Cash for Haughey raised in Bangor, Far East

Kevin Drumgoole, an audit manager with Oliver Freaney and Co, was trying to sort out some payments he needed to explain before he could sign off on the 1987 accounts of the Dunnes flagship company, Dunnes Stores Ireland Limited.

Among the items he needed to settle was why two cheques totalling over £500,000 had been paid out by Dunnes Stores (Bangor) on behalf of Dunnes Stores Ireland during 1987. He couldn't get an answer.

The cheques were one in May for £282,500 sterling to a company no one he knew had heard of called Tripleplan; and one in December for £182,630 sterling made out to a J. Furze, whom no one had heard of. The cheques had been authorised by Mr Ben Dunne and sent to Mr Noel Fox. Mr Drumgoole went to Mr Fox and asked him about the cheques.

Mr Fox said he would ask Ben Dunne. Nothing came of it. A year passed. Mr Drumgoole tried again, and again nothing came of it. Another year and he tried again. And so on. Nothing happened and the payments remained as "suspense items" on the books, and the accounts were not signed off.

Noel Fox was then, and is now, a senior partner, though not an audit partner, in Mr Drumgoole's firm, Oliver Freaney. He was a close financial adviser of Mr Dunne and at the time would meet him and other Dunnes executives at 8 a.m. every weekday in the group's headquarters in Upper Stephen Street.

When Mr Dunne wasn't present, Mr Fox would chair the meetings. Mr Fox was, and is, a member of the Dunnes Settlement Trust. He serves or has served on a number of semi-state and publicly-quoted companies. He knew all along who had got the £500,000-plus paid out through the two Bangor cheques, but he did not tell Mr Drumgoole.

Ben Dunne also knew who got the money: Charlie Haughey.

Some time in early 1987, around the time Mr Haughey was being elected Taoiseach after more than four years in opposition, Mr Fox received a phone call from the late Mr Des Traynor. Mr Traynor said Mr Haughey had financial difficulties and he, Mr Traynor, was in the process of contacting half-a-dozen or so business people to raise £700,000 to £900,000.

Would Mr Fox ask Mr Dunne? He said he would, and he did.

Mr Dunne decided he would meet the full amount himself and the decision was conveyed back to Mr Traynor. Over the following few months the £500,000 was paid out of the Bangor account. Over subsequent years a further £1.1 million, at least, was paid out by Mr Dunne. That money came from Dunne-related operations in the Far East. As counsel for the tribunal, Mr John Coughlan SC, said during the week, Mr Fox, as a trustee of the Dunnes trust, had a special responsibility. Half a million pounds of what was trust money had been paid out for non-commercial purposes and was being left as a suspense item on the group's books.

But Mr Fox told the tribunal: "I never had any worries about it." He believed Mr Dunne had undertaken to make the payments to Mr Haughey from his personal funds, and would repay the Dunnes group for the Bangor monies. "I had every faith in his doing so," he said.

Mr Fox had never forgotten what lay behind the Furze cheque and continued to consider it his duty not to betray what he thought was a bond of confidentiality with Mr Dunne in relation to the matter. However, some time around 1990 or 1991 the connection between the Tripleplan cheque and Mr Haughey slipped from his mind.

It wasn't until last year, when the link was discovered by way of a company search in England which threw up connections with the Ansbacher deposits, that Mr Fox remembered what lay behind the Tripleplan cheque.

Mr Dunne said he had always remembered the Furze cheque but says he did not know the Tripleplan cheque had been linked to Mr Haughey until told this last year. Yet Mr Fox said the two men would have discussed the Tripleplan and the Furze cheques over the years, when they had been queried by the auditors. The issue was not resolved. Mr Dunne said he accepted he had authorised the Tripleplan payment for Mr Haughey, but had never been told of the name Tripleplan. Neither man reported the Tripleplan payment to the 1997 McCracken tribunal, which inquired into payments from Dunnes to Mr Haughey. Both said they had no reason to hide the payment. Mr Dunne said he had never known the Tripleplan cheque was linked to Mr Haughey; Mr Fox said he had known, but had forgotten some time around 1990.

