Conroy made tax fraud charges in `row' with Murphy

 

It took a good deal of persuasion to convince Mr Joseph Murphy snr to allow his legal team to negotiate an out-of-court settlement with the man who had made allegations against him of massive tax fraud, the Flood tribunal was told yesterday.

Mr Murphy did not want a settlement with Mr Liam Conroy, the former chief executive of JMSE, Mr Murphy's legal adviser, Mr Christopher Oakley, told the tribunal. "He wanted revenge."

Mr Conroy had intimated in affidavits that the founder of the Murphy group "had engaged in personal wrongdoing", as Mr Des O'Neill SC, for the tribunal, put it, "particularly in relation to his tax affairs in various jurisdictions".

The former chief executive had alleged that Mr Murphy had told him how he had avoided tax and exchange controls in the early 1970s and had breached the conditions of his "residency status" as a tax exile domiciled in Guernsey.

Mr Conroy had "thrown in everything, including the kitchen sink" to bolster his case, Mr Oakley told the tribunal.

All these matters were extraneous to the main issue: Mr Conroy was engaged in a legal battle with Mr Murphy who was attempting to win back from him control of the family trust fund set up 21 years earlier, in 1968.

Mr Oakley said Mr Murphy claimed his objective had always been to set up a trust for the benefit of his own family. He was emphatic that it was a "Murphy" family trust in which he would never have contemplated including a non-family member.

Mr Conroy, however, had come to exercise a degree of influence over the group and the professional trustees, Mr Murphy had informed his solicitor.

Mr Conroy, who had been a part-time executive with the Murphy group at first, would not have accepted the full-time post of chief executive without "this tax-efficient award", suggested Mr O'Neill.

The key issue, responded Mr Oakley, was whether he needed to become a beneficiary to have the degree of benefit he claimed he was entitled to under his service contract.

At the outset, Mr Murphy had asked the trustees to make his wife and children beneficiaries under the trust, and they had not done so.

Self-made millionaires setting trusts had a great tendency to accept the word of professional experts that their wishes would be carried out, said Mr Oakley, whose own legal speciality is trust law. Practice was often very different.

A decision taken by the Isle of Man Chancery Division which invalidated a sub-trust set up by Mr Conroy in effect established Mr Murphy's wife and family as beneficiaries under the Murphy Trust.

This decision was something of a body-blow to Mr Conroy, whose own credibility had been severely dented, not least because of wrongful claims in his curriculum vitae that were revealed at this time, said Mr Oakley.

Despite the fact that litigation between Mr Conroy and the Murphys was to continue until 1990, it was clear that the Isle of Man judgment was a landmark decision and that Mr Conroy wanted to settle.

A final consensus was reached in August 1990 under which Mr Conroy was paid a settlement figure of £625,000, but only after Mr Murphy snr was persuaded that it would be futile to pursue the former chief executive further through the courts as he would be unlikely to recover his costs.

By this time, said Mr Oakley, the former chief executive had emerged as a "Walter Mitty" character, in some financial difficulty.