Report of the Tribunal of Inquiry into Payments to Politicians and Related Matters Part II Volume 1 Tribunal of Inquiry (Payments to Messrs Charles Haughey and Michael Lowry) Appointed by instrument of An Taoiseach dated the 26th day of September 1997 Sole Member: The Honourable Mr. Justice Michael Moriarty March, 2011 Mr Kieran C o u g h l a r i Clerk of the Dail Dail Eireann Leinster H o u s e Kildare Street Dublin 2 RE: T R I B U N A L S OF INQUIRY (EVIDENCE) ACT, 1921 A N D 1979 (NO. 2) ORDER 1997 D e a r Mr C o u g h l a n Tribunal Office Stale Apartments The Upper Yard Dublin Castle Dublin 2 Tel: 01-6705666 Fax: 01-6705490 I e n c l o s e the S e c o n d Part of m y Report as S o l e M e m b e r of the T r i b u n a l appointed by O r d e r m a d e on the 26 th September, 1997, by the then T a o i s e a c h , pursuant to resolutions of Dail Eireann and S e a n a d Eireann p a s s e d o n the 11th and 18th d a y s of September, 1997, respectively, to inquire into any p a y m e n t s m a d e to certain politicians and associated matters in a c c o r d a n c e with the T e r m s of R e f e r e n c e contained in the said Order. A s y o u will be a w a r e , I a m required o n foot of provisions of the said O r d e r to report to the Clerk of the Dail and, as in the c a s e of the First Part of m y Report, I have also furnished the S e c o n d Part to the T a o i s e a c h , and have written in similar terms to him. T h e S e c o n d Part of the Report c o m p r i s e s V o l u m e s 1 and 2, the A p p e n d i c e s to w h i c h are contained within those respective V o l u m e s . In a c c o r d a n c e with a decision I took approximately five months ago, in the interests of security and e c o n o m y , this S e c o n d Part is mainly published in digital form, and, as now greatly facilitated by 21 st century technology, in a form that I believe is more accessible and readily available for distribution to m e m b e r s of the Oireachtas, to interested parties and to the public at large. A c c o r d i n g l y , whilst a very few printed c o p i e s are also o n this o c c a s i o n delivered, for laying before the H o u s e s of the Oireachtas, as n e c e s s a r y , please note that the S e c o n d Part is, at present, only o t h e r w i s e available in digital form, o n electronic disc, a n d also on the T r i b u n a l ' s w e b s i t e . In d u e c o u r s e , it will be r e p r o d u c e d in hard c o p y format. A p a r t f r o m time factors in general, that a limited n u m b e r of affected p e r s o n s or entities h a v e s o u g h t to d e l a y further or prevent publication, a n d t h e r e b y thwart the u n a n i m o u s e x p r e s s e d will of the O i r e a c h t a s , is a m o n g the s e v e r a l matters a d d r e s s e d in t h e s e p a g e s . P l e a s e note that this c o n c l u d e s the substantive inquiries of this Tribunal. Tribunal of Inquiry (Payments to Messrs Charles Haughey and Michael Lowry) Appointed by instrument of An Taoiseach dated the 26th day of September 1997 Sole Member: The Honourable Mr. Justice Michael Moriarty March, 2011 Mr E n d a K e n n y T D Taoiseach G o v e r n m e n t Buildings U p p e r Merrion Street Dublin 2 RE: T R I B U N A L S OF INQUIRY (EVIDENCE) ACT, 1921 A N D 1979 (NO. 2) ORDER 1997 Dear T a o i s e a c h Tribunal Office State Apartments The Upper Yard Dublin Castle Dublin 2 Tel: 01-6705666 Fax: 01-6705490 I e n c l o s e the s e c o n d Part of m y Report as S o l e M e m b e r of the Tribunal appointed by O r d e r m a d e o n the 26 th d a y of S e p t e m b e r , 1997, by Mr. Bertie A h e r n , T D , the then T a o i s e a c h , pursuant to resolutions of Dail Eireann and S e a n a d Eireann p a s s e d on the 11th and 18 th d a y s of September, 1997, respectively, to inquire into a n y p a y m e n t s m a d e to certain politicians and associated matters in a c c o r d a n c e with the T e r m s of R e f e r e n c e contained in the said O r d e r . A s y o u will be aware, I a m required o n foot of provisions of the said O r d e r to report to the Clerk of the Dail and, as in the c a s e of the First Part of m y Report, I have also furnished the S e c o n d Part to the Clerk of the Dail, Mr. Kieran C o u g h l a n , and written in similar terms to him. T h e S e c o n d Part of the Report comprises V o l u m e s 1 and 2, the A p p e n d i c e s to w h i c h are contained within those respective V o l u m e s . In a c c o r d a n c e with a decision I took approximately five months ago, in the interests of security and e c o n o m y , the S e c o n d Part is mainly published in digital form, and, as now greatly facilitated by 21 st C e n t u r y technology, in a form that I believe is more accessible and readily available for distribution to m e m b e r s of the Oireachtas, to interested parties and to the public at large. A c c o r d i n g l y , whilst a v e r y few printed copies are also on this o c c a s i o n delivered, for laying before the H o u s e s of the Oireachtas, as n e c e s s a r y , please note that the S e c o n d Part is, at present, o n l y o t h e r w i s e available in digital form, o n electronic disc, a n d also o n the T r i b u n a l ' s website. In d u e c o u r s e , it will be r e p r o d u c e d in hard c o p y format. A p a r t from time factors in g e n e r a l , that a limited n u m b e r of affected p e r s o n s or entities h a v e s o u g h t to d e l a y further or prevent publication, a n d t h e r e b y thwart the u n a n i m o u s e x p r e s s e d will of the O i r e a c h t a s , is a m o n g the s e v e r a l matters a d d r e s s e d in t h e s e p a g e s . P l e a s e note that this c o n c l u d e s the substantive inquiries of this Tribunal. Terms of Reference Page | ix Tribunals of Inquiry (Evidence) Acts, 1921 and 1979 (No. 2) Order, 1997 W H E R E A S a Resolution in the following terms w a s passed by Dail Eireann on the 11 th day of S e p t e m b e r , 1997 and by S e a n a d Eireann on the 18 th day of September, 1997. "Bearing in mind serious public concern arising f r o m the Report of the Tribunal of Inquiry (Dunnes Payments) published on 25 August, 1997, which established that irregular payments were made to and benefits conferred on certain persons who were members o f t h e Houses o f t h e Oireachtas between 1 January, 1986, and 3 1 December, 1996. A n d noting that the said Tribunal established that money was held on deposit in certain Irish banks by offshore banks in m e m o r a n d u m accounts ("the A n s b a c h e r accounts") for the benefit of Irish residents including Mr Charles Haughey, (the history of which deposits is set out in Chapter 6 of the Report of the said Tribunal), A n d noting further that the Dunnes Payments Tribunal was unable by reason of its terms of reference to investigate the source of the Ansbacher accounts, other than in respect of sums paid by certain persons referred to in the said terms of reference. Resolves that it is expedient that a Tribunal be established under the Tribunals of Inquiry (Evidence) Act, 1921, as adapted by or under s u b s e q u e n t enactments and the Tribunals of Inquiry (Evidence) ( A m e n d m e n t ) Act, 1979, to inquire urgently into and report to the Clerk of the Dail and make such findings and recommendations as it sees fit, in relation to the following definite matters of urgent public importance: (a) Whether any substantial payments were made, directly or indirectly, to Mr Charles Haughey (whether or not used to discharge monies or debts due by Mr Charles Haughey or due by any c o m p a n y with which he was associated or due by any connected person to Mr Charles Haughey within the meaning of the Ethics in Public Office Act, 1995 or discharged at his direction) during any period w h e n he held public office c o m m e n c i n g on 1 s t January, 1979 and thereafter up to the 31 s t December, 1996 in circumstances giving rise to a reasonable inference that the motive for making the payment was connected with any public office held by him or had the potential to influence the discharge o f s u c h office. The source of any money held in the A n s b a c h e r accounts for the benefit or in the name of Mr Charles Haughey or any other person who holds or has held Ministerial office, or in any other bank accounts discovered by the Tribunal to be for the benefit or in the name of Mr Haughey or for the benefit or in the name of a connected person within the meaning of the Ethics in Public Office Act, 1995, or for the benefit or in the name of any c o m p a n y owned or controlled by Mr Haughey. Whether any payment was made f r o m money held in any of the accounts referred to at (b) to any person who holds or has held public office. Whether Mr Charles Haughey did any act or made any decision in the course of his Ministerial offices, to confer any benefit on any person making a payment referred to in paragraph (a) or any person who was the source of money referred to in paragraph (b), or any other person in return for such payments being made or procured or directed any other person to do such an act or make such a decision. Whether any substantial payments were made directly or indirectly to Mr Michael Lowry (whether or not used to discharge monies or debts due by Mr Michael Lowry or due by any company with which he was associated or due by any connected person to Mr Michael Lowry within the meaning of the Ethics in Public Office Act, 1995 or discharged at his direction), during any period w h e n he held public office in circumstances giving rise to a reasonable inference REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - Part 2 (b) (c) (d) (e) Terms of Reference Page |x that the motive for making the payment was connected with any public office held by him or had the potential to influence the discharge of such office. (f) The source of any money held in the Bank of Ireland, Thurles branch, Thurles, Co. Tipperary, the Allied Irish Bank in the Channel Islands, the Allied Irish Banks, Dame Street, Dublin, the Bank of Ireland (I.O.M.) Limited in the Isle of Man, the Irish Permanent Building Society, Patrick Street branch, Cork or Rea Brothers (Isle of Man) Limited, in accounts for the benefit or in the name of Mr Lowry or any other person w h o holds or has held Ministerial office or in any other bank accounts discovered by the Tribunal to be for the benefit or in the name of Mr Lowry or for the benefit or in the name of a connected person within the meaning of the Ethics in Public Office Act, 1995, or for the benefit or in the name of any c o m p a n y owned or controlled by Mr Lowry. Whether Mr Lowry did any act or made any decision in the course of any Ministerial office held by him to confer any benefit on any person making a payment referred to in paragraph (e) or any person who was the source of any money referred to in paragraph (f) or on any other person in return for such payments being made or procured or directed any other person to do such act or make such decision. Whether any payment was made f r o m money held in any o f t h e bank accounts referred to at (f) to any person who holds or has held public office. Whether any holder of public office for w h o s e benefit money was held in any o f t h e accounts referred to at (b) or (f) did any act, in the course of his or her public office, to confer any benefit on any person w h o was the source o f t h a t money, or directed any person to do such an act. Whether the Revenue Commissioners availed fully, properly and in a timely manner in exercising the powers available to t h e m in collecting or seeking to collect the taxation due by Mr Michael Lowry and Mr Charles Haughey of the funds paid to Michael Lowry and/or Garuda Limited trading as Streamline Enterprises identified in C h a p t e r 5 o f t h e Dunnes Payments Tribunal Report and any other relevant payments or gifts identified at paragraph (e) above and the gifts received by Mr Charles Haughey identified in Chapter 7 o f t h e Dunnes Payments Tribunal Report and any other relevant payments or gifts identified at paragraph (a) above. (g) (h) (i) (j) A n d further in particular, in the light of its findings and conclusions, to make whatever broad recommendations it considers necessary or expedient:(k) to ensure that the integrity of public administration is not c o m p r o m i s e d by the dependence of party politics on financial contributions from undisclosed source f o r t h e reform o f t h e disclosure, compliance, investigation and enforcement provisions of c o m p a n y law (including in particular those which relate to directors' duties). for maintaining the independence o f t h e Revenue Commissioners in the performance of their functions while at the same time ensuring the greatest degree of openness and accountability in that regard that is consistent with the right to privacy of compliant taxpayers for enhancing the role and performance of the Central Bank as regulator of the banks and of the financial services sector generally for the effective regulation of the conduct of their members by such professional accountancy and other bodies as are relevant to these terms of reference, for the purpose of achieving the highest degree of public confidence, and (l) (m) (n) (o) REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - Part 2 Terms (p) of Reference Page | xi for the protection of the State's tax base from fraud or evasion in the establishment and maintenance of offshore accounts, and to r e c o m m e n d whether any changes in the tax law should be made to achieve this end. " P a y m e n t " includes money and any benefit in kind and the payment to any person includes a payment to a connected person within the meaning of the Ethics in Public Office Act, 1995. " P e r s o n " includes any natural or legal person or any body of persons whether incorporated or not. A n d that the Tribunal be requested to conduct its enquiries in the following manner, to the extent that it may do so consistent with the provisions of the Tribunals of Inquiry (Evidence) Acts, 1921 and 1979:(i) To carry out such investigations as it thinks fit using all the powers conferred on it under the Acts (including, where appropriate, the power to conduct its proceedings in private), in order to determine whether sufficient evidence exists in relation to any o f t h e matters referred to above to warrant proceeding to a full public inquiry in relation to such matters, To enquire fully into all matters referred to above in relation to which such evidence may be found to exist, and to report to the Clerk of the Dail thereupon, In relation to any matters where the Tribunal finds that there is insufficient evidence to warrant proceeding to a full public inquiry, to report that fact to the Clerk of the Dail and to report in such a manner as the Tribunal thinks appropriate, on the steps taken by the Tribunal to determine w h a t evidence, if any, existed, To report on an interim basis, not later than three months from the date of establishment of the Tribunal or the tenth day of any oral hearing, whichever shall first occur, to the Clerk of the Dail on the following matters: the numbers of parties then represented before the Tribunal; the progress which has been made in the hearing and the w o r k o f t h e Tribunal; the likely duration (so far as that may be capable of being estimated at that time) of the Tribunal proceedings: any other matters which the Tribunal believes should be drawn to the attention of the Clerk of the Dail at that stage (including any matter relating to the terms of reference); A n d that the person or persons selected to conduct the Inquiry should be informed that it is the desire of the House that (a) the Inquiry be completed in as economical a manner as possible and at the earliest date consistent with a fair examination of the matters referred to it, and all costs incurred by reason of the failure of individuals to co-operate fully and expeditiously with the Inquiry should, so far as is consistent with the interests o f j u s t i c e , be borne by those individuals. (ii) (iii) (iv) (b) A n d that the Clerk of the Dail shall on receipt of any Report f r o m the Tribunal arrange to have it laid before both Houses o f t h e Oireachtas immediately on its receipt." REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - Part 2 Terms of Reference Page | xii N O W I. Bertie Ahern, Taoiseach, in pursuance of those Resolutions, and in exercise of the powers conferred on me by section 1 (as adapted by or under subsequent enactments) of the Tribunals of Inquiry (Evidence) Act, 1921, hereby order as follows: 1. This Order may be cited as the Tribunals of Inquiry (Evidence) Acts, 1921 and 1979 (No. 2) Order, 1997. A Tribunal is hereby appointed to enquire urgently into and report and make such findings and recommendations as it sees fit to the Clerk of the Dail on the definite matters of urgent public importance set out at paragraphs (a) to (p) of the Resolutions passed by Dail Eireann on the 11 th day of September, 1997, and by S e a n a d Eireann on the 18 th day of S e p t e m b e r , 1997. The Honourable Mr Justice Michael Moriarty, a Judge of the High Court, is hereby nominated to be the Sole Member o f t h e Tribunal. The Tribunals of Inquiry (Evidence) Act, 1921 (as adapted by or under subsequent enactments) and the Tribunals of Inquiry (Evidence) ( A m e n d m e n t ) Act, 1979, shall apply to the Tribunal. GIVEN under my Official Seal, this 26 t h day o f S e p t e m b e r , 1997. 2. 3. 