The former Taoiseach, Dr Garret FitzGerald, has confirmed that he owned a second house when AIB wrote off £135,000 in bad debts, but says the property represented negative equity at the time.
The value of the property was probably slightly less than the mortgage owed on it and was of "no value" to the bank. The house was bought in February 1992 for £47,000 and the mortgage was £42,000. Dr FitzGerald had by then retired from public office.
Raising a mortgage with the Ansbacher Bank - subsequently taken over by Anglo-Irish Bank - he purchased the second house, at St Alban's Road, off South Circular Road, Dublin, for his niece, who has a life tenancy there. That house is now owned by his son, Mark, who also purchased Dr FitzGerald's primary residence after the former Taoiseach ended up with huge debts after the collapse of the flotation of Guinness Peat Aviation.
Dr FitzGerald sold his home at Palmerston Road, Dublin, to his son and paid off some of the loans to AIB, which then wrote off £135,000; Ansbacher wrote off £40,000.
Dr FitzGerald told The Irish Times yesterday that the two banks knew about his second house but, because of the size of the mortgage and the then value of the property, "it was a non-issue".
Responding to a statement by Mr Dick Roche, the Fianna Fail TD, that the taxpayer was still paying £2 million a year for the cost of the bail-out of AIB over the ICI insurance collapse, Dr FitzGerald said he had been under the impression that the bank would repay the entire cost of the salvage plan.
According to Mr Roche, 9 per cent of the bail-out was borne by the taxpayer. Dr FitzGerald had later suggested that the taxpayer would be protected from carrying any part of the burden, he said, adding: "That statement is not true. The taxpayer is still carrying the cost of the interest-free loan of £32 million which Dr FitzGerald's government made to AIB."
Dr FitzGerald said: "At the time we did our best to arrange that the money would be paid back. If a problem arose after that, I was not involved. There was a further development, but what it was I do not know."