Former AIB manager denies bank colluded with O'Callaghan

A FORMER AIB banker has said there was no collusion between the bank and Cork developer Owen O'Callaghan in advance of his taking a stake in the Quarryvale development project.

Eddie Kay, former manager at AIB corporate banking division in Ballsbridge, Dublin, told the Mahon tribunal he was "absolutely sure" there was no collusion.

However, he did concede that the bank put pressure on Luton-based developer Tom Gilmartin to sign an agreement with Mr O'Callaghan just before the deadline to lodge a motion to rezone the Quarryvale site approached.

Mr Gilmartin had borrowed £8.5 million from AIB in February 1990 to develop a site at Quarryvale, west Dublin, now the Liffey Valley shopping centre, but was not in a position to pay it back. He also experienced difficulties getting the site rezoned for retail development.

In February 1991, Mr O'Callaghan became a partner in Mr Gilmartin's project.

Mr Gilmartin had alleged that Mr O'Callaghan, a long-standing customer of the bank, had been introduced to the project by the bank and that they had both colluded against him.

However, Mr Kay said yesterday that Mr Gilmartin was the first person to suggest that Mr O'Callaghan should become involved in the project.

Counsel for the tribunal Patricia Dillon SC read into the record a letter from Mr Gilmartin to the bank in September 1990 in which Mr Gilmartin said Mr O'Callaghan was interested in taking a stake in the project.

She also highlighted a note of a phone conversation between Mr Gilmartin and the bank in August 1990, in which he mentioned Mr O'Callaghan's interest.

"You are not aware of any collusion, Mr Kay?" Ms Dillon asked.

"I'm certain there wasn't any," Mr Kay said. However, he did concede that the bank had lost confidence in Mr Gilmartin's ability to advance the project, and did not want him to have control of the project on a day-to-day basis.

"It didn't seem a realistic proposal that he could run it on his own," Mr Kay said.

He conceded that the bank had put pressure on Mr Gilmartin to sign an agreement with Mr O'Callaghan in February 1991 "at the 11th hour when the deadline for a zoning proposal [ for Quarryvale] to go forward was imminent".

"You would have said to Mr Gilmartin if he didn't sign the agreement with Mr O'Callaghan, effectively the motion would not be lodged," Ms Dillon suggested.

"Yes, Mr O'Callaghan told us that," Mr Kay said.

However, he said the bank did not make contact with any councillors to prevent them from tabling the motion to rezone Quarryvale.

Ms Dillon said Mr O'Callaghan was given a larger stake in the project than originally envisaged because he was able to control the lodgement of the motion.

"I'm sure that was a factor, yes," Mr Kay said.

Tribunal registrar Peter Kavanagh told journalists that no comment would be made on the resignation of Taoiseach Bertie Ahern.