4. Bertie Ahern TAOISEACH REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - Part 2 Table Of C o n t e n t s Page | xiii Part II Chapter 1: INTRODUCTION Volume 1 1 1 4 4 PRELIMINARY COURSE O F TRIBUNAL HEARINGS EMERGENCE O F NEW MATERIAL Attempted conferral of substantial benefits on Mr. Ben Dunne Payments from Mr. Denis O'Brien BRIEF S U R V E Y O F C H A P T E R S Chapter 2: Initial hearings concerning Mr. Michael Lowry Chapters 13 and 14: Mr. Ben Dunne; and Mr. Michael Lowry's tax Chapter 3: A $50,000.00 covert donation to Fine G a e l Chapter 4: Conversations between Mr. Denis O'Brien and Mr. Barry Maloney concerning a payment to Mr. Michael Lowry Chapters 5, 6 and 7: T h e Carysfort, Mansfield and Cheadle transactions Chapter 8: T h e falsification of Mr. Christopher V a u g h a n ' s files Chapters 9 and 10: T h e Doncaster Rovers transaction and Mr. Denis O ' C o n n o r ' s shuttle diplomacy Chapter 11: Conduct of lawyers Chapter 12: Share transaction anomalies SOME FEATURES O F THE EVIDENCE Testimony of friends of, and professional advisers to, Mr. Denis O'Brien Mr. Denis O'Brien's view of the motivations of witnesses Mr. Denis O'Brien's view on the Tribunal and its legal personnel "Does all this have the ring of truth?". TRIBUNAL P R O C E D U R E S AND T H E DURATION O F ITS PROCEEDINGS TRIBUNAL ERROR R E T A I N E R O F L E G A L T E A M A N D MR. J E R R Y H E A L Y S C B E L A T E D A T T E N D A N C E O F MR. M I C H A E L A N D E R S E N 4 5 7 7 8 8 9 9 12 12 13 13 13 13 15 16 18 18 20 21 24 Table Of C o n t e n t s Page | xiv Chapter 2: EARLY EVIDENCE RELATING TO MR. MICHAEL LOWRY 26 26 29 30 31 33 INTRODUCTION PARTICULAR TRANSACTIONS REVIEWED C a s h payment b y Mr. Patrick Doherty to Mr. Michael Lowry for paintings and antiques Payments for refrigeration consultancy services by Mr. Michael Lowry Further Dunnes Stores payment of ?15,000.00 to Mr. Michael Lowry of 25th November, 1992 Assistance received from the late Mr. Michael Holly in connection with the purchase of 43 Carysfort A v e n u e , Blackrock, County Dublin 1991 off-shore sterling deposits for the benefit of Mr. Michael Lowry in Allied Irish Banks, Channel Islands CONCLUSIONS Chapter 3: THE ESAT/TELENOR $50,000.00 DONATION TO FINE GAEL 34 35 4 2 44 44 45 45 45 48 49 50 51 51 52 53 54 INTRODUCTION THE FUNCTION AND THE PAYMENT T h e fundraising function is proposed b y Mr. David Austin Mr. Denis O'Brien is asked for a donation and the payment is made off-shore T h r e e invoices T h e donation is acknowledged but is unwelcome T h e donation is transmitted to Fine G a e l disguised as a contribution from Mr. David Austin DEALINGS BETWEEN PARTNERS T h e donation becomes an issue in the Esat T e l e c o m I P O Necessity to establish that money had been duly received b y Fine Gael Telenor's concerns and actions: direct approach to the Fine G a e l party Inquiries are made b y Fine G a e l but the Tribunal is not informed... Table Of C o n t e n t s Fine Gael return the donation to Telenor b y w a y of a cheque for ?33,000.00 Telenor return the cheque for ?33,000.00 to Fine Gael; Fine Gael counter b y sending a bank draft to Telenor 56 57 61 65 67 55 Page | xv E V I D E N C E O F MR. A R V E J O H A N S E N A N D O F O T H E R T E L E N O R OFFICIALS E V I D E N C E O F MR. D E N I S O ' B R I E N E V I D E N C E O F MR. M I C H A E L L O W R Y CONCLUSIONS Chapter 4: CONVERSATIONS BETWEEN MR. DENIS O'BRIEN AND MR. BARRY MALONEY AND THEIR AFTERMATH INTRODUCTION W H A T W A S SAID AND W H E R E Mr. Barry Maloney's account of what transpired Old friends I've had to make two payments It didn't go through It got stuck with an intermediary Monkey off my back Mr. Denis O'Brien's account of what transpired I have paid ?200,000.00 Issue being raised to cause trouble M A I N S U B S E Q U E N T M E E T I N G S H E L D A N D A C T I O N S T A K E N IN CONSEQUENCE Evil thoughts never brought to fruition A wind-up: apology to Mr. Barry Maloney Inquiries conducted Non-disclosure to internal inquiry of substantial covert payments from Woodchester account of Mr. Denis O'Brien CONCLUSIONS 90 92 79 79 80 81 of ?100,000.00 each 70 70 71 71 71 72 73 74 75 77 77 78 Table Of C o n t e n t s FROM CARYSFORT TO MARBELLA 94 94 95 Page | xvi Chapter 5: INTRODUCTION THE NEW CONTEXT OF THE CARYSFORT TRANSACTION Timing of initial disclosures concerning role of Mr. David Austin in financial dealings with Mr. Michael Lowry and Mr. Denis O'Brien THE CENTRAL FACTS OF THE MONEY TRAIL Off-shore transfer of funds from Mr. Denis O'Brien to Mr. David Austin Off-shore transfer of funds from Mr. David Austin to Mr. Michael Lowry M A I N E V I D E N C E A T T H E 2001 S I T T I N G S Evidence of Mr. Michael Fingleton: twin role as managing Director of the building society and director of its off-shore bank Evidence of Mr. Eddie Holly: identification of a suitable property Evidence of Mr. Michael O ' L e a r y : co-executor of estate of Mr. David Austin Evidence of Mr. Denis O ' C o n n o r : out of the loop Evidence of Ms. Helen Malone: backdating of transaction documents Evidence of Mrs. Maureen Austin: no knowledge of a loan to Mr. Michael Lowry Evidence of Mr. Aidan Phelan: setting up covert route for transfer of funds Evidence of Mr. Denis O'Brien: merely a property purchase ... Evidence of Mr. Michael Lowry: a loan for refurbishments Non-disclosure evidence 2001 disclosures Production of documentation Mr. David Austin TWO TRANSACTIONS O R ONE TRANSACTION in support of a loan from of off-shore account in initial 1999 97 100 100 101 102 106 108 110 111 113 116 118 122 126 126 127 131 135 Table Of C o n t e n t s A purchase b y Mr. Denis O'Brien: a loan to Mr. Michael L o w r y . Covert operations Non-attendance b y Irish Nationwide (IOM) witness Non-disclosure Mr. Aidan Phelan: failure to disclose a relatively unique transaction Mr. Denis O'Brien: could not remember any of the details Mr. Michael Lowry: did not regard the transaction as relevant to the Tribunal's inquiries W a s there a sale of a holiday home to Mr. Denis O'Brien? 141 142 145 145 138 Page 135 136 | xvii 137 138 139 CONCLUSIONS O n e transaction: a payment to Mr. Michael Lowry that got stuck with an intermediary Chapter 6: THE MANSFIELD TRANSACTION 148 148 149 150 151 INTRODUCTION THE MOBILE T E L E P H O N E REALIGNMENT TALKS THE MANSFIELD ACQUISITION Dealings between Mr. Michael Lowry and Mr. Kevin Phelan Mr. Michael Lowry enters a contract to purchase for Stg.?250,000.00 T h e money moves Joint Venture Agreement T h e sale completes CONCLUDING REMARKS Chapter 7: THE CHEADLE TRANSACTION Course of the evidence HOW THE CHEADLE TRANSACTION CAME ABOUT Meeting with Mr. Michael T u n n e y of Woodchester/Gandon in the Radisson Hotel 151 153 154 156 158 160 161 161 INTRODUCTION 162 164 Mr. Michael Lowry operates through Catclause, a limited c o m p a n y . 164 1 65 Table Of C o n t e n t s Mr. Michael Lowry's tentative efforts to obtain loan finance Mr. Aidan Phelan again provides assistance 166 167 167 167 169 169 171 172 172 1 73 of Mr. Michael Lowry on the 173 1 74 176 1 79 1 83 183 1 84 186 188 189 190 191 191 192 Page | xviii THE GRANTING OF THE LOAN Loan proposal made to Woodchester by Mr. Aidan Phelan Mr. Denis O'Brien's support invoked at inception of loan proposal... The transaction "wouldn't be allowed to get into difficulties". A proposed Denis O'Brien transaction Mr. Denis O'Brien's name would naturally never be far away Involvement of Mr. Michael Lowry Catclause was the Purchaser No indication of involvement face of bank documentation A guarantor procured by Mr. Michael Lowry F U N D S A R E T R A N S M I T T E D T O MR. C H R I S T O P H E R V A U G H A N AND THE SALE COMPLETES MR. J O H N D A L Y A P P A R E N T L Y D E C L I N E S T O P E R F E C T HIS GUARANTEE AND THE CONSEQUENCES THE THISTLEWOOD AND BERWOOD SALES AND THE INTENDED BENEFICIARY OF THE PROCEEDS U K property ML Long form, short form letters Removal of references to Mr. Michael Lowry "A link with M" What were the "reasons of secrecy" ?. Consent of ML: sale for Stg.?1.3 million THE THISTLEWOOD AND BERWOOD SALES FOUNDER AND THE LOAN BECOMES PROBLEMATIC Bank concern Bank learns of involvement of Mr. Michael Lowry Mr. Aidan Phelan describes Cheadle as A "DO'B" transaction Mr. Michael T u n n e y again describes Cheadle as a "Denis O'Brien" transaction E V I D E N C E O F MR. D E N I S O ' B R I E N No involvement: no knowledge 192 196 198 198 Table Of C o n t e n t s A realistic v i e w of the bank 199 199 200 201 202 202 203 204 205 205 205 206 206 207 Page | xix O V E R V I E W O F E V I D E N C E O F MR. M I C H A E L L O W R Y ' S O W N E R S H I P OF UK PROPERTIES Source of the deposit Source of the balance of purchase price Catclause meant Michael Lowry Mr. Michael Lowry and Mr. J o h n Daly Removal of Catclause meant removal of Mr. Michael Lowry Mr. Denis O ' C o n n o r ' s knowledge of the Cheadle transaction INITIAL O B S E R V A T I O N S O N E V I D E N C E H E A R D Source of deposit Source of balance: Denis O'Brien w a s behind it Evidence of bank officials convincing Mr. Denis O'Brien's response unconvincing Evidence of Mr. Aidan Phelan implausible Relationship of Mr. Michael Lowry and Mr. J o h n Daly Conflict between Mr. Aidan Phelan and Mr. Michael T u n n e y Confusing accounts of simple transactions Missing documents Mr. Christopher V a u g h a n ' s explanations for the letter of 9th August, 2000, and other similar documents CONCLUSIONS T h e Mansfield transaction T h e Cheadle transaction 212 215 215 217 208 208 210 211 Chapter 8: FALSIFICATION OF MR. CHRISTOPHER VAUGHAN'S FILES Introduction A description of the documents Mr. Christopher V a u g h a n ' s non-attendance prior to 2009 Written explanations provided b y Mr. Christopher V a u g h a n concerning the "long form" and "short form" letters in 2002 221 221 221 222 228 230 239 LETTERS SHORT AND LONG EVIDENCE HEARD Table Of C o n t e n t s Evidence of Mr. Denis O'Brien: no involvement in the transaction Evidence of Mr. Michael Lowry: Not happy that there appeared to be two versions of the letters in existence Mr. Michael Lowry understood Mr. Christopher position to be that he got confused Evidence of Mr. Aidan Phelan: long form letters created mischievously Evidence of Ms. Helen Malone 242 245 245 245 246 248 248 250 250 252 252 253 256 17th March, 2001: 259 262 Vaughan's possession Vaughan's 242 240 239 240 Page | xx O V E R V I E W O F E V I D E N C E H E A R D U P T O 2002 Different stages: initial evidence Revelation of existence of "long form" and "short form" letters THE EMERGENCE OF Y E T FURTHER FALSIFICATION Mr. Christopher V a u g h a n ' s belated evidence in April, 2009 Resumption of Mr. Christopher V a u g h a n ' s evidence in June, 2 0 0 9 . Further documents came to light The April 2009 evidence revisited Files out of Mr. Christopher Persistent adherence to a false version of events W h e n and b y w h o m the files were falsified Fax from Mr. Aidan Phelan to Mr. Kevin Phelan of summary of a false position CONCLUSIONS from Mr. Christopher Vaughan's files Chapter 9: DONCASTER ROVERS FOOTBALL CLUB TRANSACTION 266 267 269 273 SUSPENSION O F HEARINGS: N E W DOCUMENTATION BACKGROUND T O DONCASTER ROVERS TRANSACTION I N I T I A L I N V O L V E M E N T O F MR. A I D A N P H E L A N A N D MR. D E N I S O ' B R I E N IN T H E D O N C A S T E R R O V E R S P R O J E C T M E E T I N G S B E T W E E N MR. C H R I S T O P H E R V A U G H A N , MR. K E V I N P H E L A N A N D MR. M I C H A E L L O W R Y IN S E P T E M B E R , 1998, Table Of C o n t e n t s Page | xxi A N D MR. C H R I S T O P H E R V A U G H A N ' S L E T T E R O F 2 5 t h S E P T E M B E R , 1998 Available information Mr. Christopher V a u g h a n ' s versions of his meetings with Mr. Michael Lowry over 23 rd and 24th September, 1998 Mr. Christopher 25 th September, Mr. Christopher Mr. Christopher Mr. Christopher Mr. Christopher Mr. Christopher Vaughan's letter to Mr. Michael Lowry of 1998 Vaughan's account to Mr. Aidan Phelan Vaughan's explanations arising from inquiries 281 282 283 285 288 1998. 288 276 277 277 277 281 made by Mr. Peter Vanderpump in October, 2002 Vaughan's accounts to Mr. Denis O'Connor... Vaughan's accounts to Ms. Kate Macmillan... Vaughan's accounts to the Tribunal at meeting of September, Evidence of Mr. Christopher V a u g h a n Location and participants Substance of the meeting Response to the evidence of Mr. Michael Lowry and Ms. Kate Macmillan Evidence of Mr. Michael Lowry MR. C H R I S T O P H E R V A U G H A N ' S U N D E R S T A N D I N G O F MR. M I C H A E L LOWRY'S ROLE F U R T H E R I N S T A N C E S O F R E F E R E N C E S T O MR. M I C H A E L L O W R Y IN THE COURSE OF THE DONCASTER PROJECT Progress of the transaction Fax from Mr. Kevin Phelan to Mr. Aidan Phelan of 11th August,1999 Letter from Mr. Kevin Phelan to Mr. Aidan Phelan of 30th August, 2000 E N C O U N T E R S W I T H MR. D E N I S O ' C O N N O R Brokering settlements Meeting with Ms. Ruth Collard and Mr. Craig Tallents 10th September, 2002 CONCLUSIONS 290 291 294 296 300 300 301 303 305 305 307 310 Table Of C o n t e n t s Page | xxii Chapter 10: DISPUTES AND SETTLEMENTS ON UK PROPERTIES Five stages Impact of Tribunal proceedings on Mr. Kevin Phelan 311 311 311 312 312 312 313 315 315 INTRODUCTION SHUTTLE DIPLOMACY R e g e n c y Airport Hotel meeting on 27th March, 2001 Mr. Kevin Phelan's fee claims against Westferry and others Mr. Denis O ' C o n n o r visits U K properties with Mr. Kevin Phelan Mr. Denis O ' C o n n o r ' s initial efforts to reach settlement with Mr. Kevin Phelan Mr. Kevin Phelan alleges false and misleading to the Tribunal Who was Mr. Denis O'Connor acting for? Agreements negotiated by Mr. Denis O'Connor from which Mr. Kevin Phelan intended to benefit to the extent of Stg. ?225,000.00 The Doncaster agreement negotiated by Mr. Denis In September, 2001 Mr. Denis O'Connor denies any involvement settlement with Mr. Kevin Phelan Hostile correspondence from Mr. Kevin Phelan Mr. Mark W e a v e r ' s visit to Mr. Christopher V a u g h a n on 2002 Complaints against Mr. Aidan Phelan More of "Long Form" and "Short Form" letters Lying like a trooper. Charade Mr. Kevin Phelan's dispute and settlement over Doncaster R o v e r s . Getting Mr. Kevin Phelan on side Mr. Denis O'Brien Senior takes over Payment to a potential witness might be misconstrued... Mr. Kevin Phelan prepared to settle Doncaster for Stg. ?150,000.00 18th February, in a Doncaster O'Connor evidence given 316 317 317 319 320 322 323 324 325 325 326 3 2 8 3 2 8 3 2 9 3 3 0 332 Table Of C o n t e n t s "ML " in the context of Doncaster. Had to have a simple statement that Mr. Michael Lowry had no Doncaster involvement Being asked to provide the impossible Settlement negotiations Tribunal hearings William Fry press for an explanation of the "ML" reference: confirmation confirmation in Doncaster Handover of files to Mr. Denis O'Connor Withdrawal of request for files Mr. Denis O ' C o n n o r ' s continuing involvement in promoting settlements Mr. Denis O'Connor truly fed up with the whole affair. Really interesting stuff. Maximum embarrassment Mr. Denis O'Connor's involvement" for Mr. Michael Lowry. Christopher Mr. Denis O'Connor frozen out knowledge of Mr. Vaughan's description of Mr. Michael Lowry's "total in Doncaster that Mr. Michael Lowry was involved or that he was not that Mr. Michael Lowry had no involvement 341 in train while evidence being taken at Page 334 337 337 337 | xxiii 339 No confirmation 342 342 344 344 344 345 346 346 349 349 350 coming to the attention 352 353 O V E R V I E W O F MR. D E N I S O ' C O N N O R ' S R O L E Intermediary in payments of Stg.?215,000.00 to Mr. Kevin Phelan... Denials of Mr. Denis O'Connor's Role in neutralising of the Tribunal CONCLUSIONS role risk of information Chapter 11: DELAYS, NON-DISCLOSURES AND LAWYERS 357 357 359 359 INTRODUCTION THE BLACKMAIL COMPLAINT T O THE CITY O F LONDON P O L I C E . . T h e mediation and T h e Irish T i m e s article Table Of C o n t e n t s T h e Tribunal's request for documentation relating to blackmail complaint Legal advice provided to Mr. Denis O'Brien Senior, and his response Altered legal advice provided to Mr. Denis O'Brien Senior at his request T h e Tribunal is misled T h e Tribunal discovers the true position Evidence of solicitors Conclusions: role of L K Shields and Carter-Ruck in misrepresentation of views of City of London Police 361 Page | xxiv 360 363 365 366 368 370 372 373 375 376 377 381 383 386 387 A FACSIMILE BETWEEN PHELANS T h e background to the faxed document Internal inquiries regarding "ML" reference Non-disclosure to the Tribunal Procedural sequence Conclusions: role of William F r y in non-disclosure of fax LATE LETTERS A B O U T THE UK PROPERTIES Conclusions: late disclosure b y Mr. Christopher V a u g h a n of highly relevant letters CONCLUDING OVERVIEW Chapter 12: SHARES FOR FRIENDS AND FAMILY 388 388 389 391 393 395 396 400 400 INTRODUCTION INITIAL A C Q U I S I T I O N S O F E S A T T E L E C O M S H A R E S SUBSEQUENT ACQUISITIONS OF ESAT TELECOM SHARES Evidence of Mr. Noel W a l s h e : a second purchase Evidence of Mr. Aidan Phelan: only involved in second p u r c h a s e . Evidence of Mr. Denis O'Brien: error in communications Evidence of Ms. Helen Malone CONCLUSIONS Table Of C o n t e n t s THE MARLBOROUGH HOUSE ARBITRATION T e r m s of Reference Doubling of rent Emergence of information 403 403 403 403 403 404 404 404 405 40 5 406 406 407 408 408 409 411 411 411 Page | xxv Chapter 13: INTRODUCTION THE RENT ARBITRATION Evidence of