Haughey link with Desmond longstanding

But for a twist of fate, Dermot Desmond's most significant political relationship could have been with a different ex-Taoiseach…

But for a twist of fate, Dermot Desmond's most significant political relationship could have been with a different ex-Taoiseach.

In 1985, the young, talented and then apparently apolitical financier approached the Minister for Labour, Ruairi Quinn, with a plan. He said the Government could generate hundreds of wellpaid jobs by creating a financial services centre in Dublin. Mr Quinn thought the idea just might work and passed it on to his colleague, the Minister for Industry and Commerce, John Bruton.

The future Taoiseach, however, shelved the notion, and Mr Desmond turned to the Taoiseach-inwaiting, Charles Haughey. "I first came into contact with him when he put forward the idea," Mr Haughey later told the Dail, "and on return to Government set about establishing it."

Mr Desmond's plan for the Financial Services Centre was the first contact between the two men and the former Taoiseach was to

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make it a reality. In an RTE interview in 1991, Mr Haughey said Mr Desmond was "a man for whom I have a great admiration" and credited him with the "brilliant" idea of the IFSC.

In 1990, Mr Desmond paid £30.3 million for the south block in the IFSC. He said at the time the deal was no different to that struck with AIB and Bank of Ireland for the purchase of their blocks. His statement yesterday said he lost £6.2 million on the site.

From his schooldays at Good Counsel College, New Ross, to the day he arrived in Afghanistan to work for the World Bank, there was little doubt about Mr Desmond's talent. In Kabul, he was quickly promoted to project lea der and said later that only for the untimely Russian invasion, he might have stayed there.

Instead, he came home and, aged just 31, established National City Brokers (NCB). Three years later, in 1984, the company acquired stockbrokers Dillon and Waldron. It was the first time in more than 200 years that anyone had managed to break into Dublin's stockbroker business. Mr Desmond and Mr Haughey got on well and by 1986 they were meeting regularly, with the businessman advising the opposition leader on a range of financial is sues. After Mr Haughey's re-election as Taoiseach, the contacts continued. NCB was getting quite a bit of business from the State, which displeased its competitors and led to some political questioning of the relationship between Mr Haughey and Mr Desmond.

Early in 1990, Mr Mervyn Taylor TD said the Department of Energy had paid NCB "handsomely, probably over-handsomely" for a consultancy report.

NCB also acted as consultants to Bord na Mona, ESB and Tele com Eireann and played central roles in the Greencore and Irish Life flotations. Mr Desmond was appointed to the board of Aer Rianta - later becoming its chairman - and was made a trustee of the Chester Beatty Library.

In 1991, a controversy arose over the purchase by Telecom Eireann of the Johnston Mooney & O'Brien building in Ballsbridge. Mr Desmond was identified as a key figure in a maze of financial transactions which eventually saw the building sold at an allegedly inflated price. An investigation began.

Those who made allegations that he had become too close to Mr Haughey felt vindicated when a confidential letter appeared later that year. Written by Mr Desmond to the head of Pernod Ricard - the company NCB had assisted in the purchase of Irish Distillers - it contained embarras sing references to NCB's political clout. "We orchestrated entirely the successful campaign to get a positive tax opinion from the Revenue Commissioners, which involved using personal contacts at the highest level," he wrote.

Further on in the letter, he explained: "We used up a large proportion of the favours we can call upon from our political contacts - and no doubt we will pay a price on the other side." In 1993, the Telecom Eireann investigation reported that Mr Desmond was the main beneficiary in the series of transactions, an allegation he immediately rejected. Throughout the furore which these affairs generated, Mr Haughey insisted he had extended to NCB no special privileges, describing the claims in the Pernod letter as "absurd".

By 1994, with NCB now highly successful and the second-largest brokerage in the Republic, Mr Desmond sold the company to Ulster Bank for more than £25 million. Since then, he has developed a wide range of investments, from Celtic football club and Radio Ireland to London City Airport, some successful technology companies and the Sandy Lane hotel in Barbados.

He is one of the richest men in Ireland and is thought to have made significant profits on the currency markets personally and through his company, Internation al Investments and Underwriting, which operates from the IFSC.