For years during the 1970s Charles Haughey wrote cheques for approximately £12,000 per month on a number of overdrawn AIB accounts and the bank did next to nothing about it. By the end of the decade Mr Haughey's debt to the bank exceeded £1 million.
All day yesterday counsel for the Moriarty tribunal, Mr John Coughlan, read AIB documents concerning Mr Haughey into record. The material directly contradicts Mr Haughey's evidence to the McCracken tribunal that he had not dealt with his personal finances since the early 1960s, when the late Mr Des Traynor took over.
An AIB memo outlined the history of Mr Haughey's affairs between September 1971 and August 1974. In September 1971 he had debts of £255,000 with the bank. The amount went up and down as he borrowed money from other banks or sold land to Cement Roadstone. By the end of the period the debt was approximately £170,000. Mr Haughey, who was dismissed from the cabinet in May 1970 as a result of the arms crisis, was a backbencher. His income was £7,000 per annum.
In a memo of February 1974 the bank referred to Mr Haughey's "proclivity towards making arbitrary, unauthorised drawings on his accounts".
Nevertheless, it allowed a new deal with Mr Haughey in relation to his overdraft facilities. By June 1974 the bank was "appalled" that Mr Haughey had overspent once again. (He had run up a debt of £31,486 on an account for which he was given an overdraft facility of £20,000.) Mr Haughey's attitude "cannot be tolerated", his branch, AIB Dame Street, was told by the Bank's regional general manager.
In a meeting in July 1974, Mr Haughey told the then regional general manager, Mr J.J. McAuliffe, that he "in effect found any restraint on his accounts unnecessary and galling". He went on to say he would clear the accounts through the sale of bloodstock and cattle.
The bank told him they wanted £30,000 in Deutsche Marks he had on deposit in Switzerland as a result of the sale of a showjumper. Mr Haughey said "he would give serious consideration to this".
A memo from the meeting continues: "In the course of the interview Mr Haughey said `I have no income' and this might be taken as support for the view held by the bank that his living expenses are huge and totally unrelated to his Dail salary and to income from farming and bloodstock breeding. It also emerged that he has a building site in Wexford and other pieces of property elsewhere in family and trust names and that he intends to build an elaborate house on Inishvickvillane."
Mr Haughey kept making promises, not keeping them, and building up greater debts. In January 1975, Mr Haughey told AIB his then borrowings from Northern Bank Finance Corporation (NBFC) were £220,000. This debt was charged against his stud farm at Rath, Co Meath. In April 1975, AIB sanctioned further limited overdraft facilities to Mr Haughey. By September, the bank was recommending that he seek finance from ACC bank, or get more from NBFC. "Mr Haughey said he would be loath to approach ACC in view of the fact that Mr Collins had affiliations with the Fine Gael Party." In November, Mr Haughey said he had no debts bar those owed to NBFC and AIB, though the bank noted it knew he had debts with ACC. A memo of March 1975 recorded what Mr Haughey had said were his assets: Abbeville, with 250 acres, cost £140,000 in 1968/ 9, worth £800,000; Contents worth £50,000; The Rath stud farm: £200,000; Houses and lands in Co Sligo, Co Kerry, Artane, Dublin, livestock and bloodstock; £220,000. He had staff and overhead costs of £32,600 per annum.
In September 1976, during an interview with the late Mr Michael Phelan, branch manager, Dame Street, Mr Haughey "mentioned that the bank did not make use of his influential position and he indicated that he would be more than willing to assist the bank in directing new business, etc. He intends to devote a further 10 years to politics."
In October 1976, Mr Haughey met three senior bank officials. An official "formally demanded Mr Haughey hand in his cheque books forthwith. At this point Mr Haughey became quite vicious and told Mr Denvir that `he would not give up his cheque book as he had to live', and `that we were dealing with an adult and no banker would talk to him [Mr Haughey] in this manner'. Furthermore he stated that if any drastic action were taken he could be a `very troublesome adversary'."
In December 1976, when his debts exceeded £300,000, Mr Haughey wrote to his bank manager, Mr Michael Phelan, and said he would require "accommodation of up to £350,000 for another two years". The bank acceded to the request.
By June 1978, the debt had risen to £580,000. The bank considered this "unacceptable". However, Mr G.A. O'Donnell, advances manager, in a letter to the Dame Street manager, added: "We accept that due to the change in the political climate in the past year it has not been possible for you to tackle the situation as you or the bank would wish." Fianna Fail had been returned to power in June 1977 and Mr Haughey had been appointed Minister for Health and Social Welfare. As a result, Mr Haughey stopped going to the bank to discuss his business. The bank manager had to seek appointments with Mr Haughey at his ministerial offices, and he was often stood up. In July 1979, he advised the banks that it was his considered opinion "that this client does not believe the bank will force a confrontation with him because of his [Mr Haughey's] position". The bank recommended to Mr Haughey that "he might consider a land deal under some guise with a member of the Gallagher family'. This was a reference to a plan whereby Mr Patrick Gallagher would buy some Kinsealy land from Mr Haughey and it would be held in a trust. Mr Haughey was "paranoaic" about any such sale being disclosed, bank documentation noted.
By June 1979, Mr Haughey was offering £400,000 in full and final settlement. A note from August 1979 shows his debt at £913,000. "Mr Haughey fails to see the precarious position he is in and obviously feels that his political influence will outweigh any other consideration by the bank," AIB noted. By September 1979, Mr Haughey appeared "more anxious than previously to get to grips with his affairs". He authorised the late Mr Des Traynor to discuss the situation with the bank. On September 9th, Mr Haughey telephoned his branch manager and said he wanted to handle "this dangerous situation" once and for all.
Meetings occurred, with the bankers going to see Mr Haughey in his ministerial office. At one such meeting in September, the bankers complained that he had spent £31,776 between July and September, despite promising that his drawings would be minimal. Mr Phelan noted: "He seemed very surprised by the high figure of the drawings and implied that Abbeville had gone mad buying unnecessarily." At this stage his debt was in excess of £1 million.
Despite the difficult relationship between Mr Haughey and his bank manager, they seemed to have remained civil. On December 11th, 1979 Mr Phelan wrote to "An Taoiseach, Mr Charles J. Haughey". Mr Phelan said it gave him "great pleasure" to convey his warmest congratulations. "To say the task you have taken on is daunting is an understatement but I have every faith in your ability to succeed in restoring confidence in this great little nation."
Meanwhile the negotiations continued. Mr Traynor met Mr Phelan and Mr Michael Kennedy, regional manager, on December 17th. Mr Traynor said that "for political reasons" the people who had wished to get involved in the Gallagher plan were backing out. They feared their "good names being dragged through the Dail". Mr Traynor offered £600,000 in full and final settlement. The bank rejected the offer.
A further meeting took place in January. The then chief executive of the bank, Mr Paddy O'Keeffe, became involved.
By January the deal was agreed and Mr Haughey's debt, which was then £1.143 million, was settled with a payment of £750,000.
The money came from a Guinness & Mahon account in the name of the late Mr Traynor, though the origin of the money is not clear.