Another important point remained unresolved after the two men's evidence during the week. Mr Fox said he thought Mr Dunne was going to personally provide for the Haughey payments. He knew the £500,000 in the Bangor cheques was Dunnes money but expected it would be repaid. The other funds - about £1 million - had come from Mr Dunne's personal resources, he said.

Mr Dunne hotly disputed these points. He said Mr Fox would have known there was "no way" he'd have £700,000 or so in liquid assets. Even for him a £200,000 cheque would be a significant amount, he said. He had made many charitable donations over the years and it had always been Dunnes Stores money. "I would have done very few of them if it was on a personal basis." None of the money he gave to Mr Haughey was from personal funds, he said.

"My sister visited Mr Haughey looking for the funds back. I doubt very much if she would have gone, or the company solicitors, looking for my money back." The issue remained unresolved.

Mr Dunne explained a little about the foreign trust from which the bulk of the Haughey money came. In the 1970s Dunnes set up a trading operation in the Far East, in Hong Kong, sourcing and shipping goods which were sold in the Dunnes outlets. The operation began to make profits and a trust, Equifex, was established and taxes paid in the Far East. From Mr Dunne's evidence it seems the profits are distributed among the members of the Dunne family from time to time. At the time of the Haughey request for funds, such a disbursement had just occurred, and he intended waiting for the operation to generate more funds before making the payments to Mr Haughey.

The Bangor cheques were the result of pleas from Mr Traynor for funds needed "urgently". The Far East operations are not recorded in the Dunnes books and are not part of the Dunnes group in the legal sense, and so provided added confidentiality.

Mr Dunne mentioned that the establishment of the Far East operation was discussed with his father, the late Ben Dunne snr. He mentioned his father on another occasion, when he discussed what he called the "bearer cheque system".

Once a year, at the end of the financial year, a number of cheque-books would be taken from an old leather briefcase kept in Mr Dunne's office and cheques would be made out to "bearer" for sums between £3,000 and £6,000. The amounts "evolved" from his father's time, Mr Dunne said.

Six such cheques considered by the tribunal were for amounts of £4,600, £5,400 and £5,600. These cheques were written out by Mr Fox, but signed and with the amount in figures put in by Mr Dunne. They were dated January 28th, 1987.

Mr Dunne said the "bearer" cheques would be prepared by Mr Kevin Bowen or, less usually, by Mr Noel Fox. He, Mr Dunne, would sign up to 40 of them, and distribute them among 20 to 25 key executives over the following weeks. They were cash bonuses, and charged as an expense to the Dunnes companies from which the cash came, he said. Mr Bowen is a senior member of Deloitte & Touche, which carries out audits on the Dunne companies not audited by Oliver Freaney. He is also a Dunnes trustee.

Mr Dunne said he would give some of the cheques to Mr Fox or Mr Bowen. "If it was Noel Fox or Frank Bowen I would say: `Look, there's some cheques for you.' " It was "definitely not [his] understanding" that the cheques were given to Mr Fox and Mr Bowen by way of fees.

Mr Bowen was not present to respond to this. Mr Fox said he could not recall writing out the six cheques being considered by the tribunal and said he was not regularly involved in writing out such cheques. Counsel for Dunnes Stores, Mr Richard Law Nesbitt SC, said the group had settled with the Revenue in relation to this practice in 1989, by which time the practice had ceased.

The reason the bearer cheques were being discussed was that six of them, worth just more than £32,000, were lodged to an account in Guinness & Mahon bank in February 1987, just days after they had been signed by Mr Dunne.

Mr Dunne said he would be the only person who would get six of the cheques, but said he had made no donation to Mr Haughey at that time. The Guinness & Mahon account, Amiens Securities, held money used for Mr Haughey's benefit, but other monies also.

The £500,000 from the Bangor cheques was written off by Dunnes Stores Ireland in the 1994 accounts, which were themselves signed off in 1998. How exactly they were treated in the company's books was not explained.