Mr. Mark FitzGerald Background Mr. Michael Lowry's first approach A second approach Mr. Michael Lowry persists No intervention Lowry Late disclosure by Mr. Mark FitzGerald Alarm bells Evidence of Mr. Gordon Gill Evidence of Mr. Killian O ' H i g g i n s Evidence of Mr. Ben Dunne Purchase of property. Never sought a political favour from Mr. Michael Lowry. Looked terrible Spontaneous approach relationship... Not a political favour: based on a commercial Evidence of Mr. Michael Lowry Formal memorandum of influence Mr. Mark FitzGerald's CONCLUSIONS Influence w a s sought to be exercised Mr. Mark FitzGerald: lack of malicious intent Potential financial benefit of EUR3.022 million to EUR6.86 million Profoundly corrupt account inaccurate Mr. Michael Lowry disappointed. of evidence rejects any suggestion by Mr. Mark FitzGerald in arbitration Other dealings between Mr. Mark FitzGerald and Mr. Michael 41 2 412 413 414 4 14 414 415 416 417 417 418 418 419 Table Of C o n t e n t s HOW REVENUE TAXED MR. MICHAEL LOWRY 421 421 Page | xxvi Chapter 14: INTRODUCTION T R A N S A C T I O N S GIVING RISE T O A C T U A L O R POTENTIAL T A X LIABILITIES Residential Property T a x Instances of potential taxation liability Payments referable to McCracken Matters referable to this Tribunal A N D G A R U D A IN R E L A T I O N T O T A X L I A B I L I T I E S CONCLUSIONS Tribunal 422 423 424 424 426 429 438 R E V E N U E D E A L I N G S W I T H R E P R E S E N A T I V E S O F MR. M I C H A E L L O W R Y Chapter 15: CONCLUDING OBSERVATIONS Non-disclosure Things are not what they seem Recurring personnel Witnesses refuse to attend Professional persons' actions are inexplicable "Chinese Walls" Confusion advanced as recurring theme Little b y w a y of genuine confusion Disaffection of Mr. Kevin Phelan T h e closest of associates are the sources of crucial evidence Cumulative aspects Timing of conversations Lawyers and accountants T h e money involved 440 440 440 442 443 443 445 445 446 447 448 448 449 450 450 Table Of C o n t e n t s EXECUTIVE SUMMARY 452 Page | xxvii Chapter 16: CAVEAT E A R L Y E V I D E N C E R E L A T I N G T O MR. M I C H A E L L O W R Y T H E E S A T / T E L E N O R $50,000.00 D O N A T I O N T O F I N E G A E L C O N V E R S A T I O N S B E T W E E N MR. D E N I S O ' B R I E N A N D MR. B A R R Y MALONEY AND THEIR AFTERMATH FROM CARYSFORT T O MARBELLA THE MANSFIELD TRANSACTION THE CHEADLE TRANSACTION F A L S I F I C A T I O N O F MR. C H R I S T O P H E R V A U G H A N ' S F I L E S DONCASTER ROVERS FOOTBALL CLUB TRANSACTION DISPUTES AND SETTLEMENTS O N UK PROPERTIES DELAYS, NON-DISCLOSURES AND LAWYERS SHARES F O R FRIENDS AND FAMILY THE MARLBOROUGH HOUSE ARBITRATION H O W R E V E N U E T A X E D MR. M I C H A E L L O W R Y CONCLUDING OBSERVATIONS 452 4 5 2 4 5 5 4 6 0 4 6 5 4 7 4 478 4 8 3 4 8 6 491 497 5 0 4 5 0 7 511 516 Page INTRODUCTION PRELIMINARY 1.01 Part II of the Tribunal's Report will be presented in two Volumes, of |1 which this, Volume 1, deals mainly with the money trail aspects of the Terms of Reference concerning Mr. Michael Lowry. Volume 2 relates mainly to the second mobile telephone licence competition. 1.02 Mr. Michael Lowry, T.D., who, as then a Fine Gael T.D., held the office of Minister for Transport, Energy & Communications, in w h a t was known as the Rainbow Coalition Government, formed by Fine Gael, Labour and Democratic Left in late 1994, until his resignation from the Cabinet in November, 1996. Mr. Lowry has continued in public office as an Independent T.D., since that resignation. 1.03 The matters to be dealt with in this V o l u m e fall into three broad categories which may shortly be expressed as follows: (i) whether or not any persons made payments or conferred other benefits on Mr. Lowry in circumstances referable to his holding of public office; (ii) the identification of the sources of funds in bank accounts in the name or for the benefit of Mr. Lowry; (iii) whether, Mr. Lowry in the course of any public office had done any act or made any decision to confer a benefit upon any person who had made such a payment, or was the source of funds held in such a bank account. 1.04 The precise provisions of the Terms of Reference are contained in (e), (f), and (g). Because the Tribunal has received extensive paragraphs submissions from affected persons concerning the construction of paragraph (g), reference should be made to its full terms, which are as follows: "(g) Whether Mr. Lowry did any act or made any decision office held by him to confer to in paragraph to in paragraph made any benefit in the course on any of any Ministerial making source return person person a payment referred (e) or any person who was the in of any money referred (f) or on any other person or directed any for such payments being or procured other to do such act or make such decision." REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page |2 It has been submitted by certain affected persons that, from the use of the expression "in return for such payments being made", as it appears in paragraph (g) above, it follows that a finding that Mr. Lowry did any act or made any decision within the meaning of the paragraph necessarily requires that the Tribunal be satisfied that there specifically "in return is evidence to s h o w that any such act or decision for" was payments pursuant to paragraph (e), or sources of money in bank accounts pursuant to paragraph (f). The Tribunal is satisfied that these submissions proceed on the basis of an incorrect interpretation of the whole of paragraph (g). Whilst this is a matter which requires some degree of analysis, it is nonetheless a matter of considerable importance and therefore appropriate that it should be set out at this stage. 1.05 The Tribunal is satisfied that paragraph (g) e m b r a c e s three factual elements, as follows: (a) whether Mr. Lowry did any act or made any decision to confer any benefit on any person making a payment referred to in paragraph (e); (b) whether Mr. Lowry did any act or made any decision to confer any benefit on any person w h o was the source of any money referred to in paragraph (f); (c) whether Mr. Lowry did any act or made any decision to confer any benefit on any other person in return for such payments under paragraphs (e) and (f) being made by a different person. In other words, where Mr. Lowry conferred a benefit on a person who w a s found to have made a payment to him, or to have been a source of money in certain bank accounts, there is no requirement in the Terms of Reference that the Tribunal should further find that such a benefit had been conferred specifically "in return for" those payments made, or monies in those bank accounts. 1.06 It is only in the third instance outlined above where it is contemplated that a benefit may have been conferred by Mr. Lowry on a person other than the individual either making the relevant payment, or w h o was the source of the relevant monies, that the Tribunal is obliged to take the additional step of being satisfied that the benefit in question was "in return for" the payment or monies in question. This is the only reasonable construction since, if the "in return for" qualification did not apply in the third case, the Tribunal would be required to examine a potentially infinite number of acts or decisions on the part of Mr. Lowry. Logically, it is only in a case where the person enjoying the benefit of Mr. Lowry's act or decision is distinct f r o m the person making the payment that there must, of necessity, be a link such that the conferral of the benefit on one person REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 for" a payment made by a different person altogether. capture situations where benefits are Page |3 is shown to be "in return In the most obvious case this would conferred on acquaintances, business associates or family members of persons making payments. 1.07 In concluding that this is the true and correct interpretation the Tribunal is fortified by the wording of paragraph (i) of its Terms of Reference which states as follows: "(i) Whether any holder of public referred office for whose benefit money was held of in any of the accounts his or her public source office, to at (b) or (f) did any act, in the course any benefit any person on any person to do such an to confer who was the act." of that money, or directed This paragraph does not contemplate the third factual instance set out above and embraced by paragraph (g), and does not contain the expression "in return for", for the reason that the paragraph only envisages inquiry by the Tribunal into acts w h e r e b y benefits are conferred on persons w h o themselves were the sources of money held in accounts for the benefit of any holder of public office. In a situation contemplated in paragraph (i) the notion of the conferral of a benefit on a person other than one who was a source of money does not arise. 1.08 It is clear to the Tribunal that the Houses of the Oireachtas, in adopting its Terms of Reference proceeded on the basis that if the result o f t h e Tribunal's inquiries was that Mr. Lowry had conferred a benefit in the course of his Ministerial office on a person w h o m the Tribunal had found to have made a payment to him or to have been a source of monies in any bank account held for his benefit, those two matters in themselves were of sufficient public importance that the Tribunal should report upon them. It is obvious that such a set of circumstances is sufficient to give rise to public concern without any requirement for evidence demonstrating that such payments were "in return for" the conferral of the benefit in question, or, indeed, vice versa. It follows that w h a t the Houses of the Oireachtas, in adopting the Terms of Reference, sought to c o n d e m n was the doing of any act or the making of any decision by a holder of public office so as to confer a benefit on a person from w h o m the holder of office had received payments; likewise that any holder of public office should not receive a payment from an individual who had been the beneficiary of an act or decision of that holder of public office. 1.09 Nonetheless, even if it were a requirement that in every case the qualification had to be met, the Tribunal is satisfied that the evidence in the case of Mr. Dunne as set forth in Chapter 13 of this Volume, and in the case of Mr. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page |4 Denis O'Brien as set forth in Volume 2 of this Part of the Report, supports the finding of the appropriate nexus between the relevant payments and the particular acts. COURSE O F TRIBUNAL HEARINGS 1.10 By early 2001, by which time the Tribunal had concluded most of its hearings concerning the aspects of the Terms of Reference dealing with Mr. Michael Lowry, it seemed unlikely that the portion of the Report dealing with those matters would warrant the publication of a second volume. By that time, it remained merely to examine those Terms of Reference dealing with the Revenue Commissioners treatment of certain aspects of Mr. Michael Lowry's financial affairs. The Tribunal's initial inquiries suggested that the findings would constitute a carry over from the McCracken Tribunal, focusing primarily on a number of additional payments connected with Mr. Ben Dunne. Whilst those payments added to the sum of knowledge concerning the relationship between Mr. Lowry and Mr. Ben Dunne, they would have warranted very little by way of further commentary on that relationship. 1.11 A number of other payments were identified and, but for the fact that the name of one of the individuals involved was mentioned in later evidence in connection with aspects of the Doncaster Rovers transaction, the circumstances appeared to suggest poorly documented but not improper payments, although not returned to the Revenue Commissioners. EMERGENCE O F N E W MATERIAL Attempted conferral of substantial benefits on Mr. Ben Dunne 1.12 What subsequently emerged is significant for a number of reasons, but at this stage it will suffice to mention two. Firstly, in the case of Mr. Ben Dunne, it transpired that Mr. Lowry sought, but fortunately was foiled in his attempt, to confer on Mr. Dunne a benefit amounting to approximately ?2.38 million in the short term, and a potential capital value increase of ?7.35 million. Mr. Lowry, whilst Minister, had sought to intervene in a property arbitration, with the object of procuring the fixing of the rent of premises leased to Telecom Eireann, a semiState company then within his Ministerial remit, at a level almost twice what the market would have justified. Mr. Lowry had sought to bring wrongful influence to bear on a member of the firm of Sherry FitzGerald, then engaged in the pending arbitration, as arbitrator, with a view to having the inflated rent imposed. This was done at the behest of Mr. Ben Dunne, who had previously made substantial payments both to Mr. Lowry personally, and to Fine Gael. The impropriety of Mr. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Lowry's 1 approach Terms was of compounded that by the fact, which the premises brings it within within the his Page |5 Tribunal's Reference, actually fell Ministerial remit. This evidence indicated the lengths to which Mr. Lowry was prepared to go in securing financial advantages for Mr. Dunne, for w h o m he had reason to be grateful, for his contributions to Mr. Lowry's own personal finances, and also for his contributions to the finances of the Fine Gael party. Secondly, it reflected Mr. Lowry's contempt for the quasi-judicial process in which the arbitrator, who was in a position analogous to a judicial officer, was involved, and from w h o m Mr. Lowry expected cooperation in what, had it succeeded, would have a m o u n t e d to a gross impropriety in the discharge of the functions of an arbitrator. 1.13 Prior to the emergence of this matter, it s e e m e d likely that, had the Tribunal's inquiries concerning Mr. Lowry terminated in the examination of those Terms of Reference concerning his dealings with the Revenue Commissioners, the Tribunal would not have learned of this crystallising aspect of his relationship with Mr. Ben Dunne. It is salutary to bear in mind that no file, either within Telecom Eireann, or within Mr. Lowry's Department, would have contained anything likely on its face to suggest a need for further inquiry. This is because, had the rent been reviewed, albeit improperly, as intended, the new rent, having been fixed in the course of the quasi-judicial process of arbitration, w o u l d have been immune f r o m ordinary scrutiny. Payments from Mr. Denis O'Brien 1.14 Secondly, with regard to Mr. Lowry's dealings with Mr. O'Brien, from evidence subsequently heard, it transpired that much of these were conducted through agents or associates of the latter, at times during which Mr. Lowry was interacting with the Tribunal as part of its informal investigative process, or in the course of evidence. So careful was Mr. Lowry in obscuring from the view of the Tribunal his improper dealings with Mr. O'Brien that, in his evidence and other contacts with the Tribunal, concerning the property he had purchased at Carysfort Avenue, dealings Executive, Blackrock, with Mr. the County lenders, Dublin, Irish in late 1996, he made reference to and its his Nationwide Building Society, Chief the Fingleton, disclosed full details of his loan account with Society, but concealed the fact that at around the same time he had received a payment of ? 1 4 7 , 0 0 0 . 0 0 into his own off-shore account in Irish Nationwide Bank in the Isle of Man. Despite the fact that his belated explanation for this transaction was that it did not constitute a payment from Mr. O'Brien, but rather a loan from Mr. David Austin, and further despite the fact that, according to Mr. Lowry, the purpose of the loan was to pay for refurbishments he intended to carry out; and indeed had in part carried out on the Carysfort premises; no mention REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page |6 was made of those refurbishments, nor of his having partly carried t h e m out, nor of his having earmarked funds in the Irish Nationwide Isle of Man bank for that purpose. Mr. Lowry had mentioned other off-shore accounts to the Tribunal, but not this one. 1.15 A key feature of that account, as any examination of it at that time would have shown, was the involvement of Mr. David Austin and Mr. Aidan Phelan in the covert routing of funds f r o m an account of Mr. O'Brien's in W o o d c h e s t e r Bank in Dublin, via off-shore accounts in the Isle of Man, to an off-shore account in the Channel Islands and from there back to another off-shore account, Mr. Lowry's, in the Isle of Man. Moreover, there is every reason to believe that an examination of Mr. David Austin's accounts, and in particular his Channel Island accounts, through which these monies had been routed, would have disclosed the covert routing of a $ 5 0 , 0 0 0 . 0 0 donation by Esat Digifone to Fine Gael, eventually exposed in the course of an article of Mr. Matt Cooper in The S u n d a y Tribune, in March, 2001. 1.16 Up to that time, the Tribunal had never scrutinised, having had no reason to do so, any aspect of Mr. Denis O'Brien's financial affairs. Had the $50,000.00 donation to Fine Gael, or the ? 1 4 7 , 0 0 0 . 0 0 payment in Mr. Lowry's Isle of Man account been disclosed in the course of Mr. Lowry's initial dealings with the Tribunal, then it is likely that all of the internal inquiries conducted within Esat Digifone and Esat T e l e c o m in 1997, at the time of the latter's Initial Public Offering, would have emerged, including evidence concerning statements made by Mr. O'Brien to Mr. Barry Maloney, to the effect that he had paid ? 