Gayle Killilea told to sell Shrewsbury Road house and leave Ireland, court hears
US court hears from former financial director of Sean Dunne’s company DCD Builders
Gayle Killilea was advised to sell the Shrewsbury Road property bought for her by Sean Dunne in 2005, and leave Ireland
Gayle Killilea was advised to sell the Shrewsbury Road property bought for her by her husband Sean Dunne in 2005, and leave Ireland, in part to benefit from tax advantages incurred by selling the property at a loss, a court in Connecticut heard on Thursday.
In a deposition recorded in Dublin in early April this year, and played to the court on Thursday, Ross Connolly, the former financial director of Sean Dunne’s company DCD Builders, was questioned about his involvement in the transfer of Walford, the Shrewsbury Road home bought by Mr Dunne for €58 million.
Mr Connolly told the court that Ms Killilea, who had moved to the United States with Mr Dunne, wanted to sell the property. He said that Ms Killilea had learned that she could write off the loss on Walford against her business in the US.
“The acquisition price for the asset dates back to 2006 and in the region of €58 million. The asset now being sold for significantly less – the difference between the two would have been a tax loss,” he said.
Questioned about why the property’s title was held by the original vendor of the property in 2006 and not in Ms Killilea’s name, a process called “resting on contract,” Mr Connolly said “it meant the transaction is more profitable if you didn’t have to take title,” adding that there was an obligation to pay 9 per cent of the purchase price if you took title.
Under questioning he admitted that he gave advice to Ms Killilea on selling the property. “The advice was for Gayle to close the sale and to move away essentially from Ireland and her affairs in Ireland,” he said. She was “quite concerned that a number of avenues were being taken to frustrate her affairs” – both by Ulster Bank the previous year and by Nama, he said.
He said that negotiations took place to sell the property for approximately €14 million to a third party company called Suraxion based in Cyprus. However, ultimately the sale fell through, mainly because of an objection by a neighbour, he said.
Asked if he knew the identity of the purchaser, he replied: “I recall there being speculation as to who the buyer was but to my knowledge it wasn’t known.” Asked if he thought it was odd that it was a Cyprus entity he replied: “No, it’s not unusual in Europe for Cypriot entities to acquire assets,” noting that acquirers might use an entity in Cyprus for all sorts of reasons including tax or privacy.
The court heard that renewed efforts to sell the property took place in 2013. “Gail wanted to crystallise the losses” from a sale of Walford he said, in particular to benefit from the tax loss. During a visit to the US in mid-March 2013 Mr Connolly said he received advice from a US financial and tax expert suggesting that Ms Killilea should transfer the property to a non-blood relative.
Special purpose vehicle
A new special purpose vehicle, Yesreb, was set up, the court heard. “Gayle would dispose of the asset to Yesreb and the shares of Yesreb would be held by John Dunne who is not a blood relative of Gayle’s,” Mr Connolly explained.
The funding used by Yesreb to buy the property was a loan of approximately €15 million given by Ms Killilea to the company.
The loan agreement between Ms Killilea and Yesreb was shown in court.
An escrow account was also set up at firm Clerkin Lynch to hold the deeds for Ms Killilea pending payment of the loan.
Questioned about his involvement with Ms Killilea’s property projects in the US, Mr Connolly said that he was involved until about July 2013.
“I decided to cease the activity. I had agreed with Gayle at the outset that I was coming to the US to head up the property operation but I got dragged into the litigation proceedings with Sean and Sean’s affairs. I didn’t go over there to do that, so I exited,” he said.
He spent the majority of his time working on a property project in Grand Street, New York City, where he answered to both Ms Killilea and John Dunne.
The court also heard that Ms Killilea received a total of €2.75 million from the proceeds of the sale of fixtures and fittings from assets located in the Jury’s Hotel site in Ballsbridge. It followed an option that Ulster Bank signed allowing it to purchase the fixtures and fittings at a later date if it chose.
He said that, when various efforts to sell Lagoon Beach Hotel failed, it was instead transferred to Ms Killilea. He said he travelled to South Africa about four or five times a year in the run up to the World Cup in 2010, and ultimately reported to Ms Killilea. “Gayle would have made the corporate decisions . . . and would have relied on myself to manage the day-to-day affairs.”
The court also heard that Mr Connolly, a chartered accountant, was restricted as a company director for not keeping proper books and records relating to MVBHC, the company operating the Berkeley Court and Jury’s Hotel in Ballsbridge.