Goodman got his pound of flesh through Haughey

In February 1983, when Fianna Fail was embroiled in scandal over the bugging of journalists' phones, Charles Haughey was facing the last of the great internal heaves against his leadership. He issued a stirring message to the party faithful.

The issue that faced Fianna Fail, he said, was one which went "to the very heart of its existence". The question to be asked, he said, was this: "Are its policies and its leader in future to be decided for it by the media, by alien influences, by political opponents or, worst of all, by business interests pursuing their own ends?"

It was a good question then, and an even better one now.

It is now clear that Charles Haughey was living an opulent lifestyle on the assumption that whatever amount of money he chose to spend would be raised for him by his friend and confidant Des Traynor. And if Mr Haughey's own evidence is to be believed, he was blithely indifferent to the sources of that money.

In that light, the question he himself placed at the heart of Fianna Fail's very existence - whether its policies in government were being determined by business interests - can no longer remain unanswered.

We now know that in March 1987, when he became Taoiseach for the third time, Charles Haughey was at least vaguely aware that he needed a significant amount of money to be raised on his behalf.

According to Mr Haughey's evidence to the Dunnes payments tribunal this week, Des Traynor "may have indicated to me that there was some stringency" in his financial affairs.

He had an overdraft of £200,000 with Guinness and Mahon bank which, he said, "may have been rising, going up, and attracting interest". He had a loan from the Agricultural Credit Corporation of £105,000 which he paid off in December 1987. And he needed a further £6,000 a week merely for his day-to-day expenses.

We know too that at this time Des Traynor was attempting to put together a "handful or perhaps half-a-dozen people to contribute £150,000 each" to Mr Haughey. Ben Dunne was one of that fistful of donors, but the question of who else was on the list, and how they responded to Mr Traynor's requests, must await the second tribunal of inquiry into Mr Haughey's finances that has now become a virtual certainty.

One of the things that will immediately strike whoever is appointed to conduct the next inquiry, however, is that it was precisely in this period that the most controversial relationship between business and politics - that between Mr Haughey's minority Fianna Fail government on the one side and Goodman International on the other - was in its crucial phase.

On May 18th, 1987, Mr Goodman, like Ben Dunne at a later date, called to see Mr Haughey in Abbeville and had a long private discussion with him. They had three further such meetings in 1987, two in 1988 and two more in 1989.

There is no evidence of any wrongdoing by either Mr Haughey or Mr Goodman connected with any of these meetings, and the beef tribunal found nothing to suggest that the granting of an immense amount of state benefits to Mr Goodman in this period was motivated by any kind of personal or political favouritism. Neither, however, did it come up with any other plausible motivation for these actions.

Larry Goodman, said at the beef tribunal he saw every meeting with a powerful politician as an opportunity to extract advantage. He explained to the tribunal he had "fairly liberal access" to ministers at this time, and that this gave him a competitive edge in dealing with rival companies. "I did have access," he said, "and I did use it to the best of advantage for my company any time I could . . . If I felt it gave our company an advantage, I wasn't worried about the competition in Ireland."

For his part, Charles Haughey took an extraordinarily direct interest in the affairs of Goodman International. Any new tribunal will want to look very closely at a number of his actions. The two biggest questions it will want to answer are: 1. Why did Charles Haughey put unlawful pressure on the IDA to help Larry Goodman?

In May 1987, Mr Haughey became directly involved in negotiations between Goodman International and the Industrial Development Authority, in which huge sums of money - £90 million - were being demanded by the company. On May 15th, Martin Lowery, then executive director of the IDA, rang Charles Haughey's office. Negotiations between the IDA and Goodman International, for a massive company development plan, had broken down, and the Goodman side had walked out.

It is clear from the official memorandum of the phone call that Mr Lowery was concerned that Larry Goodman would be in contact with Charles Haughey or Albert Reynolds (then Minister for Industry and Commerce) over the weekend, and that it was urgently necessary for the IDA to get its own explanations in first.

In the call, Martin Lowery made it clear the IDA had gone as far as it reasonably could to help Goodman, with an offer of £13 million in grants. The note of this call was passed on to Charles Haughey, and his attention drawn to the Goodman demand for £90 million from the State and the EU, and added that "you may wish to discuss with relevant Ministers". The call was made on a Friday evening and it is clear that Haughey and Goodman were in touch over the weekend, because they arranged to meet on Monday morning at 7.30 a.m. in Abbeville. Even though the IDA had stressed that it could not see a possibility of increasing its offer to Goodman, Mr Haughey listened to Goodman's representations, and contacted Albert Reynolds and Joe Walsh, then junior Minister for Food, to tell them to "get the negotiations back on the rails". Implicit in that instruction was a judgment that the IDA would have to improve on its maximum offer to Goodman.

