The inspectors came to the conclusion that the operation of the unlicensed Ansbacher (Cayman) bank was a matter for which CRH must bear an element of responsibility, writes Arthur Beesley
CRH's registered office at Fitzwilliam Square was central to the operation of the Ansbacher accounts between 1989 and 1994 when the late Mr Des Traynor was chairman of the building materials company.
Highly successful as it was even when the Irish economy was in the doldrums, the boom years were no less kind to the company. It is one of the State's largest, with a market capitalisation of some €8.34 billion. But prestigious as the organisation may have been - and a world leader - it had a black secret at the very heart of its registered office: Ansbacher (Cayman), the unlicensed bank.
Elements of that secret were known to a small number of very senior individuals within CRH, who had unorthodox banking arrangements with Mr Traynor. For example, the chief executive at that time, Mr Tony Barry, lodged his expenses payments into an account, sometimes sending cheques to Mr Traynor in the house post.
But, despite the fact that no attempt was made to conceal a number of the Ansbacher-related activities in Fitzwilliam Square, many at the top of CRH claimed not to know that the company was providing assistance to Ansbacher (Cayman).
Thus the inspectors concluded that the operation of the bank was a matter for which CRH must bear some responsibility. They said CRH's assistance was not provided knowingly, having regard to the legal principles governing corporate knowledge. They noted, too, that the registered office was "isolated" from the executive and administrative headquarters at Belgard Road, Clondalkin.
But if CRH as a corporate entity or its board per se did not know, it is clear that a number of people in the company - at low and very high ranks - knew of Mr Traynor's banking activities.
These include the small number of functionaries who carried out the day-to-day tasks required to run the bank for Mr Traynor. As at other banks, such work included the facilitation of withdrawals, lodgments and loans.
More crucially, the very senior figures who were clients, in a personal capacity, also knew.
Mr Traynor aside, they includedtwo successive chief executives, Mr Jim Culliton and Mr Tony Barry, and a former chairman, Mr Robert Willis.
Three other directors were clients: the late Mr Gerald Hickey, the late Mr Diarmuid Quirke and Mr Richard Wood, once a trustee of The Irish Times.
Banal as the day-to-day details of the Ansbacher operation are, they provide a striking picture of a small, seemingly transparent independent routine operating for years within the larger organisation. They include the following vignettes: Mr Traynor's secretary, Ms Joan Williams, observed by another secretary counting wads of cash on her desk; his driver told to take particular care when transporting a large sum; the caretaker of the building withdrawing sums between £3,000 and £30,000. All were employees of CRH.
The office on the first floor of the Georgian building at 42 Fitzwilliam Square had become the centre of the Ansbacher business in Ireland after Mr Traynor became chairman of the company in 1987. The chairman had no other place of work and brought with him the Irish side of the offshore operation, with a dedicated computer based in his room.
Letters for Guinness & Mahon and Ansbacher which duly arrived there were not treated any differently from correspondence for CRH. Such post was left on a table in the hall of the building where it might be seen by anyone passing by. On outgoing mail the practice was to affix a label with the annotation "Please reply to 42 Fitzwilliam Square" on documents bearing the Ansbacher letterhead.
In that office, too, did Mr Traynor meet clients of the bank and those involved in the Cayman Islands side of the business.
His associate, Mr Padraig Collery, used the computer after hours in the office to maintain records and prepare statements. Said the inspectors: "Mr Collery was known by other members of the CRH staff to be using the chairman's office for purposes that had nothing to do with CRH."
The late Mr John Furze, who the inspectors said had equal responsibility for the bank, also used the CRH office to prepare reconciliations between the Cayman and Dublin records. Although never a CRH employee, he saw clients known to him in the office.
The inspectors said: "Mr Furze was known to the staff in 42 Fitzwilliam Square as a banker from the Cayman Islands who was involved with Ansbacher. No attempt was made to conceal from the staff in 42 Fitzwilliam Square the fact that a Cayman Islands banker was making use of the CRH premises for the purpose of preparing reconciliations."
A shrewd, charming and highly clever individual, Mr Traynor was respected in the business community and a confidant of the then Fianna Fáil leader, Mr Charles Haughey. Well-liked in the business community, he had been a non-executive director of CRH since its formation in 1970 when Roadstone Ltd merged with Irish Cement Ltd. Before the creation of the CRH powerhouse, Mr Traynor was a non-executive director of the cement company.
The offshore business was well established in 1987. The current CRH chairman, Mr Pat Molloy, told the inquiry that directors knew Mr Traynor had ongoing involvement with Guinness & Mahon/Ansbacher, but those who had no dealings with the bank were "astonished" and "genuinely dismayed" when they learned of its activities.
Mr Molloy said in a statement at the weekend that the details in the report as related to CRH were "disturbing" and blamed Mr Traynor for a "grave abuse of trust".
"We can appreciate a point of view that the existence of this activity should have been detected by the company," he said. "This should not have happened and we condemn it unreservedly."
According to the report, the directors trusted Mr Traynor and assumed that he discharged his duties in a wholly proper and legal fashion. However, the inspectors said the directors who had a banking relationship with Mr Traynor were not entitled to hold him in the same regard.
These individuals were among the leaders who helped grow CRH's market capitalisation from €1.58 million in 1980 to €433.26 million in 1990. It was a sterling commercial performance, one that required talent, diligence, acumen and careful attention to detail.
Yet - for example - when Mr Culliton, the chief executive, entered his deposit arrangement with Mr Traynor, he got no application form, no documents were produced, no statements were given to him and there was no reference to commissions or fees.
Although he knew the money was to be held offshore, Mr Culliton told the inspectors that Mr Traynor had "fooled us all". He ended the facility when he retired in 1987, the year Mr Traynor brought the business to Fitzwilliam Street.
Mr Culliton's successor, Mr Tony Barry, began his arrangement with Mr Traynor in 1989 because he wished to send his expenses to his children who were living abroad. The inspectors said: "Mr Barry acknowledged that the features of his personal relationship with Ansbacher bore the hallmarks of banking and that they took place making use of CRH premises and facilities."
Mr Molloy claimed in his statement this weekend that the inspectors' conclusions in relation to CRH were based on an "assumption" that the systems of corporate governance could have discovered them.
He claimed: "The reality is that the information contained in the report was not available to the company at that time, and these activities were not detected."
This statement must be measured against the conclusion of the inspectors that a number of directors availed of the private banking system. The dealings sith Mr Willis were usually conducted either on the way to CRH meetings, or immediately before or after them. Mr Willis, referring to his statements of account, said he was concerned that "everything wasn't quite kosher".