1 0 0 , 0 0 0 . 0 0 to Mr. Michael Lowry. There was also a real likelihood that the revelation of those dealings, including in particular the involvement of Mr. Aidan Phelan, could have led to the disclosure of Mr. Lowry's UK property transactions in which Mr. Phelan played a significant role, in Doncaster, Mansfield and Cheadle. 1.17 The events referred to in this Volume are not laid out in the chronological order in which they occurred. Rather, to a significant degree, they are dealt with in the order to which they came to the notice of the Tribunal. This is because, although following the Mr. Matt Cooper/Investec Bank disclosures, certain information concerning the $50,000.00 donation to Fine Gael, and the Mansfield and Cheadle transactions, was brought to the attention o f t h e Tribunal, much relevant material concerning these properties and the Doncaster Rovers property was either withheld from the Tribunal, or provided to the Tribunal in such a form as to misrepresent the true picture. The Report endeavours, so far as it is intelligibly possible to do so, to present the evidence so as to show how, from time to time, the material actually provided, and disclosed on the footing that it REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page |7 reflected cooperation of the providers with the Tribunal, in fact a m o u n t e d to an attempt either to confuse, or conceal the true situation. 1.18 The detailed chapters which follow in relation to the money trail evidence and in one case, as appears in Chapter 13, in relation to the conferral of benefits, set forth a sequence of payments, property and other financial transactions, and other dealings between centrally involved persons, as regards all of which one c o m m o n characteristic was their absence of disclosure to, or concealment from, the Tribunal in the first instance, resulting in knowledge of these matters being acquired by the Tribunal only belatedly. This element, allied to a level of cooperation from interested persons that in s o m e instances fell far below that which might have reasonably been expected to be accorded to a Tribunal established by unanimous resolutions of both Houses of the Oireachtas, gravely delayed and extended the duration of the w o r k of the Tribunal. 1.19 W h e n , in early spring of 2001, significant information first came to the its inquiries into notice of the Tribunal, suggesting a requirement to reopen matters relating to Mr. Michael Lowry, and examine at public sittings a number of possible associations between Mr. Lowry and certain individuals, all of w h o m had connections with Mr. Denis O'Brien, it had s e e m e d that the Tribunal's w o r k was comparatively close to completion. Although the declining health of Mr. Haughey had retarded conclusion of his evidence, and there was a likelihood that s o m e further matters referable to him would require examination, it had up to the time of those disclosures appeared that further public hearings in regard to Mr. Lowry might not be required, beyond some brief hearings that actually took place in 1999. It accordingly s e e m e d , until those disclosures, in Spring of 2001, that there was every likelihood that the completion of the Tribunal's work, if not achieved by the end of 2001, would not proceed far in 2002. It would be unrealistic to seek to encapsulate all that emerged from the extensive money trail evidence in a f e w short paragraphs in a preliminary chapter, but it may be helpful nonetheless to set forth certain of the primary features that emerged f r o m that evidence. BRIEF SURVEY O F CHAPTERS Chapter 2: Initial hearings concerning Mr. Michael Lowry 1.20 Turning now to a brief survey, but not an executive s u m m a r y of the contents of this Volume, which is in fact set forth as its final chapter, the first chapter pertaining to substantive matters, Chapter 2, deals with information elicited from the comparatively short public hearings held in 1999 in relation to Mr. Lowry's business, financial and tax affairs. Whilst not unimportant in REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page |8 themselves, w h a t was noteworthy, as has already been mentioned, in relation to that evidence, was that it was represented by and on behalf of Mr. Lowry that its content was the entirety of the remaining matters required to be addressed by the Tribunal in regard to the Terms of Reference referable to him. Chapters 13 and 14: Mr. Ben Dunne; and Mr. Michael Lowry's tax 1.21 Chapters 13 and 14 are distinguishable f r o m w h a t may be termed the money trail chapters. Chapter 13 relates to events which occurred in 1995 but which did not come to the attention o f t h e Tribunal until November, 2 0 0 2 , in the course o f t h e Tribunal's inquiries concerning the second G S M competition, and in particular FitzGerald. concerning dealings between Mr. Michael Lowry and Mr. Mark The chapter relates to Mr. Lowry's dealings with Mr. Dunne, already mentioned in paragraph 12 above. 1.22 Chapter 14 relates to the manner in which the Revenue Commissioners exercised their powers in collecting taxes due by Mr. Lowry and his associated company, Garuda Limited, trading as Streamline Enterprises, in regard to certain specific payments and gifts. A chapter, in broadly analogous or parallel terms, with reference to Mr. Haughey, as also required by the T e r m s of Reference, was contained in Part I o f t h e Tribunal's Report. Chapter 3: A $50,000.00 covert donation to Fine Gael 1.23 senior Chapter 3 pertains to a $50,000.00 donation, made off-shore, in December, 1995, in a clandestine fashion and intended for Fine Gael, then the partner in Government, shortly after the result of the second GSM competition had been a n n o u n c e d in October, 1995. The payment was made by the Norwegian entity, Telenor, part of the successful Esat Digifone consortium, following an approach via telephone made to Mr. O'Brien by Mr. David Austin. Although at the time rejected by the leader of Fine Gael, Mr. John Bruton, the payment was not in fact returned by Mr. Austin to Telenor, or Esat Digifone, but was retained by him in an off-shore account and subsequently donated to Fine Gael, this time disguised as a personal payment of Mr. Austin himself. At the time the payment was first transmitted to Mr. Austin, Mr. Lowry was Chairman of the trustees of Fine Gael. The implausible explanation advanced by Mr. Denis O'Brien for this payment was that it was in fact a donation made by Telenor, Mr. O'Brien's Norwegian partners, as a formal expression of interest in Irish affairs, and was later reimbursed by Esat Digifone to Telenor, equally implausibly only through the exercise of some form of force or compulsion on the part of Telenor. Although a serious matter, this transaction differs from others addressed in this Volume involving improper payments or transactions in which Mr. Lowry was personally REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page |9 involved, as opposed to a connection in this instance arising through his said office as Chairman o f t h e Fine Gael trustees. Chapter 4: Conversations between Mr. Denis O'Brien and Mr. Barry Maloney concerning a payment to Mr. Michael Lowry 1.24 Chapter 4 relates to certain conversations had between Mr. Denis O'Brien and Mr. Barry Maloney, respectively Chairman and Chief Executive Officer, of Esat Digifone, in late 1996 and 1997, in the course of which Mr. O'Brien conveyed to Mr. Maloney, firstly, that he had made a substantial payment to Mr. Lowry personally, at a time shortly after the successful outcome of the GSM competition; subsequently that he had not made the payment but that he had considered making it; finally, that having considered making it and having attempted to make it, and taken some steps toward doing so, the payment was not transmitted to Mr. Lowry but in fact had become "stuck with an intermediary". It will be seen that, whilst the events addressed in that chapter were considered sufficiently serious to put the Initial Public Offering of shares in Esat T e l e c o m at risk, none of those involved s a w fit to make timely disclosure of t h e m to the Tribunal. Chapters 5, 6 and 7: The Carysfort, Mansfield and Cheadle transactions 1.25 Chapters 5, 6 and 7 deal with a number of financial transactions of which some details were notified to the Tribunal around the time of Mr. Matt Cooper's disclosures in relation to the $ 5 0 , 0 0 0 . 0 0 donation to Fine Gael. The information concerning these transactions was notified by Mr. Aidan Phelan and Mr. Michael Lowry. The Tribunal was also furnished with information by Investec Bank as a result of its own internal inquiries into one of those transactions, a loan transaction relating to a property purchase in Cheadle, near Manchester, in the UK. The information provided by Mr. Lowry and Mr. Phelan, though presented as a voluntary disclosure, w a s in any case likely to come to the attention of the Tribunal as part of the ordinary inquiries that would have been prompted by Mr. Matt Cooper's disclosures, and the inevitable examination of Mr. Austin's bank account, on the one hand, and, on the other hand, by the inquiries that would have been prompted by the information provided by Investec Bank. 1.26 Chapter 5 deals with a payment of ? 1 4 7 , 0 0 0 . 0 0 by Mr. O'Brien to Mr. Mr. Lowry was still in office. This payment w a s by an off-shore route, through made Lowry in 1996, while indirectly, having been transmitted Phelan and the late Mr. David Austin. Mr. Aidan It was to this payment that Mr. O'Brien was referring in his conversations to Mr. Barry Maloney, referred to, in Chapter 4. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1.27 1 The transaction was described by Mr. O'Brien as a payment to Mr. Page | 10 Austin for the sale by the latter of his Marbella holiday home, and by Mr. Lowry as a loan from Mr. David Austin to him, to enable him to refurbish his newly purchased Carysfort Avenue, Dublin, residence. However, despite its supposedly unblameworthy character, neither the accounts from and through which the payment was made, nor the so-called underlying transaction, were disclosed by Mr. O'Brien in the course of a relevant internal inquiry within Esat Digifone/Esat T e l e c o m in November, 1997, in connection with and j u s t prior to the Initial Public Offering of shares in Esat Telecom. Nor was it disclosed to the Tribunal by Mr. Lowry in the course of his evidence concerning the Irish Nationwide Society loan for Carysfort Avenue, despite his contention that the Building in money question was borrowed from Mr. Austin for the express purpose of carrying out the refurbishment of the property purchased with that loan, and further, despite the fact that the amount of the so-called loan had been lodged to an off-shore bank wholly owned by Irish Nationwide Building Society. The s u m in question, never withdrawn from Mr. Lowry's account, w a s re-transferred to Mr. Austin at the time that the McCracken Tribunal was established. The statement by Mr. O'Brien to Mr. Maloney that this payment had become resonates with the fact that at that time, transferred to one o f t h e "intermediaries" Lowry, namely, Mr. Austin. "stuck with 1997, an intermediary" been re- February, it had by w h o m it had been transmitted to Mr. 1.28 Chapter 6 relates to a payment of S t g . ? 3 0 0 , 0 0 0 . 0 0 by Mr. O'Brien to Mr. Lowry, the bulk of which was used for the purchase of a property by Mr. Lowry at Mansfield, in Derbyshire in the UK. The acquisition of the property, in Mr. Lowry's name, had completed in March, 1999, j u s t three months prior to Mr. Lowry's first giving evidence to the Tribunal, in June, 1999. The sale was completed with the transmission of funds f r o m a London bank account of Mr. Denis O'Brien, Credit Suisse First Boston, to Mr. Lowry's UK solicitor for that This purpose. The transmission o f t h e funds was processed by Mr. Aidan Phelan. was the second occasion on which funds, originating in an account of Mr. O'Brien, terminated, as a result of directions f r o m Mr. Aidan Phelan, in an account where they were held for the benefit of Mr. Lowry. Mr. Lowry maintained in evidence that the property represented a joint venture, whereby he paid a deposit of Stg.?25,000.00, and the balance was paid by Mr. Aidan Phelan. Mr. Phelan and Mr. O'Brien testified that the funds, though transmitted directly from Mr. O'Brien's account, represented Mr. Phelan's entitlement to payment for business services rendered by him to Mr. O'Brien. This so-called payment was never invoiced, f o r m a l i s e d , j o u r n a l i s e d or returned to Revenue. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1.29 1 Chapter 7 pertains to another English property transaction, involving This Page | 11 the purchase of another UK premises at Cheadle, near Handforth, Cheshire. transaction was first brought to the attention of the Tribunal as a result of inquiries conducted by Investec Bank, which had provided finance for the purchase, those inquiries having indicated that it appeared that Mr. Michael Lowry's name was connected with that of Mr. Denis O'Brien in relation to the transaction, within the bank; the transaction had been represented to two officials of the bank, by another official, as a Denis O'Brien transaction, at a time when, unknown to the bank, the c o m p a n y through which the purchase w a s made, Catclause Limited, was in fact a vehicle of Mr. Michael Lowry. The deposit for this purchase was paid for by the application of the balance of the S t g . ? 3 0 0 , 0 0 0 . 0 0 remaining in Mr. Lowry's client account with Mr. Christopher Vaughan, after the completion of the Mansfield transaction. The balance of S t g . ? 4 2 0 , 0 0 0 . 0 0 was provided by Investec Bank under arrangements negotiated by Mr. Aidan Phelan. The purchase was completed in Christmas w e e k of 1999. 1.30 Although both Mr. Michael Lowry and Mr. Aidan Phelan testified that the loan, and the property, were taken over by Mr. Aidan Phelan at, or shortly after, the closing of the sale, from correspondence, initially suppressed, but which ultimately came to the attention of the Tribunal during the belated evidence of Mr. Christopher V a u g h a n , the solicitor handling the transaction, it was clear that the apparent removal of Mr. Lowry from the transaction, by the removal of his company, Catclause, was effected for secrecy reasons. From other documentation, again initially suppressed, but which ultimately came to notice in the course of the above mentioned evidence, it is clear that, w h e n there was a prospect of selling the property, along with the Cheadle property, in S e p t e m b e r , 2000, it was beyond doubt that Mr. Lowry was to be the beneficiary. 1.31 he When the matter became the subject of internal inquiries within Investec Bank in 2001, both Mr. Aidan Phelan and the Investec official with w h o m negotiated the loan, Mr. Michael Tunney, repeatedly asserted that the transaction was a Denis O'Brien transaction. Although Mr. O'Brien at all times testified that he had no involvement whatsoever with the purchase or the loan, when faced in evidence with the testimony of the bank officials, his only response was to suggest that the bank and its officials had in effect fabricated their files so as to implicate him in the provision of the loan, an action which, as the Tribunal has found, and is in any case self-evident, would not have inured to the bank's benefit either in terms of the inconvenience, and unwelcome publicity, likely to be associated with its dealings with the Tribunal, or in terms of its commercial relationship with a substantial customer such as Mr. O'Brien. