Fund-raising control was a priority for Haughey

From the moment he was elected leader of Fianna Fail and Taoiseach in December 1979, Charles Haughey wanted control of the party's coffers. He set out to remove Senator Des Hanafin, who served as secretary of Fianna Fail's top secret fund-raising committee, and replace him with his own man.

Mr Haughey had been a patron of Taca, Fianna Fail's controversial fund-raising operation, up to the time of its abolition in 1969. He was out in the cold after the Arms Crisis in 1970. Having climbed his way back up to the top of the party in late 1979, he knew from the start that he wanted access to, and control of, the finances.

It is important to clarify, at the outset, that the Fianna Fail general election fund-raising committee, to give it its full title, was - and is - one of three known sources of funds for the party.

Its income and accounts were never published. It operated in secret from behind closed doors in Room 547 of the Burlington Hotel in Dublin. Its activities were traditionally never revealed to the party leader.

The committee's operations were always separate from the normal annual fund-raising by the party, which has audited accounts published in the Clar (the programme) at each ardfheis, and the annual Opposition leader's allowance recently investigated by the Taoiseach, Bertie Ahern, at the behest of the Labour leader, Dick Spring, after Mr Haughey gave evidence to the Dunnes Stores tribunal.

Within weeks of becoming Taoiseach and party leader, Mr Haughey asked for an accountants' report on the control of Fianna Fail finances. The report, marked private and confidential, was personally delivered to him in his office on March 11th, 1980.

Mandated to try to find out "control weaknesses", the report came up with certain recommendations about party headquarters and, more particularly, the Fianna Fail general election fund-raising committee which Mr Haughey wanted to disband.

This fund is under Fianna Fail control in theory but, in practice, party headquarters know nothing about its workings, according to the report by Daniel M. McGing, then a senior partner in the firm of Kean and Co and of its major associate, Coopers and Lybrand.

"Monies formerly received at head office for the trustees' election fund account are now being collected by the Fianna Fail election fund, administered from the Burlington hotel," Mr McGing said.

He advised: "It might be considered that this situation is a less than desirable one from the point of view of Fianna Fail because although the Burlington Hotel fund is operating under the Fianna Fail name, it would appear that the trustees have no control over its activities or the disposal of its monies."

Notwithstanding this specially commissioned report, it took Mr Haughey 15 months, considerable aggravation and arm-twisting, to secure possession of what was called the Black Book, the secret accounts of hundreds of subscribers to Room 547 of the Burlington.

Des Hanafin, the late George Colley and Des O'Malley knew at the outset of his leadership that Charles Haughey wanted to put his own man in charge of Fianna Fail fund-raising. But Mr Haughey had to be in a position of some strength within the party before he could disband Senator Hanafin's committee and assume control of the finances.

Senator Hanafin originally got the job of general secretary of the committee, with salary, on the recommendation of former Taoiseach Jack Lynch. He was a keen supporter of Mr Colley, Mr Haughey's arch-rival, and, later, Des O'Malley.

Senator Hanafin was then known as the bagman of the party. He did not assert his profile as chairman of the Pro-Life Amendment Campaign and the Anti-Divorce Campaign until a couple of years later.

With a profound distrust of Mr Haughey's intentions, he was never going to hand over the Black Book voluntarily.

Debts of around £100,000 were outstanding on the European and Cork by-elections when Mr Haughey became leader at the end of 1979. Mr Haughey's first general election in June, 1981, cost Fianna Fail an estimated £1.2 million. The Burlington Hotel committee was then given a target of around £600,000.

That target was topped but, because of over-spending by party headquarters in the last week of the campaign, there was a considerable shortfall. The committee reportedly raised loans of £300,000 from Allied Irish Banks and the Bank of Ireland.

Mr Haughey's second general election, on February 18th, 1982, cost £750,000. A lot of the money promised to pay for it was believed to be awaiting collection when Fianna Fail's top financiers fell victim to the latest bout of faction-fighting within the party.

Then a curious thing happened. Around this time, Mr Haughey acquired a knowledge of the list of subscribers, as distinct from the accounts in the Black Book.

Three or four days before the election was called on January 27th, 1982, Mr Haughey's friend and solicitor, Pat O'Connor (who was also his election agent), sent out fund-raising letters to subscribers on the list.

When Senator Hanafin's committee made their fund-raising appeal to the names on their list, after the campaign started, they were informed that they had already responded to Mr O'Connor. The committee members were furious.

THE FIRST challenge to Mr Haughey's leadership of Fianna Fail in 1982 came immediately after that February general election. Des O'Malley publicly challenged him for the party's nomination as Taoiseach when the Dail met on March 9th.

At a meeting on February 25th to decide the issue, Mr O'Malley withdrew at the last moment. There was no vote.

