some time in the 1960s. Mr Haughey's former apprentice in the accountancy firm, Des Traynor, who became a key financial adviser to many of these businessmen, was the person delegated to collect the money for Mr Haughey and keep it hidden from the Revenue. The truth about Haughey and his money was successfully hidden from the public for three decades, despite the fact that some figures outside the circle had reason to suspect what was going on.

Allied Irish Banks knew through the latter half of the 1970s that Mr Haughey was living a lifestyle that bore no relation to his income. The bank allowed him build up an enormous overdraft, afraid to dishonour his cheques.

Mr Haughey's overdraft exceeded £1 million in late 1979 as he was preparing for the Fianna Fáil leadership battle which would follow the resignation of Mr Jack Lynch. As the leadership battle raged, the accountant and banker, Mr Des Traynor, negotiated a deal with top executives of AIB whereby the £1.14 million overdraft would be settled by a payment of £750,000.

On December 11th, 1979, the day Mr Haughey was first elected Taoiseach by the Dáil, Mr Traynor opened an account in Guinness & Mahon bank, which he used to collect donations towards settling the new Taoiseach's debts.

The account was opened with a lodgement of £150,000. Five days later, £355,000 was lodged. On January 18th, 1980, £50,000 was lodged, and on January 26th, a further £150,000 was lodged. On February 14th, the final amount, £80,662, was lodged.

Apart from one payment of £300,000, it has not been established where the rest of the money came from. Mr Haughey said in evidence to the Moriarty Tribunal that he could be of no assistance. The matter was handled by Mr Traynor, he said, and he never asked for the details and was never told.

It is known that £300,000 came from the property developer, the late Mr Patrick Gallagher. Mr Gallagher, who attended a party in Kinsealy on the night Mr Haughey was elected Taoiseach, returned there two days later, on a Sunday. He met Mr Haughey in the library and was told by him of his financial difficulties. Mr Haughey said he needed £750,000. Mr Gallagher, after discussing the matter briefly with his brother, Paul, returned to the library to tell Mr Haughey he would give £300,000.

A contract was then drafted which purported to be a land deal for the sale of Kinsealy land to Mr Gallagher's companies. The £300,000 was a non-refundable 25 per cent deposit, according to the contract. Nothing to bring the deal forward had occurred by the time of the collapse of the Gallagher group in 1982. Mr Haughey said he was involved directly in this matter because it involved the sale of Kinsealy land.

At the time of Mr Haughey's settlement of his debt with AIB a TD's salary was approximately £10,000 per annum. An AIB memo from 1975 recorded that Mr Haughey had a TD's salary of £7,000, no other source of income, and spent £5,000 per annum on domestic staff alone.

The house and lands in Kinsealy, which Mr Haughey had purchased in 1969, consumed huge amounts of money and were the main cause of his constant need for funds. Despite this in 1973, when the Lynch government was replaced by the Cosgrave coalition government, Mr Haughey bought the island of Inishvickillane, Co Kerry, for £20,000.

Three years after the purchase he decided to build a holiday home on the island, again despite the huge costs involved. Asked where he had thought the money might come from, he replied: "I didn't think of it in those terms. I just decided to go ahead with the building, leaving it up to Mr Traynor to fund the operation."

An account was opened in Guinness & Mahon bank. Statements on the account show payments of at least £38,000 going towards the construction of the home in the period 1976 to 1978. The source of the money remains a mystery.

During the 1980s Mr Traynor opened and operated a number of accounts in Guinness & Mahon bank in Mr Haughey's name. In excess of £1 million passed through the accounts, the money being used to fund Mr Haughey's lifestyle. He told the Moriarty Tribunal he had not known of the existence of the accounts until told of them by the tribunal.

In early 1983, as he was facing into a period in opposition, Mr Haughey got a £400,000 loan from Guinness Mahon Cayman Trust, the Cayman bank founded by Mr Traynor and which later changed name to Ansbacher (Cayman) Ltd. A request to the Central Bank for exchange control approval for the loan was delivered on December 8th, 1982, in the wake of the November 24th General Election and after it became clear Mr Haughey would not be forming the new government.

What happened with this money is not clear, though £200,000 was moved into one of Mr Haughey's Guinness & Mahon accounts in January, 1983. Internal bank documentation shows this came from the secretive Ansbacher deposits and Mr Haughey may have had his own account in the deposits from this time. Central Bank documentation indicates the loan was still out some years later. The tribunal found no evidence of the loan ever being repaid.