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 12 Chapter 8: The falsification of Mr. Christopher Vaughan's files 1.32 Chapter 8, entitled "Falsification of Mr. Christopher Vaughan's Files", of the relates to differing forms of correspondence coming to the attention Tribunal, primarily in the files of Mr. Christopher Vaughan, an English solicitor, retained by Mr. Lowry for both the Mansfield and Cheadle transactions, from which it appears that original letters, accurately recording the nature and details of Mr. Lowry's involvement in these transactions, had been falsified in such a fashion as to convey a substantially misleading factual position to the Tribunal. This suppression and deception came to be assessed by the Tribunal on two occasions, firstly, in relation to two letters at a relatively early stage of inquiries into UK property transactions, and secondly in regard to much more extensive correspondence, w h e n Mr. V a u g h a n belatedly came to testify at a late stage of public sittings in 2009. In every case the falsification and suppression was directed to either obscuring or removing references to Mr. Lowry in the files of Mr. Vaughan, which reflected Mr. Lowry's interest in certain English properties, and his involvement in those transactions, at a time when he was asserting in evidence a reliance on other aspects of Mr. V a u g h a n ' s files to the effect that he had no such interest or involvement. Chapters 9 and 10: The Doncaster Rovers transaction and Mr. Denis O'Connor's shuttle diplomacy 1.33 Chapters 9 and 10, although not exclusively in the case of the latter, deal with the Doncaster Rovers Football Club transaction, a further UK venture w h e r e b y Mr. O'Brien acquired the property interest of that club, and with matters brought to the attention of the Tribunal suggesting an involvement on the part of Mr. Lowry in the acquisition. Chief a m o n g s t these was a letter written by Mr. Vaughan, w h o in this instance acted for the purchasing vehicle of Mr. O'Brien, to Mr. Lowry, for w h o m he was also acting separately in another matter at the time, in which Mr. V a u g h a n referred to not having appreciated Mr. Lowry's "total involvement" in the transaction. The letter also alluded to Mr. Lowry's intimate participation in a meeting concerning the project, disclosed highly confidential and sensitive information concerning dealings with the vendors, and referred to various confidential enclosures. The chapter also refers to other references to an involvement on the part of Mr. Lowry in this transaction, made by Mr. O'Connor, a close associate of Mr. Lowry, and recorded by Mr. O'Brien's London solicitor, Ms. Ruth Collard. Mr. O ' C o n n o r ' s intimate role in dealing with disputes concerning Doncaster, between both Mr. Kevin Phelan and the vendors, on the one hand, and the purchaser, and the O'Brien interests on the other, an extensive account is provided in Chapter 10 in this Volume. The Tribunal was able to determine that Mr. Lowry had an involvement in the transaction, one which was intended would entail the conferral of s o m e pecuniary advantage on him. However, on the basis REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 13 of the inquiries undertaken and the evidence heard, the Tribunal was unable to determine the precise nature of his interest in the property, or the extent to which it was intended he would benefit from the transaction. There were further lines of inquiry which the Tribunal could have pursued but, having regard to the extended time period already devoted to the matter, and the extent of the concealment, suppression and deliberate falsehoods encountered by the Tribunal in endeavouring to conduct its inquiries into all of the UK properties, the Tribunal was doubtful that any such further inquiries would cast any further light on the matter. Chapter 11: Conduct of lawyers 1.34 In Chapter 11 the Tribunal considers aspects of the relationship between a lawyer and his client, in which it may become necessary to advise the client to take a course such as the disclosure of documents, or the disclosure of information, palpably relevant to the Tribunal's proceedings, where such disclosure may be contrary to the client's wishes. One of the matters examined concerns the active non-disclosure by Mr. O'Brien, his father Mr. Denis O'Brien Senior, or his lawyers, of a reference in a document to Mr. Michael Lowry in the context of the Doncaster transaction, when both client and lawyers acknowledged the relevance and importance of the document. A not dissimilar situation arose relating to the attitude of the City of London Police, concerning the disclosure of information regarding a complaint regarding the handling by the police of a complaint of blackmail made by Mr. Denis O'Brien Senior. Two firms of solicitors, one in London, and one in Dublin, were centrally involved in a failure to disclose information which, on the evidence available, was palpably relevant and, more seriously, relayed to the Tribunal information which misrepresented the true position. Chapter 12: Share transaction anomalies 1.35 Chapter 12 addresses certain share transaction anomalies in the course of the flotation of Esat Telecom, involving Mr. O'Brien, Mr. David Austin, and the firm of New York stockbrokers, Donaldson Lufkin & Jenrette. SOME FEATURES O F THE EVIDENCE Testimony of friends of, and professional advisers to, Mr. Denis O'Brien 1.36 Those who read the chapters which follow, in particular those relating to the money trail, will have an opportunity to assess the evidence that was heard, and the conclusions that have been drawn by the Tribunal on foot of it. At the very outset of the Tribunal, it was stated that, in its investigations and REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 In the context of the Page | 14 reporting, it should neither be a witch-hunt nor a whitewash. nature and weight of evidence heard and evaluated, it is the considered view of the Tribunal that a report, which failed to draw the conclusions necessitated by that evidence, would emphatically fall into the latter category. Those chapters set forth detailed analysis of each of the individual transactions and separate portions of evidence heard. S o m e characteristics c o m m o n to various of these transactions are further examined and analysed in those chapters. But there is also a cumulative element which must be taken into consideration. If the donation of $50,000.00 made to Fine Gael had indeed been motivated by the wish of Telenor, Mr. O'Brien's Norwegian partners within Esat Digifone, and if the money advanced off-shore by Mr. O'Brien's friend and confidante, Mr. David Austin, to Mr. Lowry only coincidentally happened to be the same funds, as had separately property, been paid by Mr. O'Brien to any Mr. Austin, for the latter's Spanish again it surely strains rational evaluation of coincidence that, thereafter, substantial funds of Mr. O'Brien moved, through a further trusted associate in Mr. Aidan Phelan, to be applied for the benefit of Mr. Lowry in relation to the UK property transactions, unless an intent consistent with that application underlay the entire course of dealings. 1.37 A c o m m o n feature of the evidence from which adverse conclusions have been drawn with regard to Mr. Lowry and Mr. Dunne, and particularly Mr. O'Brien, was that in no case could it convincingly be suggested that any of the material had emanated from sources with any demonstrable history of hostility to any of those individuals. Mr. O'Brien's case is the most illustrative, in that inquiries concerning his dealings with Mr. Lowry were in the main prompted by remarks he himself had made to Mr. Maloney, the thrust of which he had acknowledged in evidence. As the inquiry proceeded, it was statements contained in documents generated by his own solicitors, Mr. Christopher V a u g h a n and Ms. Ruth Collard, that to a significant degree propelled inquiries in relation to English property transactions. Likewise, it was from statements made by his agent Mr. Aidan Phelan, and his long term business contact, and later associate, Mr. Michael Tunney, that many other inquiries were pursued in connection with those same English property transactions. Of course it could not be suggested, in the case of Mr. Lowry, that Mr. Aidan Phelan or Mr. Michael T u n n e y had any animus or bad feeling toward Mr. Lowry. In Mr. Lowry's case, also, it was statements made by his own solicitor, also Mr. Christopher Vaughan, and by his associate and agent, Mr. Denis O'Connor, which featured prominently in evidence concerning the English property transactions. Where Mr. Dunne was concerned, there was no suggestion of any hostility against him by Mr. Mark FitzGerald, nor indeed any serious suggestion to the same effect where Mr. Lowry was concerned. In the course of the cross-examination of Mr. Christopher V a u g h a n by Mr. O'Callaghan, counsel for Mr. O'Brien, it w a s suggested that the situation in which Mr. O'Brien f o u n d himself, having to answer for the contents of Mr. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 15 V a u g h a n ' s correspondence, in the case of Doncaster Rovers specifically, was something for which Mr. V a u g h a n was culpable; w h a t was in effect put was that Mr. V a u g h a n was to blame, for mistakenly noting an involvement on the part of Mr. Lowry that he acknowledged in evidence did not exist. To this suggestion Mr. V a u g h a n responded that any erroneous statements he had made were not his fault, but the result of w h a t had been stated to him by Mr. Lowry and certain agents and associates of Mr. O'Brien. It also has to be said that, in assessing the evidence of Mr. Lowry, Mr. O'Brien and some of the witnesses associated with each of them, and in particular responding to the evidence of the class mentioned above, clear elements of implausibility and improbability emerged. This applied to Mr. Lowry, not merely in the context of the chapters specifically addressing the money trail, but in regard to his dealings with Mr. Ben Dunne and Mr. Mark FitzGerald in relation to the Marlborough House rent arbitration. As to Mr. O'Brien, even allowing for the difficulties inherent in testifying for periods of some days on relatively detailed and intricate matters, in c o m m o n with Mr. Lowry, his testimony in many respects proved unconvincing, unpersuasive and unsatisfactory. Frequently argumentative, intemperate and bombastic in manner, his disposition towards self-justification in his testimony was manifest in much inaccuracy in his responses to questioning and, as regards significant portions of his testimony relevant to the money trail matters inquired into, the Tribunal found much of w h a t he stated at best unreliable and reckless. Mr. Denis O'Brien's view of the motivations of witnesses 1.38 S o m e t h i n g of the quality of this portion of Mr. O'Brien's testimony may unworthy be gauged from his almost habitual readiness to attribute base or motives to persons w h o gave evidence that was potentially d a m a g i n g to his interests. To take some obvious examples; (i) Mr. O'Brien contended that the motivation of Mr. Barry Maloney, as Chief Executive Officer of Esat Digifone, in bringing to attention his several conversations with Mr. O'Brien, particularly on a delayed basis and when he knew that no improper payment had been made, was because he was seeking to derail the Initial Public Offering of Esat Telecom, the vehicle through which Mr. O'Brien held his interest in Esat Digifone; (ii) as to evidence from a number of Telenor witnesses, perceived as adverse by Mr. O'Brien, this was attributed by him to Telenor having been unsuccessful in its bid for control of Esat Digifone, and because its witnesses may not have made full and frank disclosure in Norway, REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 as to the circumstances in which Telenor had made the contribution to Fine Gael; (iii) w h e n put to Mr. O'Brien in evidence that he was scarcely suggesting that the officials of W o o d c h e s t e r / I n v e s t e c Bank had not accurately Page | 16 recorded w h a t was stated to t h e m at meetings, s o m e short number of months prior to their giving evidence, relating to the involvement of Mr. O'Brien in supporting the loan which had been advanced to the c o m p a n y controlled by Mr. Lowry, in circumstances where w h a t had been suggested to t h e m at those meetings had obliged t h e m to report the loan to the Central Bank and the Tribunal, Mr. O'Brien responded that, if a realistic view w a s wanted, banks s o m e t i m e s put file notes into their files that suited their position; (iv) other instances indicative of a s o m e w h a t simplistic and self-serving view of events on the part of Mr. O'Brien included his observation, in the context of a suggested error on the part of Mr. Peter Muldowney of Donaldson Lufkin & Jenrette, as to the beneficiary of a share purchase described in Chapter 12 of this Volume, that brokers made plenty of errors w h e n they put shares that had been purchased into the w r o n g account, although he was unable in evidence to point to any other such instance. Mr. Denis O'Brien's view on the Tribunal and its legal personnel 1.39 Mr. O'Brien's views on the Tribunal, and its legal personnel, need little introduction, and have been aired energetically by him in evidence, statements, press conferences, advertisements and the internet, as well as in personal letters from him to the Tribunal's Sole Member. In the earlier of two such letters in 2010, he expressed the view that the Tribunal was "totally that its activities constituted "a new low in Irish Judicial history". personal and biased", Quite w h y such supposed bias should have formed and persisted within the Tribunal has never been made entirely clear: w h a t realistically tenable animus could impel the Tribunal to make serious criticisms, or adverse findings, which necessarily entail reputational and other d a m a g e , w h e n none are warranted? Whilst a measure of non-disclosure, delay and a court challenge was encountered by the Tribunal in relation to the matters investigated and reported on in Part I o f t h e Report, these were of comparatively modest dimensions, in contrast to the wholesale concealment, non-cooperation and splenetic outpourings of abuse given vent to, by and on behalf of some affected persons on an almost daily basis, in relation to the matters addressed in this Part o f t h e Report. As stated, a later chapter deals with certain of the repercussions caused to the Tribunal by delay and non- disclosure on the part of a small minority of the legal practitioners acting for REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter affected 1 persons. As to the content and frequency of substantially abusive Page | 17 correspondence by a similarly small minority of practitioners involved, it may be that this will require to be addressed in the course of considering costs. 1.40 In an article in The Irish Times, of 4 t h May, 2010, it was noted that it that the outdated to be shifted legislative infrastructure of the inquiry substantive process issues at was "regrettable has allowed attention from the very serious of inquiry". the heart of the tribunal to the method Further, the writer observed the political and Judicial Judicial "media the that, in Italian corruption inquiries "tensions branches authorities attention alleged of the state have been exacerbated between by accusations realm", that the and that have unnecessarily has shifted from intruded into the political of corruption the allegations to disputes about bias ofjudges." 1.41 In a similar vein, although in the sphere of major commercial litigation in the High Court of England and Wales, rather than of inquisitional tribunal processes, reference in passing may be apposite to the case of Digicel (St. Lucia) and Ors v. Cable & Wireless plc and Ors [2010] EWHC 774 (Ch). Mr. Justice Morgan, the Trial Judge, dismissed all the claims of the Digicel companies, of which Mr. Denis O'Brien was Chairman, alleged to have amounted to over S t g . ? 3 0 0 million, save for a nominal d a m a g e s award of Stg.?2.00 on one of the claims, in a lengthy j u d g m e n t of 15 th April, 2010. He also addressed matters of costs on 20 t h April, 2010. In exercising a discretion to allow the highest level of costs for the successful defendants, subject to a limited percentage discounting, he indicated that, a m o n g the factors taken into consideration were: (i) the allegation that the defendants had acted in bad faith throughout all their dealings with Digicel; (ii) massive over claiming and gross exaggeration of alleged losses by the claimants, contending that virtually everything the defendants had done was unlawful, and sustaining claims on foot of which they cannot have expected to succeed; (iii) the use of derogatory press releases and statements calculated to damage the defendants; (iv) the circulation of written advertising c a m p a i g n s that were highly critical of the defendants, some at least of which were neither fair nor accurate; REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (v) 1 furnishing witness statements which were not confined to facts within knowledge, but contained adverse c o m m e n t a r y on the behaviour of others. Page | 18 The matters noted by the Trial Judge in this regard, bear regrettable similarities to certain conduct on the part of Mr. O'Brien and his advisers experienced for a substantial period of time, by the Tribunal. "Does all this have 1.42 the ring of truth?" The Tribunal must be w a r y and vigilant in its evaluation of evidence. where potentially serious consequences may arise for affected Particularly persons, it must guard against drawing conclusions based on evidence that is frail, inadequate or untested, either as regards an individual matter of evidence, or an aggregation necessary caution of a number however of such and matters. Such should not understandable that findings and or cannot mean conclusions can only be expressed, if so unrealistically high a standard of proof is observed as to border upon mathematical certainty, or diverge significantly from w h a t for centuries has been found appropriate in the trial of grave matters in civil litigation. A stage may be reached at which, upon a careful and dispassionate analysis of all of the evidence, particular views or conclusions are clearly warranted, not by w a y of whim, caprice or marginal preference, but as a basis clearly established in fact. In the present instance, due allowance having been or excusable error, the combination of positive made for frailty of m e m o r y evidence heard, allied to the inferences properly to be drawn from such matters as absence of proper disclosure, non-attendance of potentially crucial witnesses, clandestine courses of dealing, the wholesale falsification of crucial solicitors' files, and explanations redolent with increasingly implausible coincidence, warrant conclusions that certain payments or other benefits falling within the Terms of Reference were made available by Mr. O'Brien to Mr. Lowry. Put more bluntly, surveying the odd backdrop of happenstance, silence and implausibility comprised by much of the evidence, and the manner and time in which it came to be recounted, it is inevitable that a stage is reached w h e n the Tribunal must ask "does all this have the ring of truth?", not. and conclude that much emphatically does T R I B U N A L P R O C E D U R E S A N DT H E D U R A T I O N O F ITS P R O C E E D I N G S 1.43 In preparing Part II of its Report, the Tribunal has had full regard to all of the obligations and procedures outlined in Part I of the Report, with a view to ensuring fairness to all persons who came within the scope of its inquiries, in w h a t it is appreciated was necessarily a lengthy and demanding process. In particular, it has sought to have full regard to the necessity to apply a civil onus of REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 19 proof that respects fully the importance of matters involved to affected persons, and the r e l e v a n t j u r i s p r u d e n c e of the S u p r e m e Court and High Court. The Tribunal has also furnished to such affected persons a full opportunity to make submissions on all matters d e e m e d of importance, and in particular in regard to any proposed or provisional findings or conclusions that may be critical of such affected persons, and has, save for the limited exceptions outlined in Part I o f t h e Report, based the findings made in Part II, exclusively on evidence heard and tested at public sittings. The Tribunal has moreover declined, in respect of a limited number of matters that were considered in private inquiries, to proceed to public sittings, either because such matters were not demonstrably within the Tribunal's Terms of Reference, because the potential prejudicial import appeared to exceed the probative value of w h a t might have emerged, or because the Tribunal could not countenance a further prolongation of its inquiries. 