Phelan had 'no reason' to doubt bona fides of Taher in meat plant deal

The founder of Master Meats, Mr Paschal Phelan, told the High Court yesterday he had "no reason" to doubt the bona fides of the wealthy Middle Eastern business family headed by Mr Zacharia El Taher when he concluded a deal with the Tahers in 1985 to buy the former Clover Meats plant at Clonmel, Co Tipperary.

Until Mr El Taher acquired a 50 per cent shareholding in the Clonmel plant, the Tahers had not owned any property in Ireland, Mr Phelan said. He and the Tahers had put in a tender for the Clonmel plant one hour before the time for submissions of tenders expired and were surprised and pleased to learn it was accepted.

Mr Phelan said he had personally managed the Clonmel plant for some months in 1985 after which he was replaced by his brother Fintan. The Clonmel factory did not open until September 1985. Prior to that, farmers who were in dispute with Clover Meats had occupied it and there were detailed negotiations to resolve the situation. The farmers had also looked for contributions from him and others to reduce their losses.

Mr Phelan said he had paid £120,000 (€152,400) into the farmers' hardship fund. He was the first to make a contribution and he got a lot of credit from the farming community for doing so. Others also contributed. Having the goodwill of farmers was more important for a meat factory than the goodwill of customers, Mr Phelan said.

Yesterday was the 54th day of the hearing before Mr Justice Murphy of a number of actions involving Mr Phelan, Mr El Taher, Mr Larry Goodman and others. Mr Phelan is suing Mr Goodman and Mr El Taher for multimillion damages over an alleged conspiracy to force him out of the Master Meats companies.

In his evidence yesterday, Mr Phelan focused on the beginning of his business relationship with the Tahers in 1985 and on the development of the Master Meats companies from 1983.

Mr Phelan said he had founded the Master Meats group of companies in August 1983. It was his idea that factory managers should have some equity in the companies. In a submission to a bank in 1985, devised by himself and Mr Nasser El Taher, proposals for the development of the companies were outlined.

Mr Phelan said he saw an opportunity to build a national business. This required funding. He had secured the services of Arthur Andersen in relation to the development of a plant in Omagh, Co Tyrone and the relationship expanded to include the other companies.

His strategy for Master Meats included developing the Middle Eastern market with the help of the Tahers but the primary business of Master Meats was to supply, on a weekly basis, companies in the European Economic Community which were close to consumers. The Middle Eastern market was an emerging market but from the banks' point of view, it had a bad reputation.

He said there was a system in place in all the Master Meats factories whereby factory managers would do their costings for each week. At the end of each day, a job costing would be done. This was all documented. Each plant had its own accountant, who would produce weekly accounts which, in turn, would go to himself or the finance director. Mr Phelan said the weekly accounts were "sacred" and he insisted they had to be done. Every month, there was a meeting of the factory managers with himself and others . The factory accountants reported to Mr Joe Halpin, a fellow director. The MMP group soon became number two in the meat processing industry, after Mr Goodman. He had admired the success of Mr Goodman, Mr Phelan said.

The case continues today.