Payment at heart of Lowry tax trial would have been of great interest to Moriarty tribunal

The payment at the heart of the Michael Lowry tax trial would have been been of great interest to the Moriarty tribunal.

The tribunal investigated Lowry's role in the winning by businessman Denis O'Brien's Esat Digifone of the competition for the State's first privately-held mobile phone licence. Yet it never learned about the Stg £248,624 payment made by a Finnish refrigeration company, Norpe OY, to Lowry's refrigeration company Garuda in August 2002.

Instead of being banked by the Irish company, the money went to an Isle of Man entity called the Glebe Trust, which at the time was owned by Northern Ireland land agent Kevin Phelan.

In September 2004, when the tribunal was investigating links between Lowry and O’Brien and a number of English property transactions, Phelan secretly recorded a conversation he had with Lowry about the Norpe payment.

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“If that comes out I’m f-cked”, Lowry said, referring to the fact that the £248,642 payment had gone to Glebe.

While the tax trial just ended went into great detail about how the Norpe payment was treated for tax purposes by Lowry and Garuda, it was not at all concerned about Glebe or the relationship between it and one of the greatest scandals in Irish political and corporate history.

Glebe held shares in a company called Westferry, that in turn owned the Doncaster Rovers football stadium. Phelan thought there was money to be made from knocking down the stadium and developing the site. The Westferry shares were later transferred to an Isle of Man trust linked to O’Brien, which still owns Westferry.

“As far as I’m concerned that 250 represented my selling my Glebe Trust shares in Westferry,” Phelan said, during his secretly-recorded conversation with Lowry.

Property deals

The Doncaster investment was one of a number of English property deals in the late 1990s which the tribunal found involved efforts by O’Brien to confer a financial benefit to Lowry (Lowry’s role in the £4.3 million Doncaster deal fell away for reasons that are unclear, according to the tribunal.)

Phelan was involved as agent in all the deals.The tribunal found that payments later made to him by Lowry and O’Brien were made so he would not “undermine” false evidence that had been given to the tribunal.

In 2016, a High Court judge summarised the reason for the payments as “the bribing of a potential witness”.

The tribunal’s findings were in relation to a £65,000 payment made by Lowry and a £150,000 payment made by O’Brien to Phelan.

The parties involved said the payments were the settlement of fees due to Phelan from the land deals. The tribunal said the “predominant purpose” of the payments was to ensure Phelan would not undermine false evidence that had been given to the tribunal. Phelan never gave evidence to the tribunal.

An accountant called Denis O’Connor, who acted for Lowry and was a former partner with BBT, the company that audited Garuda’s accounts, was involved in negotiating the payments to Phelan that were made both by Lowry and O’Brien.

The payments led, the tribunal found, to a “choreographed falsehood in which Mr Kevin Phelan would not have agreed to participate but for the payment of those fees”.

The £65,000 payment was made in April 2002, and the £150,000 was paid in August 2002.

Financial accounts

The Norpe payment, which was commission due to Garuda from the Finnish company but which went to Glebe, was paid in September 2002. Lowry has not said why the money was paid. It was eventually recorded in Garuda’s financial accounts in 2006.

In 2007, in a letter to the Moriarty tribunal, Lowry said the £67,000 payment was the only payment he made to Phelan.

One of the apparent issues between Lowry and Phelan at the time of their 2004 phone conversation was Phelan’s annoyance at what others, including O’Connor, were telling the tribunal about the payments, which Phelan said were fees due to him from the land deals. “There’s nobody trying to piss on you,” Lowry told him.

Lowry and O’Brien have rejected the tribunal’s findings.

The fact of the Norpe payment and its going to the Glebe Trust in the Isle of Man first became publicly known following the publication of transcripts of the Lowry-Phelan conversation in the Sunday Independent in 2013.

By this stage O'Brien was the majority shareholder in the Independent group. However, the Sunday title, then edited by Anne Harris, was notable for publishing stories that might not be viewed positively by the group's largest shareholder. The so-called Lowry tapes were given to the newspaper by Phelan.

Investigations

Among the many extraordinary aspects of the Norpe payment was that it had not been known about before 2013.

Since he had to resign from cabinet in disgrace in 1996, Lowry and Garuda have been the focus of numerous investigations by tribunals, authorised officers and the Revenue. In 2007 a €1.45 million settlement was concluded by Lowry and his company.

"This has been rambling on for 11 years," he told The Irish Times in the wake of the settlement. "I am relieved and delighted that this chapter is closed. It has been a very stressful and expensive period."

He was wrong about the chapter being closed.