1.44 Before concluding this relatively short introductory chapter, it would be remiss not to refer to the duration of time that has been entailed in bringing the Tribunal's w o r k to a conclusion. Undoubtedly s o m e factors, outside of the control Firstly, there of material o f t h e Tribunal, have impacted significantly on that overall duration. has been the concealment, falsification of files, non-disclosure documentation, and general absence of cooperation, usually presaged by effusive protestations of an anxiety to assist the Tribunal fully, that have been noted on the part of some affected persons and their representatives. 1.45 Secondly, the Tribunal has been required to defend four sets of legal brought against it, necessitating multiple hearings, including the proceedings initial Constitutional challenge brought by Mr. Haughey, each of which proceeded in both the High Court and S u p r e m e Court and, notwithstanding that all these proceedings proved unsuccessful, very significant amounts of time and resources had to be devoted to t h e m by the Tribunal. Indeed, given the very limited impact wealthy of the sanctions entailed in costs awards made against exceedingly individuals, balanced against the delay and disruption necessarily occasioned to Tribunal inquiries, by such litigation, it may realistically be said that litigious It success in these instances for the Tribunal was of a s o m e w h a t pyrrhic nature. is of course acknowledged that, in dealing with these cases, both the High Court and the S u p r e m e Court listed and determined t h e m with the m a x i m u m expedition possible. Four further sets of legal proceedings, each instituted against the Tribunal in 2010, currently remain pending, and await final determination. 1.46 Thirdly, it should be noted that a significant portion of the period, during which the primary focus of the Tribunal was on the T e r m s of Reference addressed in this Part of the Report, was also occupied with extensive private investigations into new material which came to light in the course o f t h e inquiries REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 20 into Ansbacher (Cayman) Limited, and associated entities, carried out by the Authorised Officer appointed by the Minister for Enterprise, Trade and Employment. Although a detailed Report w a s prepared and furnished to the relevant Minister, the outcome of these extensive investigations did not require proceeding to public hearings. This entailed the consideration of t h o u s a n d s of pages of documents, and the conduct of private inquiries, including interviews with a significant number of individuals. 1.47 Fourthly, as already alluded to, the Tribunal has had to conduct its investigations and hearings in an environment that has changed unrecognisably since the enactment o f t h e originating Tribunals of Inquiry legislation in 1921. reading of some of the early Tribunal of Inquiry Reports, in the A decades arcadian immediately following that originating legislation, conveys an almost picture of a serene, orderly and cooperative process, that is greatly at odds with contemporary experience, particularly as regards a Tribunal such as this, which is required to investigate the possibility of improper associations between senior politicians and powerful figures in the business world. Not only would such matters as the extent of abrasive correspondence directed to the Tribunal, and the wholesale deployment of media consultants as an integral part of representing a substantial client, prove unrecognisable to those involved in early Tribunals, but the jurisprudence of the High Court and S u p r e m e Court over the currency of this Tribunal, emphasising the rights and fair procedures that must be accorded to affected persons, and properly so, has significantly and crucially changed the landscape. The Tribunal accepts and understands the need for a rights-based jurisprudence, and would in any event never have countenanced the concept of riding roughshod over affected individuals or entities, but one undoubted consequence is that it has become exceedingly difficult to run an efficient and expeditious Tribunal, that equates getting as close as possible to the heart of matters under investigation, whilst fully safeguarding the expanded entitlements of affected persons. It is desirable that something more should be said in this regard in the context of Recommendations. Having noted all these and related matters, however, it has to be said that the aggregate duration o f t h e Tribunal, seeking to inquire into definite matters of urgent public importance, has nonetheless exceeded w h a t was intended, or is desirable, and again this aspect will be alluded to in forthcoming Recommendations. TRIBUNAL 1.48 ERROR It would likewise be remiss not to refer to the error made by the Tribunal and referred to at public sittings in March, 2010, even though it is unconnected with any aspect of the investigations addressed in this Volume. That error, whilst extending to a private meeting overlooked by the Tribunal, primarily related to the misinterpretation by the Tribunal of a letter furnished by REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 21 the Attorney General in the course of the Tribunal's private investigative inquiries in connection with the G S M licence. As it arose in that context, the error will be Errors can and do occur in all addressed and explained in Volume 2 of this Part. fields of human endeavour, particularly in matters of the complexity with which the Tribunal has been engaged over many years. The error is one which is remediable, and whilst the Tribunal fully accepts that it was an error of the Tribunal's own making, it is one that could have been identified at a much earlier point, had matters over which the Tribunal had no control proceeded otherwise. RETAINER O F LEGAL TEAM ANDMR. JERRY HEALY SC 1.49 Lastly, some limited matters in relation to the Tribunal legal team, which, in comparison with those engaged in comparable agencies, has never been large, and in relation to which the Sole Member has acknowledged and repeats his indebtedness, as expressed in Part I of the Report. The first such matter relates to some remarks made in the course of related business of the Public Accounts Committee, in addition to brief correspondence between Mr. Michael McGrath, T.D. and the Tribunal, the substance of which was a suggestion that an element of "cronyism" had applied to the e n g a g e m e n t and retention of the members of the legal team. At this juncture, it is proposed only to say that, in the immediate aftermath of the request to the Sole Member to undertake his task from the then Attorney General, Mr. David Byrne SC, a detailed and lengthy discussion took place between t h e m in the Attorney General's office, in which numerous names of practitioners were explored and inquired into, and it was on foot of that considered exchange that the retention of the principal members of the legal team occurred. 1.50 The second matter involving the Tribunal legal t e a m relates to one of its senior members, Mr. Jerry Healy SC, and a contention that has been made persistently for several years that, because Mr. Healy had been retained as senior counsel on a limited and short-term basis by Persona Digital Telephony, the second-placed consortium in the G S M competition, after its outcome had been announced, he had placed himself in a position of potential conflict and bias, by acting as Tribunal counsel in respect of subsequent inquiries into that competition. It is not proposed to e m b a r k upon this matter in the detail, or with the v e n o m , in which it has been pursued in correspondence and via the internet, but the essential facts must be briefly stated. 1.51 It has been suggested and portrayed, erroneously, that Mr. Healy advised the Persona consortium in relation to its bid for the G S M licence. That is incorrect. Mr. Healy w a s first consulted by the solicitor to Persona after the G S M had concluded, for the sole purpose of advising in relation to competition REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 22 proposed Judicial Review proceedings to compel the furnishing of reasons as to why Persona had not won the competition. Junior counsel had prepared settled or approved and the Mr. Healy by Mr. Healy. Judicial no Mr. further Lowry an opinion, which was then proceedings whatsoever. were Having not Review advice in the issued, to provided position of regard prominent Tribunal's Terms of Reference, and the possibility that its investigations, as they unfolded, could touch upon the conduct of the G S M competition, Mr. Healy, in accordance with the highest professional standards, duly brought that limited involvement to the attention of the Sole Member before accepting his appointment as counsel to the Tribunal. The Sole Member was satisfied that such a minor prior retention to approve an opinion written by junior counsel, after the completion of the competition, could not give rise to any operative conflict, or any such reasonable perception. 1.52 In March, 2001, Investec Bank reported to the Tribunal the apparent involvement of Mr. Lowry and Mr. O'Brien, in relation to the loan advanced to fund the acquisition of the Cheadle property in the UK. Following further disclosures, and information that came to the attention of the Tribunal regarding matters with which both Mr. Lowry and Mr. O'Brien were associated, it became apparent that these would require investigation by the Tribunal. advance of c o m m e n c i n g any inquiries At that point, in May, 2001, in matters at public sittings, into these disclosure of Mr. Healy's prior retention by Persona for the purposes of furnishing that opinion was made to each of the senior counsel acting for the persons affected by those inquiries, namely, Mr. Lowry, Mr. O'Brien and Telenor. T h e y were each asked to convey that matter to their respective clients, and to indicate whether their clients had any objection to Mr. Healy acting as Tribunal counsel in the event that an inquiry was pursued into the G S M licence. Each of those senior counsel, having duly taken their clients instructions, confirmed that their clients had no objection to Mr. Healy's continuing involvement. In the case of Mr. O'Brien, that confirmation was confirmed by his then solicitors, Messrs. William Fry, by letter dated 28 t h May, 2001. 1.53 Disclosure was likewise made at a later point to senior counsel acting for the State, once the State became a party concerned with the Tribunal's inquiries into the G S M licence. As the involvement of Mr. Dermot Desmond was never regarded as central to any aspect of the Tribunal's inquiries, and indeed was reflected in Mr. D e s m o n d ' s infrequent and sporadic representation at public sittings, his legal advisers were not formally apprised of Mr. Healy's prior limited involvement in approving that opinion on behalf of Persona, as had the legal advisers to Mr. Lowry, Mr. O'Brien, Telenor and the State. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1.54 1 Prior to c o m m e n c i n g inquiries into the G S M process, the Tribunal t o o k precaution, to protect itself against any complaint that might Page | 23 the additional subsequently be made against the Tribunal by Persona Digital Telephony, arising from Mr. Healy acting for the Tribunal in that investigation, of seeking and obtaining from Persona a waiver of any duty of confidentiality that might have arisen on the part of Mr. Healy, from his limited role in connection with approving the opinion prepared b y j u n i o r counsel. 1.55 The Tribunal is satisfied that Mr. Healy's conduct in this matter has The manner in which efforts have been been exemplary, and beyond reproach. made to d a m a g e the reputation of Mr. Healy, and thereby call into question the integrity and independence of the Tribunal by, firstly, misrepresenting the limited extent of Mr. Healy's prior involvement with Persona, and secondly, by concealing both the fact that disclosure of that involvement had been made, and that no objection had been taken to Mr. Healy's continuing to act as counsel for the Tribunal, has been both opportunistic and reprehensible. The Sole Member has already expressed his views on this matter, in a Ruling made by him in the course of public sittings, on 3 r d March, 2004. It is worthy of note that despite his earlier criticisms of Mr. Healy, in the course o f t h e Tribunal's examination of Mr. Michael Andersen, the Tribunal's concluding witness, Mr. Denis O'Brien, who took exception to the retainer of Mr. Michael McDowell S C on the grounds of bias, expressly indicated that he would have had no objection had the examination of Mr. Andersen been conducted by Mr. Healy. 1.56 Although touching on matters primarily addressed in Volume 2 of this Part of the Report, because it was only latterly that the evidence of Mr. Michael Andersen, the lead consultant to the G S M process was taken, it is appropriate at this juncture to remark on his contention that Tribunal counsel had displayed bias and hostility in their dealings with him. As was stated on more than one occasion in the course of the Tribunal's proceedings, the Sole Member of the Tribunal cannot put himself in a position where he w o u l d be obliged to decide on a contested question of fact as between m e m b e r s of his legal team, or indeed members of his administrative staff, on the one hand, and a witness on the other. A Ruling to this effect was made by the Sole Tribunal's public sittings on 23 r d Member in the course of the March, 2010, on the basis that, by reason of long association with members of both his legal t e a m and his staff, he would in doing so effectively be deciding as a j u d g e in his own cause. 1.57 It was following this public Ruling that Mr. Andersen drafted a statement to the Tribunal, and indicated that he would make himself available as a witness at public sittings. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 24 BELATED ATTENDANCE O F MR.MICHAEL ANDERSEN 1.58 The statement of Mr. Michael Andersen contained a number of allegations of bias and misconduct against n a m e d and unnamed m e m b e r s of the Tribunal legal team, and was provided to the Tribunal, not by Mr. Andersen or his lawyer, but by solicitors acting for Mr. Denis O'Brien. The Tribunal subsequently learned, s o m e four months later, that Mr. A n d e r s e n had discussed the statement with Mr. T o m Reynolds, solicitor, an employee of Digicel and an associate and legal adviser to Mr. O'Brien, and had provided it to Mr. Reynolds in return for w h a t then was an undisclosed indemnity from Mr. O'Brien. 1.59 Despite the Ruling, the complaint of bias was frequently repeated in Whether any such bias against, or hostility towards, evidence by Mr. Andersen. Mr. Andersen was displayed, as he contends, cannot conclusively be determined by this Tribunal insofar as any such determination would entail resolving conflicts of evidence as between members of the Tribunal legal team, who it should be recorded categorically reject the complaint, and Mr. Andersen. 1.60 However, it is appropriate to lay before the reader certain features of the evidence of Mr. A n d e r s e n concerning these matters. Any c o m m e n t a r y must of necessity be limited to w h a t can be deduced from Mr. A n d e r s e n ' s own evidence. Firstly, there is the fact that despite the v e h e m e n c e with which these views were expressed by Mr. A n d e r s e n in evidence, there had been no complaint to the Tribunal in any correspondence following any of the meetings with Tribunal counsel over a period of five years between 2 0 0 3 and 2008. Nor have any of these matters, at any time, been raised in any forum (a) where they were justiciable and, (b) w h e r e members of the legal t e a m involved would have an opportunity to dispute the complaints. 