The day after the abortive leadership challenge, on February 26th, 1982, Mr Haughey told Senator Hanafin that he was fired. He wanted him out because he was an O'Malley supporter.

Mr Haughey also told him that the chairman of the committee, Ken O'Reilly-Hyland, was sacked. He had disbanded the committee.

A short time afterwards, with Mr Haughey re-elected Taoiseach courtesy of the £80 million Gregory deal, he invited Mr O' Reilly-Hyland, then chairman of Burmah Castrol and a Government appointee as director of the Central Bank, and the other members of the committee to his home in Kinsealy.

Mr Hanafin was excluded from the meeting.

Senator Hanafin was claiming, at this point, that Mr Haughey had no right to fire him because the committee was so constituted that it did not come under the control of the leader of Fianna Fail.

"I have been employed as secretary of the Fianna Fail fund-raising committee group for the past ten years," he said. "I am still employed in that position and will continue to be so employed until such time as the committee dismisses me or disbands itself, thus making me redundant."

But that view cut no ice with Mr Haughey. Inside Kinsealy, seated round the private bar, which was the old sewing room, Mr Haughey got the members of the committee to sign a document instructing Senator Hanafin to hand over the complete fund-raising accounts to Fianna Fail HQ in Mount Street.

He told those present that he was "fed up with Hanafin. I want to oust him. I am calling on you to hand over the account and transfer whatever is in it."

Only one man questioned Mr Haughey's authority to issue such an instruction and refused to sign the document. He was Mr Gerry Creedon of Gypsum Industries.

After getting his way, Mr Haughey took the committee members to dinner that night in the private dining room upstairs in Johnny Opperman's restaurant in Malahide.

Senator Hanafin subsequently refused to hand over the Black Book until all of the fund-raising accounts were audited.

Mr Haughey requested that Oliver Freaney, who featured as Ben Dunne's accountant in the recent payments-to-politicians tribunal, do the audit. Mr Hanafin insisted that the audit be conducted by Mr McGing.

CHARLES HAUGHEY assumed control of party fund-raising within 15 months of becoming leader of Fianna Fail. To assess the significance of this, however, it is necessary to trace a line back to Taca, predecessor of the secret men who ran an office in Room 547 of the Burlington Hotel.

For the Fianna Fail general election fund-raising committee succeeded the controversial Taca at the end of 1969.

At least, by the ardfheis of 1970, Neil Blaney, then Minister for Agriculture, referred to "an organisation formerly known as Taca".

The patrons of Taca - an elite group of 300 top businessmen who paid £100 a year for membership and contributed through £100-a-plate dinners in the Gresham and the Burlington - were Mr Haughey and Mr Blaney.

The chairman of the secret committee which ran Taca was Desmond MacGreevy of MacGreevy and Partners, quantity surveyors and construction economists.

Among the other members of the committee were: Ken O'Reilly-Hyland; Noel Griffin of Waterford Glass; Sam Stephenson, architect, of Stephenson and Associates; John Reihill, head of Tedcastle McCormick and Co Ltd; Liam McGonagle, a solicitor; Dillon Digby of the First National Building Society; Eoin Kenny, head of J.A. Kenny and Partners; and Denis McCarthy, head of Odearest.

Harry Boland, a partner in Mr Haughey's old firm of Haughey Boland, was secretary and treasurer.

Senator Hanafin formally abolished Taca in 1969 because of the public and party controversy surrounding its operations. But a question mark hangs over whether it was actually abolished or whether it just went underground for a decade.

What is more interesting, however, is that a number of the original Taca members were still working on Senator Hanafin's fund-raising committee. They were: Mr O'Reilly-Hyland, Mr McGonagle, Mr Reihill and Mr McCarthy.

Besides Senator Hanafin, the other members of the fund-raising committee which Mr Haughey set out to control were: Roy Donovan, then of Lisney and Son; Peter Leon, a solicitor; Conor Crowley, a senior partner with accountants Stokes, Kennedy, Crowley; Gerry Hickey of solicitors Hickey, Beauchamp, Kirwan and O'Reilly; Clayton Love, then chairman of Beamish & Crawford; and Gerry Creedon, of Gypsum Industries.

Three members, interestingly, ceased to act on the committee shortly after Mr Haughey came to power: Mr Stephenson, Mr Digby and Mr Kenny. A further two, Mr Creedon and Mr Hickey, resigned from the committee when Mr Haughey sacked Mr Hanafin to take control of Fianna Fail's fund-raising himself.

At the time that Mr Hanafin was fired, sources close to Mr Haughey insisted that P.J. Mara, his close aide and spokesman, would shortly be appointed to take his place in a revamped fundraising group. This never happened.

It was Mr Haughey's intention to make the committee a much bigger operation with a manager and staff. It was also to undertake "new fund-raising schemes."

Commenting on the whole affair, Mr Hanafin said yesterday: "Let bygones be bygones."