A lending institution closely associated with property developer Mr Patrick Gallagher never sought the repayment of two loans totalling £8,500 taken out by Mr Charles Haughey in 1976, the tribunal heard.
The now dissolved Merchant Banking Ltd, of which a number of members of the Gallagher family were directors, sought no security for the loans, of £6,000 and £2,500, except a promissory note.
Counsel for the tribunal, Mr Jerry Healy, said these were among a number of unusual features about the loans. Others were that the loans were repaid only after the liquidation of the bank in 1982, by which time it had come under the control of the courts, and that they were repaid with money drawn from one of Mr Haughey's overdrawn current accounts in Guinness & Mahon.
By the time the loans were repaid in 1982, the total owed, including interest at 18 per cent, was £23,226.01.
In an affidavit to the tribunal, Mr Gallagher admitted the loans contained "unusual features" and acknowledged "no demand was ever made" by Merchant Banking for their repayment.
He said he trusted Mr Haughey implicitly and never doubted him, adding that his faith was not misplaced as the loans were repaid in full in June 1982.
His recollection of the loans was somewhat vague, but from what he remembered Mr Haughey came into his office in 1976 and informed him that he needed funds "to build a house for his daughter Eimear at Kilmuckridge, Co Wexford".
Mr Healy said Mr Haughey had to date declined to comment on the two advances. The tribunal would seek to establish whether there was any "commercial reality" to them.
The joint liquidator of Merchant Banking Ltd, Mr Patrick Shortall, confirmed to the tribunal that there were two loans outstanding when Merchant Banking Ltd went into liquidation in 1982 and that no securities were sought and no demands for payment were made before liquidation.
The first loan for £2,500 was in Mr Haughey's name and the second, for £6,000, was in the name of Larchfield Securities, of which Mr Haughey and Mrs Maureen Haughey were jointly listed as directors.
When Mr Shortall examined the bank's accounts Mr Haughey owed £6,541.78, including interest on the loan, and Larchfield Securities owed £11,836.74 including interest.
The liquidator made demands for payment of those loans in May 1982, and they were paid in full in June through Mr Des Traynor, Mr Haughey's personal financial adviser. The tribunal was also told about a loan of £150,000 Mr Haughey received in December 1980 from Northern Bank Finance Corporation, now known as National Irish Investment Bank.
Mr John Trethowan, a senior manager of National Irish Bank Ltd, told the tribunal the bank was unaware of the purpose for which the loan was advanced and was unaware of the source of the repayment of the principal or interest.