At the time, the assistant secretary of the Department of Finance, Phelim Molloy, in an internal document, expressed concern at the handling of the entire Goodman proposal, and noted that "the involvement of third parties at this stage must militate against the IDA carrying out an objective assessment of the project". He made clear to the tribunal that "third parties" was a reference to "members of the Government and their officials".

Equally, the IDA Authority, when it came to discuss the project, expressed its concern about political involvement in the negotiations. Its then chairman, Joe McCabe, complained of "pressure from politicians. I'm not happy when people are under pressure when they're negotiating. There is the, naturally, normal pressures but I don't want anything beyond that." By the end of 1987, Goodman International had drawn down £81 million worth of cheap, Exchequer-subsidised loans, at rates of interest in some cases as low as 1 per cent, which had been negotiated as part of the IDA deal. But none of the promised development had taken place, and Larry Goodman had not even signed the agreement with the IDA.

Early in 1988 he told the IDA that he would not sign the deal unless a standard "performance" clause, linking the payment of grants to the rate of progress on the plan, was dropped. On March 1st, 1988, the IDA Authority met and took a "very strong" and unanimous decision that the performance clause would not be deleted from the agreement. Two days later the IDA wrote to Larry Goodman informing him that it had no intention of complying with his demand.

That afternoon, at 4 p.m., Larry Goodman met Charles Haughey. He was not, he told the beef tribunal, "going along asking for Mr Haughey to remove" the clause but "if Mr Haughey chose to do something about it, that was great". Charles Haughey, for his part, said he was sure that he himself did nothing to act on these complaints.

By sheer coincidence, however, the following Tuesday morning, Haughey's departmental secretary and close adviser, Padraig O hUiginn, made a phone call to the IDA offices and told Martin Lowery that the IDA was taking a hard line on the issue. Acting "in the interests of the economy", O hUiginn told the IDA he "proposed to seek a decision from a Government meeting currently in progress".

He sent a note for Charles Haughey into the cabinet meeting then in session. The Cabinet was not - as the current Chief Justice Hamilton subsequently made clear in the beef tribunal report - entitled in law to force the IDA to drop the performance clause from the agreement, or indeed to amend the agreement in any way. But it went ahead and did so anyway. The beef tribunal report notes that "at the instigation of the then Taoiseach or the secretary to his Department", the Government acted "wrongfully and in excess of their powers". 2. Why did Charles Haughey take a direct personal interest in Good- man's deals in Iraq?

The Fianna Fail government of 1987 to 1989 decided to underwrite Larry Goodman's beef deals with the Saddam Hussein regime in Iraq. The beef tribunal established that in doing so it placed at risk huge sums of public money - around £200 million if Goodman wins a forthcoming High Court case - for no economic benefit.

Most of the immediate decisions in this regard were taken by Albert Reynolds, then Minister for Industry and Commerce. But the overall policy was decided at Cabinet under Charles Haughey. And he showed an extraordinary level of interest in the routine business of the Irish embassy in Baghdad where that business impinged on Mr Goodman's interests.

ON June 9th, 1987, an official in the Department of Foreign Affairs in Dublin telexed the Baghdad embassy with the information that a small competitor company of Goodman's, Agra Meats, was looking for help with its application for a visa. The embassy got back to Dublin with a request for written instructions, and refused to take any action until they were delivered. Larry Goodman was in Baghdad at the time, and at dinner in the embassy made it clear that he wanted the Irish diplomats in Baghdad to give no assistance of any kind to any of his competitors. According to the ambassador, Patrick McCabe, Goodman indicated "that he was willing to put the institution which I worked for in a possibly difficult situation".

The embassy's urgent communication to the Department of Foreign Affairs in Dublin warned of "the risk that would be involved to the Department if Mr Goodman learned of the assistance we offered to other companies and was angered". This risk was taken so seriously that a memorandum for the secretary of the Department of Foreign Affairs was drawn up, and John Swift, the assistant secretary in charge of the foreign earnings division, discussed the matter with Brian Lenihan, the Minister for Foreign Affairs and Tanaiste, on July 9th.

But not only did the second most senior political leader in the State become involved, it was also considered by officials to be of interest to Charles Haughey. A note marked "highly confidential" and "Baghdad - NB not recommended for use in Cabinet. For direct conversation with Taoiseach, if considered suitable" was also given by Swift to Lenihan. As to why this matter should be brought to the attention of Charles Haughey, Mr Swift explained: "It was my understanding that the Taoiseach had a particular interest in the matters relating to economic relations with Iraq in the broader sense . . ." Mr Haughey told the beef tribunal he was unable to recollect anything about it: "It all seems very mysterious to me, I must say."

Yet, a similar situation arose in 1989, when Larry Goodman demanded to be present at a formal inter-governmental meeting between the Irish ambassador to Baghdad and Saddam Hussein's deputy prime minister. Instead of being rejected out of hand, this extraordinary request was again referred to Mr Haughey.