Ahern says action was inappropriate

The Taoiseach admitted yesterday that, with the benefit of hindsight, his practice of pre-signing blank cheques on a Fianna Fail bank account may have been inappropriate.

Mr Ahern said that although it was a widespread practice in the community at that time "and indeed up to today", pre-signing such cheques perhaps "creates difficulties".

"It was believed to work in the proper fashion but . . . depending on the information unearthed by the tribunal, it may transpire to be an inappropriate practice."

Mr Ahern was being questioned about the operation of the Fianna Fail leader's allowance account from which monies appeared to have been diverted into private accounts for the benefit of Mr Charles Haughey.

The Taoiseach accepted his signature was on a £25,000 cheque made out to cash which was drawn on the party account in June 1989 and lodged in one of Mr Haughey's accounts. However, he said, he must have pre-signed the cheque blank with the details filled in later as he could not recall signing such a cash cheque on the account for that or any other significant sum.

Mr Ahern said that since 1992, when Mr Haughey ceased to be Taoiseach, Fianna Fail had sought to overcome deficiencies in the operation of the leader's allowance account. However, he stressed that under the 1938 legislation - amended in 1973 - pertaining to the allowance, "there was no obligation to do other than what we did".

Mr Ahern said the account was a busy one and between February 1984 and February 1992 a total of 1,615 cheques was drawn on it. The vast majority of these would have been signed both by the Taoiseach and Mr Haughey as the third signatory, Mr Ray MacSharry, did not sign any cheques after 1989 when he became European commissioner.

In the same period, 1984-1992, lodgements to the account totalled approximately £1,520,000, while the total amount received from the Department of Finance in respect of the leader's allowance amounted to approximately £1,050,000.

Mr Ahern said: "It was my belief that from time to time the account had to be topped up from contributions from outside." However, he was never privy to any of the details. He said money had been transferred from the general Fianna Fail account to the leader's account when shortfalls occurred, adding that such a "crossing between the party leader's account and the [Fianna Fail] account still occurs to this day".

The Taoiseach said he was unaware that money raised for the late Mr Brian Lenihan's medical treatment had gone into the leader's allowance account, or that some of the medical bills were paid from it. He said he had no recollection of Ms Eileen Foy, the account administrator, bringing cheques relating to Mr Lenihan's medical bills to his attention, although had she done so he would willingly have signed them.

"Of course, I knew that there was an effort being made by members of the party to assist in the medical treatment for Mr Lenihan, but precisely how that was done I was not aware."

As well as being questioned on the £25,000 cash cheque, the Taoiseach was asked to explain how he came to sign six other cheques drawn on the account in 1991. Three of the cheques, dated April 4th, September 11th and September 18th, were made out to cash for the sums of £5,000, £10,000 and £7,500 respectively.

Two - for £8,332.32 and £12,914.50 - were drawn on the account on February 4th and 12th respectively and made out to AIB, while the sixth, for £5,750, was drawn on September 26th and made out to Celtic Helicopters.

Mr Ahern said he had no recollection of signing any of the cheques. The only logical conclusion was that they had been pre-signed by him when blank.

He said the practice of pre-signing cheques had been introduced for administrative convenience. He stressed "there was no evidence of any irregularity applying to the use made of cheques which were drawn on the account and which were pre-signed".

The Taoiseach said the motivation for changing the operation of the leader's allowance account after Mr Haughey ceased to be Taoiseach was to control expenditure rather than to stop the practice of pre-signing cheques.

"In 1992, we had the difficulty that the party wasn't exactly in a very good financial position, and we were trying to control our expenditure as best we could, and to make sure that whatever resources we had were efficiently used and controlled in a way that we would know monthly how we were doing." The biggest flaw identified in the old system, he said, was the absence of an external audit, although that was not at that time in breach of the law.

The auditing of accounts by an outside agency was "a modern-day imperative" for any organisation. "It removes the risk, however likely or unlikely, of anything untoward happening or any collateral use of funds," he said.

Counsel for the tribunal, Mr John Coughlan SC, asked if it was the case that any cheque made out to £25,000 in cash "would jump up and hit any accountant immediately?" Mr Ahern replied: "Straight away."

The Taoiseach was later asked to explain a number of substantial round-sum cheques drawn on the account. In 1986, for example, £75,000 in round sums, or about 40 per cent of the leader's allowance for that year, was withdrawn.

Mr Ahern said he believed these related to payments to creditors' accounts, noting that "regular enough" the party would have found itself behind on such payments. However, he stressed any such payments would have been made out to the creditor rather than to cash. He noted that since he became Taoiseach the biggest cash cheque he had issued on the account was for about £1,000.

Mr Ahern was also asked to comment on his statement to the Dail on September 10th, 1997, on the setting up of the tribunal.

He said that before he became Taoiseach members of the Opposition had raised the issue of the leader's allowance account and he thought he should check with Ms Foy whether her recollection of its operation was the same as his.

Mr Ahern said that on July 18th 1997, shortly after being appointed Taoiseach, he invited Ms Foy to meet him at his office. They did not go through the particular transactions being investigated by the tribunal, which he said he only learned about in August 1998, but they discussed the operation of the account and "our recollections were the same".

In the Dail, Mr Ahern said that having spoken to Ms Foy he was satisfied the account "was used for bona fide party purposes", adding "there was no surplus and no misappropriation".

Mr Ahern noted there were no statutory regulations regarding the leader's allowance. The 1938 legislation decreed that "the leaders will naturally decide in what manner the money is going to be dispersed" and that it was not the duty of the Minister for Finance to interfere with that discretion.

But the allowance was always viewed as the property of the party rather than its leader, Mr Ahern said. It was "understood the money would have been disbursed for the benefit of Fianna Fail".