1.61 Complaints of bias were made, for the first time, by Mr. Andersen, in December of 2008, in a response to Provisional Findings notified to him in November, 2008. Of all the complaints made, the most serious, and the only one to which reference can be made at this juncture, was the assertion that the Tribunal had suppressed a set of quantitative results generated by AMI, Mr. A n d e r s e n ' s firm, in the course of the G S M evaluation process. Mr. Andersen alleged that in the course of a private meeting, members of the Tribunal legal t e a m had displayed bias in favour of Persona, and had suppressed a version of the quantitative evaluation provided by AMI, because it did not rank Persona in first place. It was also alleged that the Tribunal did not refer to the evaluation in This complaint the course of public sittings and did not raise it again with AMI. was repeated in various forms in Mr. A n d e r s e n ' s S t a t e m e n t furnished to the Tribunal by Messrs. Meagher & Company, solicitors for Mr. Denis O'Brien, on 14 th REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 25 April, 2010. The full significance of the complaint cannot be demonstrated in this introductory chapter and will not be properly appreciated until the reader has digested at least the Executive S u m m a r y of Volume 2 of this Part. 1.62 In the course of Mr. Andersen's evidence, this assertion was demonstrated to be wholly without foundation. Apart from anything else, the quantitative results in question had been referred to at length in the Tribunal's Opening S t a t e m e n t in December, 2002. Further, they had been dealt with in evidence on various occasions with Departmental witnesses, including Days 201, 214, 215, 2 2 2 and 232. In the course of evidence, it became clear that they had also been faxed to Mr. A n d e r s e n ' s lawyer for the purposes of a meeting between Tribunal counsel and Mr. Andersen in October, 2003. 1.63 In the course of the Tribunal's last sittings, Mr. Andersen was eventually obliged to withdraw the complaint, and to accept that the evaluation had not been suppressed. 1.64 The S t a t e m e n t produced to the Tribunal by Mr. O'Brien's solicitors on behalf of Mr. Andersen in April, 2010, contained additional specific allegations against named and u n n a m e d members of the Tribunal legal team, which had never previously been set out by Mr. Andersen. It is noteworthy that these assertions were made for the first time after the Tribunal had publicly ruled that it could not call its own lawyers or staff to give evidence on matters of dispute. It is also noteworthy that w h e n this S t a t e m e n t was provided to the Tribunal, the extent of the dealings between Mr. Andersen and Mr. O'Brien, and Mr. T o m Reynolds, a legal adviser to Mr. O'Brien which led to the production of the Statement, including the provision of a comprehensive indemnity by Mr. O'Brien in return for the Statement, was kept undisclosed. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 2 _ EARLY EVIDENCE RELATING T O M R . MICHAEL LOWRY INTRODUCTION 2.01 Lowry, In addressing the Terms of Reference that related to Mr. the Tribunal sought to assemble all potentially relevant Michael available Page | 26 information relating to his financial affairs, both inside and outside the State. Whereas payments Enterprises the to focus Mr. of the McCracken his Tribunal was confined Limited to examining Streamline was Lowry Dunnes and company and/or Mr. Garuda Ben t/a from Stores Dunne, this Tribunal required to examine all or any relevant payments to him whilst holding public office, and also to inquire into the sources of all monies held in bank accounts for him. 2.02 maximum Further to repeated assurances by and on behalf of Mr. Lowry that the degree of cooperation and disclosure was being afforded to the Tribunal, various copy statements of bank accounts held by Mr. Lowry were made available. Whilst a majority of lodgments to these accounts appeared identifiable with income from Mr. Lowry's business, and other sources of remuneration, a number did not appear to reconcile with known sources by the of income, notwithstanding retained by Mr. extensive reconstructive w o r k undertaken accountant Following related Lowry to assist in his dealings with the Tribunal. substantial preliminary investigations, which further had regard to the inquiries and findings of the McCracken Tribunal, matters proceeded to public sittings in late June, 1999. In the course of these, a general review of Mr. Lowry's finances between the years of a limited 1987 and of 1996, inclusive, was followed payments or transactions, by an examination number considered relevant to the Terms of Reference, that had come to light in the course of these inquires. 2.03 Mr. Lowry's accountant, Mr. Denis O'Connor, a Partner in the firm of Brophy Butler Thornton, indicated that his professional association with Mr. Lowry dated only from December, 1996, although he had previously known him socially. He had assisted Mr. Lowry in relation to the McCracken Tribunal as well as this one, and was aware that both Tribunals had addressed numerous queries to Mr. Lowry, seeking to relate bank lodgments to income receipts. This entailed extensive dealings with banks. It was accepted that, prior to Mr. involvement, the financial affairs of Mr. Lowry had been O'Connor's in a conducted haphazard fashion. Income appeared to derive f r o m firstly, salary and expenses as a public representative and Minister, secondly, salary and commission from Butler Engineering Limited, thirdly, salary f r o m Garuda, fourthly, bonus payments from Dunnes Stores and/or Mr. Ben Dunne for w o r k done independently of the money paid to Garuda, fifthly, other payments in connection with refrigeration REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 27 consultancy services, sixthly, proceeds from sales of assets, including furniture, and finally, some rental income f r o m a dwelling house and lands. 2.04 Between business and joint accounts, the bank accounts acknowledged by Mr. Lowry as having been held by him were some nineteen in all, including some of limited transactions and short duration. These may conveniently be classified as follows: (i) two Bank of Ireland current accounts at Thurles, one personal and opened prior to January, 1987, and the other in the name of Michael Lowry trading as Streamline Enterprises, opened on 14 th November, 1988; (ii) four Irish Permanent Building Society accounts, a deposit account at Thurles opened prior to January, opened on 18 th 14 th 1987, a deposit account at Cork May, 1992, a further Cork deposit account opened on May, 1992, and a joint loan account with Mrs. Catherine Lowry at Cork, opened on 29 t h May, 1992; (iii) an Allied Irish Banks, Dame Street, Dublin, current account, opened on 9 t h May, 1991; (iv) five Allied Irish Banks, Dame Street, Dublin, deposit accounts, opened respectively on 12 th July, 1989, 15 th March, 1993, 5 t h January, 1995, 19 th May, 1995, and 10 th October, 1996; (v) an Allied Irish Banks Finance and Leasing deposit account, opened on 10 th January, 1992, and a further Allied Irish Banks Finance and Leasing deposit account, in this instance in sterling, opened on 29 t h October, 1990; (vi) two Allied Irish Banks Thurles accounts, one a home loan opened on 17 th January, 1992, and the other a current account, opened on 19 th January, 1992; (vii) an Irish Nationwide Building Society loan account, opened in S e p t e m b e r , 1996, from Head Office, in relation to the purchase of a house in Blackrock, County Dublin; (viii) an Allied Irish Banks Channel Islands sterling deposit account, opened on 17 th January, 1991; (ix) a Bank of Ireland, Isle of Man, sterling deposit account, opened on 9 t h October, 1990. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 2.05 Mr. O'Connor gave 1 comparatively detailed evidence regarding the Page | 28 reconstructive accountancy w o r k that he had undertaken, in seeking to equate bank lodgments with income receipts in respect of each of the calendar years from 1987 to 1996, inclusive. He stated that, as with other clients he became more difficult the further one went had back. represented, this exercise Addressing financial records, that in Mr. Lowry's case by any appraisal left much to be desired, was further complicated by his apparent practice of, on occasion, retaining cheques for quite lengthy periods before lodging them, and of taking partial cash withdrawals of limited amounts, in the course of the exercise of making lodgments. 2.06 his Mr. O'Connor then dealt for each of the years under consideration with exercise of balancing unidentified lodgments to accounts, with income receipts not matched to lodgments, and addressing in particular payments or transactions queried by the Tribunal, certain of which will shortly be referred to. In general, the pattern that emerged was that, for the early years in question, excesses of unidentified lodgments over unmatched income receipts were apparent, whereas for 1994 to 1996 inclusive, the last three relevant years, the converse appeared the position. Allowing for correction of the view initially formed in relation to the position applicable in 1992, Mr. O'Connor accordingly indicated that he found the net position for each of the relevant years to be as recorded in the table below: Year Excess of income receipts over lodgments 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 ? 8,986.84 ? 3,714.15 ? 3,498.74 ?16,836.73 ?11,265.62 ? ? 8,439.49 1,785.42 -?6,459.33 -?3,420.54 -?3,517.44 2.07 In the latter course of his evidence, Mr. O ' C o n n o r corrected the 1992 figure, to the effect that it in fact revealed a deficit of ? 1 , 3 9 3 . 0 9 , rather than an ?8,439.49 question, excess. there Aggregating emerged over these from respective Mr. balances for the an years excess in of thus O'Connor's income inquiries of unidentified lodgments unmatched receipts approximately Mr. ? 3 1 , 2 9 5 . 0 0 , balances in pence for the respective years having been ignored. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 29 O'Connor stated that it was characteristic of such cases that transactions in the earlier years were harder to verify, and that a s o m e w h a t improved position was apparent in relation to latter years, to the extent that, for the last two years, during which Mr. Lowry was a Cabinet Minister, no large lodgment had remained unidentified, so that there was then in broad terms a balancing of books. Applying accountancy principles of materiality, and bearing in mind the finding of the McCracken Tribunal, that turnover in excess of ? 1 2 , 0 0 0 , 0 0 0 . 0 0 was received between 1989 and the end of 1996, from Dunnes Stores, Mr. O ' C o n n o r was of the view that the to said aggregate was amount of lodgments in that terms could of not be attributed income essentially immaterial, accepted accountancy practice. PARTICULAR TRANSACTIONS 2.08 terms, Having reviewed more detailed REVIEWED in general of Mr. Lowry's finances over these years was then directed to a limited evidence number transactions considered to have particular relevance to the Terms of Reference concerning Mr. Lowry. In ascending order of importance, these comprised: (i) a sum of ? 3 5 , 0 0 0 . 0 0 cash paid by Mr. Patrick Doherty, property developer, to Mr. Lowry in May, 1995, for the purchase of certain antique paintings and furniture; (ii) certain payments made in cash, or by cheques payable to cash, for refrigeration consultancy services undertaken by Mr. Lowry for (1) Mr. Bill Maher of Maher Meat Products, and (2) Mr. Patrick Whelan of Whelan Frozen Foods Limited; (iii) a further payment of ? 1 5 , 0 0 0 . 0 0 paid to Mr. Lowry by Mr. Ben Dunne of Dunnes Stores, seemingly as another bonus payment for refrigeration services, and in this instance by w a y of a credit transfer; (iv) assistance received f r o m the late Mr. Michael Holly in connection with the purchase of premises at 4 3 Carysfort Avenue, Blackrock, County Dublin; (v) certain sterling deposits made off-shore for the benefit of Mr. Lowry to Allied Irish Banks in the Channel Islands in 1991. 2.09 The evidence heard in relation to these matters related, apart from Mr. O ' C o n n o r ' s inquiries, to material documentation, Mr. Lowry's own recollection of them, and the testimony of available individuals who had dealt with him. S o m e of these matters have in the ultimate transpired to be of relatively modest weight in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 30 the context of the Terms of Reference, and may be summarised without setting forth much of the detail that is apparent from the full transcripts of evidence. Other portions of this evidence have proved to be of somewhat greater importance, although more in the context of separate or subsequent evidence heard, than on a basis of being considered in isolation. In addition, s o m e of the matters proved relevant in the context of Terms of Reference (j), requiring the Tribunal to examine dealings had between the Revenue Commissioners and Mr. Lowry and his company, which have been addressed in a later chapter. Cash payment by Mr. Patrick Doherty to Mr. Michael Lowry for paintings and antiques 2.10 A lodgment of ? 3 2 , 9 5 0 . 2 0 to one of Mr. Lowry's accounts in Allied Irish Banks, Dame Street, Dublin, on 19 th May, 1995, represents the preponderance of the proceeds of sale of certain antiques and paintings by him to Mr. Patrick Doherty. The four items in question comprised a landscape painting by Henry John Boddington, an English Victorian artist of s o m e distinction, which had been an inheritance from an uncle two years previously, another painting of gun dogs, a three-piece 19 th century clock set and a George II walnut bureau. Mr. Lowry felt that these items were unsuitable for his new home in Tipperary, and did not wish to keep them. He had known Mr. Doherty socially, and in the context in of horseracing interests for some years, and both had apartments Finsbury House, Dublin. The two men had met for a drink in Jury's Hotel, Ballsbridge, in early 1995, and during their conversation, Mr. Doherty alluded to his interest in furniture and antiques, w h e r e u p o n Mr. Lowry stated that he had some items that would be available for sale. Mr. Doherty expressed interest, and requested that a valuation be obtained, following which Mr. Lowry obtained a valuation from the antique dealer, Mr. Charles Fleury, in the a m o u n t of ? 3 9 , 0 0 0 . 0 0 . On a later visit to Munster, Mr. Doherty stopped off in Tipperary, inspected the items and agreed to purchase t h e m from Mr. Lowry for ? 3 5 , 0 0 0 . 0 0 as a fair valuation. Mr. Doherty then arranged that his brother drove to Mr. Lowry's premises, paid the agreed s u m in cash, and t o o k possession of the items. Whilst the two men maintained some social contact, there had never been any business relationship between them, or any transaction other than this agreement. Mr. Fleury recalled preparing the valuation of the items at Mr. Lowry's request, with some of which he was already familiar. Whilst he had initially thought his involvement to value the items was sought for insurance purposes, he was disposed to regard the total sale figure as a good price. 2.11 The foregoing evidence was agreed, and the only difference between the testimony of Mr. Doherty and Mr. Lowry was as to the circumstances in which so substantial a price as ? 3 5 , 0 0 0 . 0 0 came to be paid in cash. Mr. Doherty stated that Mr. Lowry had asked for cash on delivery, that Mr. Doherty agreed, and duly organised this facility together with his brother. He took the view that such a REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 31 request meant the provision of physical cash, and was disinclined to agree with Mr. Lowry's counsel that it might equally have meant a bank draft. Mr. Lowry in contrast stated that it w a s incorrect that he specifically requested cash, and that all he was concerned about was that, w h e n the goods were removed from his house, there would be a transaction w h e r e b y he would then and there be paid. Cash was not specifically looked for, and w h a t would have been expected was a bank draft. W h a t in fact was presented was cash in a large white envelope, which Mr. Lowry later lodged to his Dublin bank account. At the time he would have been anxious to cut out the involvement of an auctioneer or other middle-man, but in hindsight he accepted, particularly as a Cabinet Minister at the time, that another form of payment would have been preferable. He had not given Mr. Doherty any receipt for the cash. Although not discussed at the time, he accepted, and had duly recognised with his accountants, that the transaction would have had a capital tax implication, but he stated that it had not been his intention to avoid this. Payments for refrigeration consultancy services by Mr. Michael Lowry 2.12 These transactions relate to refrigeration services furnished personally by Mr. Lowry to clients wholly unconnected with Dunnes Stores. In the case of Mr. Bill Maher of Maher Meat Products, Mr. Lowry had advised him since the late 1980s in regard to various queries concerning refrigeration of meat processing plants, and the services giving rise to the payment under consideration related to three specific projects undertaken by Mr. Lowry at Mr. Maher's request. Since Mr. Maher's business was based exclusively in England, two of these related to premises at Brackley, Northampton, and the last related to premises at the Central Smithfield Market in London. 