Bank official unaware that £10,000 went to councillor

A PAYMENT of £10,000 made to former councillor Colm McGrath by Cork developer Owen O'Callaghan was explained to the bank as expenses to hire halls and provide sandwiches and tea ladies at public meetings about the Quarryvale development, a former banker told the Mahon tribunal yesterday.

James Donagh, a former assistant manager at AIB, said he was unaware that the money, paid out in October 1991, actually went to a councillor at Dublin City Council who tabled a motion to rezone the Quarryvale development, now the Liffey Valley Shopping Centre.

Mr Donagh was involved with the account from 1990 to 1992. AIB had taken a 20 per cent share in the project after Luton-based developer Tom Gilmartin ran into financial difficulties.

Mr O'Callaghan took a 40 per cent stake and Mr Gilmartin held the remaining 40 per cent.

Mr Donagh said that Mr O'Callaghan's business partner, John Deane, told him that a number of meetings had been held with councillors and the public to appraise them of the plans for Quarryvale.

He said Mr Deane had told him that the £10,000 covered expenses incurred by Mr O'Callaghan, including the hire of community halls, sandwiches which were laid on and tea ladies.

"Owen had bought rounds of drinks and things like that afterwards for people and he hadn't got receipts for every little bit," Mr Donagh said.

He said he did not dwell too much on the matter.

Counsel for the tribunal Pat Quinn SC said Mr O'Callaghan's cheque stub showed that the £10,000 was a payment to Mr McGrath and Mr O'Callaghan had confirmed that.

"That was not advised to me," Mr Donagh said.

He did not recall at all a second payment of £10,000 made in September 1991 and which the tribunal had been unable to trace.

The tribunal also heard that Mr Gilmartin had said that in December 1992 he had threatened the bank that he would go to the press with allegations of blackmail and corruption to prevent a vote to cap the zoning of the development at Dublin County Council in December.

Last Friday, Dave McGrath, director of corporate banking at AIB, told the tribunal that he could not answer questions about the allegations until he saw a note bank official Mary Basquille had written about the contents of the threatening phone call.

However, yesterday he said that, having searched the file, he accepted no such note existed. He said he had confused what he read in fellow banker Eddie Kay's evidence to the tribunal with AIB file notes.

Tribunal judge Gerald Keys remarked that it was "somewhat unusual" that Ms Basquille did not make a note of this conversation for the file.

He asked Mr McGrath what he would have done if allegations of corruption had been made.

"I certainly would have gone to our legal adviser," Mr McGrath said.

He said that the bank would have possibly gone to the planning authorities, "possibly the government and possibly the gardaí".

Judge Keys asked him if the bank would have appreciated the consequences of improper conduct in relation to the zoning and if it could have undermined the security of the bank and its assets.

"The soundness of the credit would dim into insignificance when it comes to the reputation of the bank," Mr McGrath replied.

Counsel for the tribunal Patricia Dillon SC asked Mr McGrath if he recalled articles about planning corruption written by Frank McDonald in The Irish Timesin July 1993. She pointed out that bank official Michael O'Farrell had made a note about the articles for the bank files on July 26th.

She said AIB must have had "a very profound interest in the article in The Irish Times".

"We had a profound interest in ensuring we got our loan repaid," Mr McGrath said.