Tribunal hunted its quarry through record of deposits and withdrawals

With the Ansbacher Deposits set up by the late Des Traynor, Irish residents such as former Taoiseach, Charles Haughey, could …

With the Ansbacher Deposits set up by the late Des Traynor, Irish residents such as former Taoiseach, Charles Haughey, could have an offshore bank account in College Green in Dublin. People who deposited funds in the accounts could have money which was technically in the Cayman Islands. But it could be withdrawn with as much ease as money kept with National Irish Bank or the AIB.

The customer simply contacted Mr Traynor in Guinness & Mahon bank (or, after 1986, in his Cement Roadstone offices on Fitzwilliam Square), and asked for the sum required. Mr Traynor then contacted someone in the bank who would either send him a draft or ensure the money or draft was available when the client called.

In December 1987, £58,000 in cash was prepared in this way for collection from Guinness & Mahon for Mr Haughey. It is not known why he needed such a large sum at that time. The withdrawal occurred between December 15th and December 22nd. Mr Haughey had been returned to the office of Taoiseach the previous March.

This secretive and personal deposit-and-withdrawal system which Mr Traynor operated in Dublin had obvious attractions for Irish residents wishing to lodge their money offshore. But it transpired that the attempt to have money effectively offshore and onshore at the same time was a weakness - because records had to be kept in Dublin as well as the Cayman Islands.

READ MORE

It enabled the Dunnes payments tribunal, whose report will be published today, to prove Mr Haughey had received Ben Dunne's £1.3 million and thereby show that Mr Haughey had lied to the tribunal. The proof was provided by the files kept to record the deposits and withdrawals.

The system was also a cause of concern for an international banking group which bought the Cayman operation in the late 1980s. Evidence about this was given to the tribunal in camera in hearings in London and has not been made public before now.

The Ansbacher Deposits is a generic name the tribunal gave to a series of similar accounts which have existed in Dublin banks since the 1970s. Back in those days, few people in Ireland had heard of the Cayman Islands, although this was certainly not the case for some of Dublin's richest businessmen.

The Gallagher property, banking and building empire had its holding company in the Cayman Islands. The Kerry-born multimillionaire property developer, Mr John Byrne, who built O'Connell Bridge House, D'Olier House and other major Dublin developments, also had company headquarters in the Cayman Islands.

Matt and Pat Gallagher, and John Byrne, were all friends of Mr Haughey. Mr Traynor was a director of Mr Byrne's two principal companies.

The islands, which form a British dependent territory in the British West Indies, demand very little information from companies wishing to base themselves there. One demand they do make is that companies hold annual general meetings on the tropical islands.

Mr Traynor travelled regularly to the islands and was often seen socialising with his Cayman banking colleagues in the restaurants which line the shore along the George Town wharfs. As a director of Aer Lingus - he was appointed in 1982 by the minority Haughey government and served for 10 years - Mr Traynor would have had access to free travel worldwide.

And so for some Irish people, the Cayman Islands had been playing a central role in their finances for 30 years or more. In fact, in the early 1980s a group of Irish people had what was, effectively, a bank on the Cayman Islands which did little besides manage their accounts.

In 1969, the same year Mr Traynor became a director of the bank, Guinness & Mahon formed a small investment company in the Cayman Islands. The late Cayman banker, Mr John Furze, first met Mr Traynor in 1969, but would not disclose the circumstances when asked by The Irish Times last December.

Some time shortly after the establishment of Guinness & Mahon on the islands, Mr John Guinness, a descendant of a founder of the bank and now chairman of British Nuclear Fuels, was approached by a Cayman banker in relation to funding a land buy on the islands. The banker was John Collins, who at the time was a manager with Bank of Nova Scotia on the Cayman Islands.

The deal led to further involvements and in February 1971 the Dublin bank successfully applied for a restricted or "B" banking licence for the Cayman Islands. The new bank was called the Guinness Mahon Cayman Trust. Mr Collins and Mr Furze, his colleague at Bank of Nova Scotia, managed its activities.

Two years later the bank was granted an "A" licence and commenced as authorised dealers on January 1st, 1974. Mr Collins and Mr Furze, who had left the Bank of Nova Scotia, took over as joint managing directors. Mr Traynor was chairman of the new bank and the main Dublin-based figure behind its establishment.