During 1986 two cheques from the Irish Permanent Building Society, for a total of £100,000, were lodged to the Fianna Fáil party leader's account, an account controlled by Mr Haughey and used for the receipt of an allowance for Fianna Fáil from the Exchequer. The £100,000 was withdrawn over a period of months and used by Mr Haughey. The cheques had been issued by the society's chief executive, Dr Edmund Farrell, who said he'd intended them as donations to the party.

Other cheques given to Mr Haughey and ostensibly intended for Fianna Fáil were likewise lodged to the party leader's account and the money later withdrawn. In the period 1984 to 1992 approximately £300,000 was processedin this way.

In the months after Mr Haughey's return to the office of Taoiseach in 1987, Mr Traynor telephoned leading businessmen asking for donations towards helping settle the Taoiseach's debts. Among those he is known to have contacted are Dr Michael Smurfit, Mr Dermot Desmond and Mr Ben Dunne. The first two said they did not take up Mr Traynor's invitation, but Mr Dunne transferred huge amounts of money over the following five years. As well as the £1.3 million discovered by the McCracken Tribunal, further payments were discovered by the Moriarty Tribunal bringing the total to in excess of £2 million.

The practice of "laundering" money through the party leader's account reached its zenith during 1989 and, in particular, in the run-up to that year's general election. Mr Brian Lenihan was in need of an expensive liver transplant and the Fianna Fáil fund-raiser, Mr Paul Kavanagh, was in charge of raising money. He was at the same time in charge of seeking contributions for Fianna Fáil's coffers. Huge amounts of money rolled in, well in excess of £1 million.

The property developer, Mr Paul Kavanagh, donated £100,000, one quarter of which he said he intended for the Lenihan fund and the rest for Fianna Fáil. He handed the money to Mr Haughey in Kinsealy on the morning of the 1989 general election, in four cheques of £25,000 each, three of which were made out to cash.

Dr Smurfit donated £60,000 to Fianna Fáil around the same time. He was told by Mr Traynor, who had nothing to do with Fianna Fáil fund-raising, to send the money to a London bank account. The Kavanagh and Smurfit donations were then confused by Mr Haughey with the net result that the Lenihan fund got nothing and Fianna Fáil got £75,000.

A contribution of £20,000 from the Irish Permanent was lodged to an account of Celtic Helicopters, withdrawn in a cheque made out to cash, and that cheque cashed in AIB Baggot Street, the branch where the party leader's account was held.

Mr Larry Goodman made a contribution of £25,000 towards the Lenihan fund. A withdrawal of that amount was made from the party leader's account while the Goodman cheque was in the post.

In all, more than £200,000 would appear to have been collected for Mr Lenihan, but less than £90,000 used for his care. The rest was spent by Mr Haughey.

In 1991, two withdrawals totalling almost £16,000 were made from the party leader's account to pay Charvet, an expensive shirtmakers in Paris. That same year £15,000 from the account was used to pay bills in Le Coq Hardi, the expensive Dublin restaurant favoured by Mr Haughey. Ms Eileen Foy, the secretary who administered the party leader's account, said Fianna Fáil ministers would sometimes have lunch in the restaurant after Cabinet meetings.

The financier, Mr Dermot Desmond, has said he never gave money to Mr Haughey while he held public office but that he did fund the renovation of the Haughey family yacht, the Celtic Mist, in 1990/91, at a cost of £75,000. He gave Mr Haughey £125,000 sterling in 1994, after Mr Haughey said he was feeling the pinch, and a further £75,000 in 1996.

In April, 2000, Mr Haughey settled a tax bill with the Revenue arising from the £1.3 million he received from Mr Ben Dunne and which was considered by the McCracken Tribunal. He settled the bill with a £1 million payment after reportedly selling 10 acres in Kinsealy for £5 million. The sale valued his Kinsealy estate at £125 million.

In March, 2003, the Revenue reached a further €5 million settlement with Mr Haughey in relation to the payments discovered by the Moriarty Tribunal. To fund the tax bill Mr Haughey sold land and the house in Kinsealy for €45 million, to Manor Park Homes, but with the condition that he and his wife could remain in the house until they died.