The chairman of Aer Lingus and Greencore, Mr Bernard Cahill, was phoned by Mr Charles Haughey in 1988 and asked to chair the board of Feltrim Mining, a company set up by the former Taoiseach's son, Conor, Mr Cahill told the Moriarty tribunal yesterday.
Two key businessmen with years of experience in the exploration industry, Mr James Stafford and Mr Emmet O'Connell, also came on board, Mr Cahill said. And there was a "well-thought-out business plan", based on the assessment of industry experts, which featured details of where proposed explorations would take place.
The shares doubled from 40p to 80p on the day the company was floated, April 1st 1988, which led Mr John Coughlan SC, for the tribunal, to comment wryly that it would have been a good day to get in and out - a reference to the company's subsequent performance.
Mr Cahill was chairman of the exploration company from its incorporation and flotation until it was taken over in 1993, when Mr Haughey's involvement with it ceased also.
By 1990, Feltrim was showing a deficit of £2 million on the profit and loss account. This widened to £3.5 million by 1991.
Mr Conor Haughey, the managing director and sole full-time executive, approached Mr Der mot Desmond, of National City Brokers, who came up with loans totalling £55,000, Mr Cahill said. These loans were eventually converted into shares.
Mr Cahill had purchased 10,000 shares in Feltrim in March 1990 for £6,666.32 at the time of a merger with Connery Minerals, he told Mr Coughlan.
In 1992 he made a loan to the company of £6,400, which was converted into 24,000 5p shares. That loan was crucial to securing the patent on Feltrim's sole asset, the development of an anti-toxic leaching process developed in conjunction with the Dublin Institute of Technology at Kevin Street.
The importance of the leaching process stemmed from the fact that it obviated the need to use cyanide in the extraction of gold, silver and other minerals. As such, it was seen to have significant environmental potential for worldwide exploration.
"Otherwise, the company would have lost the rights to this environmentally friendly development", Mr Cahill said. "That was the main asset of the company, and still is its main asset."
Mr Desmond had confirmed for the tribunal, said Mr Coughlan, that he had made the £55,000 loans to Feltrim and had also given guarantees to AIB to support borrowings which the company wished to make. Yet the minutes of the board meetings did not record that a loan had been made by Mr Desmond.
Mr Coughlan: "There was no sensitivity about that?"
"Nothing whatsoever", replied Mr Cahill.
As chairman, he was aware that money was coming from Mr Desmond and Mr John Stakelum, who had come up with a loan of £15,000. And there were supporting bank statements.
Counsel asked whether there had been any discussion at board level of the terms applicable to those loans. Mr Cahill could not remember any. The company was hoping to trade out of the situation it found itself in: "All the shareholders did well in the end, when the company changed hands [in 1993], due mainly to the leaching process."
Mr Mike Murphy, an insurance broker, who was the only main creditor not to agree to have his company's debt of £5,167 converted into shares, said that he had no regrets about getting out when the company was taken over and he saw the chance of recouping his money. At that stage losses were approaching £4 million: "That's how I saw it. You get one opportunity in life - it had never happened like that before - and I took it."