Sandra Kells, a finance director with Guinness & Mahon, told the Dunnes payments tribunal what happened from the mid-1970s onwards. "Substantial deposits would be placed with the bank in Dublin . . . in the name of Cayman, Guinness Mahon Cayman Trust, which was the Cayman bank, so we would have substantial deposits on our books received from Guinness Mahon Cayman Trust."

Alongside these Ansbacher Deposits was another structure which the bank considered part of the overall Traynor-controlled operation. This involved a company called Overseas Nominees Ltd, which was primarily involved in the purchase and sale of stocks and shares. The same people who controlled the affairs of the Ansbacher cash deposits gave instructions concerning the Overseas Nominees accounts.

By 1989, when an audit of the Dublin bank was carried out, there was £38 million in the deposits. In addition, the bank was also holding assets in the form of shares in the name of Overseas Nominees. The value of these was not revealed.

"It appears to Guinness & Mahon that the deposits were made up of monies which were beneficially owned by persons resident in Ireland," said Ms Kells.

She used the word "appears" because very few people in the bank were allowed access to the names of the beneficial owners of the deposits. One person in the bank who played a central role in their running was Padraig Collery.

Mr Collery joined Guinness & Mahon in 1974 as a junior banking official with responsibility for computer operations. Later he came to be in charge of bank operations. The bank had remained open through the 1974 and 1975 bank strike and the transaction load was heavy. He was involved in processing this load and was promoted.

Right from when he joined the bank, Mr Collery was involved in maintaining memorandum accounts. These were a record of who owned what in the Ansbacher Deposits. The deposits were made up of funds belonging to different individuals which were all intermingled. The system was already in place when Mr Collery joined the bank and he took over its running in the late 1970s.

Mr Collery was in charge of the bank's overall computer system. He also ran a "bureau system", however, which shared the bank's hardware but was otherwise separate. Only Mr Collery had the password which gave access to this system. And it was within this system that Mr Collery kept the secret memorandum accounts.

To add a further layer of secrecy, each memorandum account had its own code. Mr Haughey had accounts coded S8 and S9. Mr Traynor kept a list which revealed the names behind each code while Mr Collery mainly used codes and only got to know the names of some of the depositors, through direct contact with them or their drafts. As far as others in the bank were concerned, the deposits were simply money lodged there by another client, the Cayman bank.

The system continued after Mr Traynor left Guinness & Mahon in 1986. And it continued after Mr Collery left Guinness & Mahon in 1989 to work with Kindle Computers, a company involved in banking software. Mr Collery ran the memorandum accounts, taking instructions from Mr Traynor.

Mr Traynor, who had become chairman of Cement Roadstone but was still chairman of the Cayman bank, brought his secretary, Joan Williams, with him to his Fitzwilliam Square offices. Messages would pass back and forth between Mr Traynor, Ms Williams, Mr Collery and the bank on College Green. Mr Traynor also kept in contact with the bank on the Cayman Islands keeping it informed of deposits and withdrawals from the accounts.

Mr Traynor would send letters to the bank telling them, say, to withdraw £20,000, and then send a copy of the letter to Mr Collery, telling him to note the withdrawal as having been from one or other of the coded accounts. John Furze in the Cayman Islands would be informed of the transactions.

Meanwhile, the bank on the Cayman Islands had changed hands several times. In 1984 the bank, which had been a subsidiary of the Dublin bank, became a subsidiary of the Dublin bank's London parent bank, Guinness Mahon.

The tribunal, hearing evidence in camera in London from Martin Green, of Guinness Mahon, was told that in 1988 the London bank sold the Cayman bank to the management of the (Cayman) bank. The consideration was "around £5.8 million" and was equal to the net assets at the time. The corporate vehicle used for the sale was a company called Chichester Investments. Chichester Investments has its registered offices in the Cayman Islands, in a company controlled by Mr Furze. The management consortium was put together by Mr Traynor.

Peter Greenhalgh of Henry Ansbacher, a bank in London, again in the in camera hearings, told Michael Collins SC for the tribunal that in July 1988 Henry Ansbacher Holdings acquired the majority shareholding in Guinness Mahon Cayman Trust Ltd. The name of the Cayman bank, which had around 35 staff, was changed to Ansbacher Ltd.

The price paid was £3 million in cash and shares; £6.5 million was contributed to recapitalise the operation, restoring its capital to the same level as before the management buyout. The bank had assets of £114 million at the time of the sale. The bank gave a commitment that it would produce profits of "at least" £450,000 for 1988, excluding interest on the new capital injection.

According to reports at the time for the nine months to June 30th, the time of the buyout, the bank made profits of just over £500,000 "before realising an exceptional loss of £1 million on the sale of an investment". That loss was included in the price paid by the directors in June to Guinness Mahon, of London.

The 25 per cent of the Cayman bank not bought by Henry Ansbacher remained with the four management shareholders: Mr Traynor, Mr Furze, John Collins and Hugh Hart. Mr Hart is a Jamaican national and former Minister for Tourism. He resides jointly between Jamaica and the Cayman Islands and is currently chairman of the Cayman bank.

The 25 per cent was subsequently sold on to Henry Ansbacher. The consideration is not known.

Mr Greenhalgh, in his evidence, was asked what his bank thought about the operation run by Mr Furze, Mr Traynor and Mr Collery.

"I think initially we had bought, effectively, an Irish operation. It had been operating satisfactorily, it had got a good client base, and I think we considered that it was a good acquisition."

Mr Greenhalgh seemed to believe that Mr Furze and John Collins were Irish, which is not the case. Asked if the bulk of the bank's business was conducted in Ireland, Mr Greenhalgh said: "I really don't know . . . I know that a significant amount of business was emanating from the Irish Republic as a result of ongoing relationships that had been built up."

An audit carried out for the Henry Ansbacher group in 1990 or 1991 referred to what was termed "the Irish accounts" held by the Cayman bank.

Mr Greenhalgh: "They basically said that they were concerned that accounts were effectively held in the books of Henry Ansbacher which appeared to be under the control of a third party in Dublin, who I assume was Mr Traynor, and there were obviously questions raised about the reconciling of those accounts, who was actually controlling them and what the background was to all of this. We obviously took steps to address the audit query."

Mr Traynor was still the chairman of the bank. Mr Greenhalgh gave evidence of how he once contacted Des Traynor and expressed his concern that monies passing through the Ansbacher Deposits might be linked to "drugs or terrorism".

"I remember he said to me on one occasion, `I know all about this money-laundering. You don't need to worry about this. These transactions are all right. The clients are known to me and you may be sure we would not put transactions through you which would give rise to money-laundering considerations'."

Mr Greenhalgh said his company introduced no major changes to the Cayman operation until the time of the audit report. In January 1989, the company had acquired several other Cayman operations, merged them and erected a purpose-built building - a large pink air-conditioned structure which would not look out of place in the southern states of the US.

Towards the end of 1990 it was decided to amalgamate the managements from the merged operations. A man was sent out from London to "head it all up" and make sure the Cayman operation was up to Henry Ansbacher standards.

Mr Greenhalgh: "I think in banking you have got basically two sorts of people. You have got marketeers and you have got bureaucrats . . . The Guinness Mahon thing, I think . . . it was entrepreneurial rather than bureaucratic."

There was a problem with the memorandum accounts, Mr Greenhalgh said. Michael Collins, for the tribunal, asked him to explain.

Mr Greenhalgh: "A memorandum account is an account that is not in the books but which is actually a shadow of an account held elsewhere. If you have a memorandum account, you basically reconcile that with the actual account holder. I think the question was really raised in the context of, if we were effectively holding accounts for third parties which were being run by an intermediary, effectively, then what steps were taken to reconcile those accounts and ensure that the ultimate beneficiary of those accounts was aware of what the position was and that there were no potential nasties lurking in the arrangement."

Mr Greenhalgh said there was basically a "gap in our control" which was causing concern. It was also the case that at the time, the early 1990s, the British authorities were putting new regulatory pressures on banking groups operating in Britain.

Back in Dublin, the so-called Ansbacher Deposits were being moved to a new home. The London bank, Guinness Mahon, carried out an audit of its Dublin subsidiary and raised similar questions to those being raised by the Henry Ansbacher auditors. The bank was also concerned at the size of the Ansbacher Deposits, which now made up a large part of the Dublin bank's business. In 1989 the £38 million in Guinness & Mahon constituted almost 35 per cent of the bank's liabilities.

Mr Traynor made an approach to the Irish Intercontinental Bank, on Merrion Square, in December 1990. Guinness & Mahon was concerned about the size of the Cayman business relative to the bank's size and was getting out of "this type of business", he told the bank. Would it, Mr Traynor asked, be prepared to take on a group of accounts which held about £40 million? The bank said yes.

In January 1991 a general account in the name of Ansbacher Ltd (the Cayman bank) was opened in Irish Intercontinental. £10 million sterling was deposited in the sterling account. The deposits were moved from College Green to the Merrion Square bank over a three-year period so there would be no sudden falling off in the Guinness & Mahon books.

Something else changed around this time. Funds from the Ansbacher accounts were moved to accounts in the name of Hamilton Ross Ltd. This occurred in September 1992. Hamilton Ross is a Cayman company controlled by John Furze. The signatories for the Hamilton Ross accounts were Mr Furze, Mr Traynor, Joan Williams and Mr Collery. Why the accounts were moved from the bank to the fund management company controlled by Mr Furze is unclear. The move may have been linked to the changes being introduced in the Cayman bank and Mr Furze's desire to maintain the close personalised treatment the accounts had been receiving.

Charles Haughey's coded S8 and S9 accounts were among those moved into the Hamilton Ross accounts. Mr Furze, Mr Traynor and Mr Collery were now running their memorandum account operation for both the accounts controlled by Ansbacher Ltd and for those controlled by Mr Furze's company, Hamilton Ross.

In 1994, Mr Traynor died. Mr Furze travelled to Ireland for the funeral and met Mr Haughey. He also met Mr Collery and it was arranged that Mr Collery would now take over some of Mr Traynor's tasks.

Mr Furze and Mr Collery also went to Mr Traynor's office on Fitzwilliam Square and went through his files on the memorandum accounts. Some of the files were destroyed and Mr Furze brought others back to the Cayman Islands. The Dublin files were stored in offices belonging to an accountant, Sam Field-Corbett.

Mr Field-Corbett was a director of two companies used as vehicles to buy Mr Haughey's Dublin home and his island in Kerry. His company, Management Investment Services, at Inns Court, Winetavern Street was involved in holding shares for Celtic Helicopters, which belongs to Mr Haughey's son, Ciaran. Correspondence relating to Overseas Nominees was sent to Winetavern Street after Mr Traynor's death.

In 1995, Mr Furze retired from Ansbacher Ltd, the Cayman bank. He set up an insurance and investment business, with Hamilton Ross as one of several fund management companies which he controlled.

Also that year Mr Collery ceased managing accounts for Ansbacher. The Cayman bank took control of the monies in the Dublin account and repatriated them to Cayman. Mr Collery destroyed the memorandum accounts relating to the Ansbacher monies. He had been keeping the files in Mr Field-Corbett's office and was anxious not to do so any longer than was necessary. Meanwhile, Mr Furze and Mr Collery continued to run Hamilton Ross.

Since Mr Furze's death in July, it is unclear who controls these accounts and who has legal ownership of the files. It emerged during Mr Collery's evidence that in late 1994, when Mr Haughey's accounts were running out of money, they were replenished from Overseas Nominees. The company is registered with Ansbacher Ltd and was originally set up by Mr Furze and Mr Collins.

It has not emerged who else, besides Mr Haughey, had money in the Ansbacher Deposits. It is understood that no politician is among the names which have come to the attention of the tribunal team.

Whoever they are, the accountholders kept a close eye on the work of the tribunal. When counsel for the tribunal, Denis McCullough, first mentioned that the £1.3 million paid out by Ben Dunne had been lodged to the Guinness & Mahon and Irish Intercontinental banks, the account holders immediately recognised where the money trail was leading. The bulk of the deposits was immediately moved on.

But the account holders may have moved their money unnecessarily. The Revenue Commissioners has no powers to find out who the account-holders are. Whereas a tribunal has the power to seek discovery of documents relevant to its terms of reference, the Revenue can only seek access to the bank accounts of named individuals whose affairs it is investigating. The problem with the Ansbacher Deposits is precisely that the Revenue does not know the names of the individuals involved.

The weakness in the system established by Des Traynor may end up being relevant only to the case of his old friend Charles Haughey.

Quote 1

For some Irish people, the Cayman Islands have been playing a central role in their finances for 30 years or more'

Quote 2

Peter Greenhalgh, London banker speaking about Des Traynor: "I remember he said to me on one occasion, `I know all about this money-loundering. You don't need to worry about this. These transactions are all right. The clients are known to me and you may be sure we would not put transactions through you which would give rise to money-laundering considerations'"

Quote 3

The account holders immediately recognised where the money trail was leading. The bulk of the deposits was immediately moved on'