2.13 them. The first of these projects dated from the year 1990, and save for some letters exchanged, little of a documentary nature existed in relation to Particularly in relation to the first and last projects, Mr. Lowry indicated that he had carried out very large amounts of work, had made a substantial number of site visits and, in relation to one particular refrigeration unit, Mr. Lowry recalled that his advice had proved very beneficial and profitable for Mr. Maher. Mr. Lowry also stated that there was no agreement between himself and Mr. Maher in regard to any method of payment for these services, or agreed rate; although their relationship was a business one, he stated that there w a s trust between them. However, he recalled that he did probably put some pressure on Mr. Maher to settle up for these services about late 1992, and Mr. Maher telephoned him to say that he was coming home for Christmas, and would meet with Mr. Lowry to resolve matters. T h e y duly met on or around 23 r d December, 1992, in Dublin, at the Royal Dublin Hotel, and Mr. Maher said "there's ?25,000.00", and gave him that a m o u n t in cash. Mr. Lowry could not recall REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 32 whether the money was in an envelope, but recalled Mr. Maher saying that he was sorry for the delay in payment, and since he would need Mr. Lowry in the future, some unspecified amount of the payment related to anticipated future work. Mr. Lowry thought the a m o u n t generous without being excessive, and accepted that if Mr. Maher engaged him again, he would have to allow him a degree of credit. 2.14 As events transpired, on the one later occasion w h e n he was again contacted by Mr. Maher in regard to another English project, he was then a Cabinet Minister, and unable to assist. As to Mr. Maher, in relation to w h o m further Tribunal inquiries came to be addressed at a much later stage in its investigations information into the Doncaster Rovers transaction, on the he furnished some in correspondence to the Tribunal refrigeration services rendered by Mr. Lowry, but was not disposed to testify at public sittings and, being resident in England, could not of course be compelled to do so. 2.15 With regard to Mr. Patrick Whelan of Whelan Frozen Foods Limited, it appeared that two payments for consultancy services were made to Mr. Lowry, the first a ? 1 0 , 0 0 0 . 0 0 cheque payable to cash, dated 14 th May, 1992, in relation to construction of a new cold store at premises at J a m e s t o w n Industrial Estate, Dublin, and the second a further ? 5 , 0 0 0 . 0 0 cheque payable to cash, dated 17 th May, 1994, in respect of installation of refrigeration at a plant at Ballysimon, County Limerick. Once again Mr. Lowry testified that no rate was agreed with his customer in advance for these works, but that Mr. Whelan afterwards determined the amount, and he accepted it. This he conceded was unusual, but he said that a relationship of trust had developed between the two over a period of years. He again acknowledged that the practice had been far from ideal, particularly in regard to a holder of public office, and that difficulties could easily have arisen in enforcing payment. He stated that he had lodged each of the two cheques to bank accounts, and that he had in recent times rectified his practice in regard to consultancy works, by having a c o m p a n y incorporated for that purpose in late 1998, A b b e y g r e e n Consulting Limited, which duly issued invoices. 2.16 Mr. Whelan also testified in regard to his dealings with Mr. Lowry, and whilst acknowledging that the latter was excellent as a refrigeration contractor, differed s o m e w h a t in his recollection of their p a y m e n t arrangements. He stated that Garuda had tendered the most competitive price for supply and installation of the new cold store at the J a m e s t o w n premises, but that Mr. Lowry had at the time also indicated that he would be charging a separate fee in respect of consultancy services, s o m e w h e r e between ? 7 , 5 0 0 . 0 0 and ? 1 2 , 0 0 0 . 0 0 . This fee was subsequently agreed at ? 1 0 , 0 0 0 . 0 0 , and Mr. Lowry requested that he be fixed up in cash. W h e n Garuda w a s awarded the subsequent Ballysimon contract, Mr. Lowry again indicated that he would be charging a separate consultancy fee, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 33 in this instance of between 7.5% and 12.5% o f t h e contract price, and Mr. Whelan recalled that Mr. Lowry had referred on a number of occasions to dissatisfaction on his part at the fee paid for the earlier services. Eventually, the lesser s u m of ? 5 , 0 0 0 . 0 0 was agreed and paid, and Mr. Lowry did not express dissatisfaction with this. As to the form of payment, his recall w a s that it was likely that Mr. Lowry simply asked to be paid in cash, and Mr. W h e l a n interpreted this as meaning a cheque payable to cash, because he did not retain large amounts of cash, and cash payments were not his practice. Whilst it was correct that no V A T was provided for as regards either payment, this entailed no benefit to Mr. W h e l a n ' s company, as the amounts had to be put through their books. Further Dunnes Stores payment of ?15,000.00 to Mr. Michael Lowry of 25th November, 1992 2.17 Both Mr. Ben Dunne and Mr. Lowry testified in broadly similar terms in relation to this payment, which appears to have been a further bonus payment in accordance with the general basis of a g r e e m e n t between them, w h e r e b y Garuda would make a small profit on its refrigeration services as invoiced, and Mr. Lowry would receive separate bonus payments from Mr. Dunne on behalf of Dunnes Stores, contingent on satisfactory performance. That aspect of satisfactory performance was never in issue, as all persons having dealings with Mr. Lowry as a refrigeration contractor were unanimous that his expertise and level of performance were excellent. Although a payment which would obviously have come within the remit of the McCracken Tribunal, this particular payment of ? 1 5 , 0 0 0 . 0 0 only came to light after that Tribunal had completed its Report. It was discovered by Mr. Denis O ' C o n n o r in the course of further inquiries made by him with Allied Irish Banks in November, 1997, and prompt contact was then made with both Tribunals. The payment of 23 r d November, 1992, was made by a bank giro from the Donnybrook branch of Allied Irish Banks, which in turn had been funded by the Marino branch of Bank of Ireland. 2.18 Mr. Dunne accepted in evidence that the credit to Mr. Lowry's account corresponded to the debit from the Marino Bank of Ireland account, which was one used both for Dunnes Stores business, and also for some of Mr. Dunne's private business. Although Mr. Dunne doubted that the " B Dunne" signature on the s o m e w h a t poor available copy of the giro form was his, he noted that the name on the form authorising the debit appeared to be Michael Irwin, w h o would have had authority from him to do this. normal basis, w h e r e b y The procedure used differed from the have Mr. Lowry was paid by cheque, and may either indicated some urgency, or that Mr. Dunne was out of Ireland at the time, but had agreed to make the payment. Mr. Dunne could not recall the purpose of the payment, but was satisfied that it must have related to w o r k that Mr. Lowry had undertaken for Dunnes Stores, and would s e e m to have been a bonus. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 2.19 Mr. Lowry confirmed these 1 details, and stated that the only two Page | 34 persons with w h o m he had contact in Dunnes Stores with regard to payment were Mr. Dunne and Mr. Irwin. It was Mr. Lowry's recollection that he had had no dealings with Donnybrook Allied Irish Banks, and did not then know of the Marino Bank of Ireland branch, although he had since encountered it. He thought it probable that Mr. Irwin had asked him for an account number, and then had the payment transferred to him. It was because the procedure did not accord with the normal pattern of these payments that probably accounted for Mr. Lowry and his advisers missing it in the first instance. He agreed that the use of the giro procedure may have indicated some urgency, recalling that he had heavy property commitments at that time. Assistance received from the late Mr. Michael Holly in connection with the purchase of 43 Carysfort Avenue, Blackrock, County Dublin 2.20 Having Attaining Ministerial office meant for Mr. Lowry that he was required to spend a great deal more time in Dublin than solely as a back-bench Tipperary T.D. incurred considerable expense in renting Dublin accommodation, he became anxious to purchase a suitable property, and discussed his needs with a number of professional persons, including his accountant, Mr. O'Connor, Mr. Ken MacDonald and Mr. Mark FitzGerald. In all, he asked at least eight people to keep a look-out for a suitable property, and inspected some six properties that proved to be unsuitable. Another o f t h e persons he spoke to was Mr. Michael Holly, since deceased, a person with w h o m he had had no prior business dealings before or since this transaction, but w h o was known to him socially through Gaelic games and horseracing. He knew Mr. Holly was a successful builder and property developer, and w h e n he mentioned to him that he was anxious to find a property in Dublin, Mr. Holly said that he would keep an eye out for him. 2.21 In July, 1996, Mr. Holly telephoned Mr. Lowry to say that he had seen a property at 43 Carysfort Avenue, Blackrock, County Dublin, that he thought would be suitable for Mr. Lowry's needs, and good value, and that he would in any event be attending the auction the following day. On 17 th July, 1996, Mr. Holly w e n t to the auction and purchased the property for ? 2 0 0 , 0 0 0 . 0 0 , his building c o m p a n y paying a deposit of ? 2 0 , 0 0 0 . 0 0 . Mr. Holly gave Mr. Lowry first option on the property and, having viewed it, Mr. Lowry decided to exercise this. The contract was signed by Mr. Donal Gahan, solicitor, and different members of Mr. Gahan's firm subsequently acted for both Mr. Holly and Mr. Lowry. Mr. Lowry obtained a mortgage for the full purchase price, indemnifying Mr. Holly for the deposit paid, and paying the balance to the vendors. Within a short period of months, w h e n matters relating to Mr. Lowry's Tipperary home at Holycross became a source of major public controversy, there was also negative publicity in relation to the Blackrock premises; not wanting to repeat all that he had had to bear in regard to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 35 his premises at Holycross, Mr. Lowry testified that he decided for the sake of retaining some degree of privacy to dispose of the Blackrock premises. He spoke further to Mr. Holly, and Mr. Holly agreed to re-purchase the property from Mr. Lowry on 10 th January, 1997, for the same price. Mr. Lowry stated that he t o o k this course in the context of his accumulated problems, and unwillingness in the changed circumstances to move home. He did not consider seeking to let the premises, or sell t h e m at a profit, feeling that Mr. Holly had been decent to him, and the honourable course was now to offer the premises back to him. He stated It was that no question of him receiving any additional or bonus payment arose. also stated by Mr. Lowry, w h o was the only witness called in relation to the transactions at that stage, that until Mr. Holly's untimely death, he continued to see him socially, but not otherwise. 2.22 As will be set out in a subsequent chapter, significant additional facts surrounding this short-lived property acquisition by Mr. Lowry in 1996, which were not disclosed to the Tribunal at the time of its initial investigations in 1999, were to emerge in further evidence heard by the Tribunal in the s u m m e r of 2001. 1991 off-shore sterling deposits for the benefit of Mr. Michael Lowry in Allied Irish Banks, Channel Islands 2.23 In the McCracken Report, it was noted at page 2 5 that s o m e between November, 1988, and March, 1993, issued nine cheques were by the Dunnes Stores Group in favour of Streamline Enterprises, but that each of these appeared to have been either cashed by Mr. Lowry, or lodged by him to bank accounts for his own benefit. The respective dates, currencies and amounts of each of these nine payments were noted in the Tenth Schedule appended to the Report. That Report also referred to the lodgment by Mr. Lowry of a s u m of Stg.?100,000.00, in his name and that of his three children, with Allied Irish Banks in the Channel Islands. It concluded that the penultimate payment listed in the Tenth Schedule, being Stg.?34,100.00, comprised a portion of that deposit. 2.24 In its preliminary inquiries, this Tribunal ascertained that the balance of the S t g . ? 1 0 0 , 0 0 0 . 0 0 lodgment appeared to be comprised of a sterling draft for Stg.?7,562.72, dated 30 t h August, 1991, and drawn on Allied Irish Banks, Dame Street, Dublin, plus a further sterling payment in the amount of Stg.?58,337.28. This latter payment in turn represented the accrued balance due to Mr. Lowry on foot of a S t g . ? 5 5 , 0 0 0 . 0 0 s u m placed on his behalf with the Channel Islands branch o f A l l i e d Irish Banks, o n 17 th January, 1991. Although it had appeared that Mr. Lowry had been conducting his Dublin personal banking, since July, 1989, at the Dame Street branch of Allied Irish Banks, which was and is a large branch fully equipped to handle foreign exchange transactions, it became apparent that it was in fact the Allied Irish Banks branch at 3 7 / 3 8 O'Connell Street, Dublin, that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 36 had furnished the draft for Stg.?55,000.00, and directed the opening of the Channel Islands account on Mr. Lowry's behalf. The documentation that was made available regarding these transactions, by both Mr. Lowry and Allied Irish Banks, appeared scanty in material respects, and the Tribunal accordingly the proceeded to hear the evidence of those involved, addressing primarily sources of the monies lodged on Mr. Lowry's behalf, other than the s u m of Stg.?34,100.00, the circumstances w h e r e b y the O'Connell Street branch, rather than the Dame Street branch of Allied Irish Banks, came to initiate the off-shore deposit for Mr. Lowry in January, 1991, and the degree to which exchange control requirements, disregarded. which were mandatory at the time, were complied with or In addition to the evidence of Mr. Lowry, and bank officials from both branches w h o had been involved in the transactions, the Tribunal also had the assistance of Mr. S e a m u s O'Neill, who, on hearing initial media reporting of the matters being inquired into, recalled material involvement w h e n e n g a g e d with JC Financial M a n a g e m e n t Limited, and volunteered his testimony. 2.25 The bald and uncontested facts are that on 14 th January, 1991, apparently after attending at his own Dame Street branch, Mr. Lowry attended at the O'Connell Street branch of Allied Irish Banks, where he held no account, and appeared to have had no previous dealings. He dealt there with the assistant manager, Mr. Liam O'Connell, and despite having seemingly brought neither cash nor valuable instruments from Dame Street or elsewhere, a bank draft for S t g . ? 5 5 , 0 0 0 . 0 0 was then made available, and used to open an off-shore term deposit account for Mr. Lowry in the Banks' Channel Islands affiliate. Mr. O'Connell addressed a written m e m o r a n d u m of the same date to the Channel Islands manager, referring to a proposed account in the name of Mr. Lowry, enclosing the S t g . ? 5 5 , 0 0 0 . 0 0 draft, and confirming telephone instructions earlier that day to place it on deposit for three months at an interest rate of 13.25% per annum. A reference w a s also made to having enclosed a copy history card. The money was duly lodged, and the deposit renewed for a further three months on 17 th April, 1991, at the s o m e w h a t lower rate of 10.875%, so that w h e n the O'Connell Street branch sought repatriation of the deposit on 17 th July, 1991, a balance of S t g . ? 5 8 , 3 3 7 . 2 8 had accrued. A cheque in this a m o u n t was duly sent to the O'Connell Street branch, and from there transmitted to Mr. Lowry. 2.26 It seems that, for the next disposition of this money, Mr. Lowry reverted to his Dame Street branch, and after some months of apparent inactivity, he combined the cheque with the Dunnes Stores cheque for Stg.?34,100.00, and a further draft of Stg.?7,562.72, which he purchased from the Dame Street branch. This exactly rounded off the aggregate to a s u m of Stg.?100,000.00, which, with the assistance of the Dame Street branch on this occasion, he placed on further deposit with the Channel Islands branch. A letter on Dame Street notepaper to the Channel Islands manager was produced, signed by Mr. Lowry, and stamped REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 37 as having been received on 20 t h December, 1991, seeking that confirmation of the deposit be sent to Mr. Lowry, c/o the Dame Street branch. 2.27 The evidence heard related primarily to the circumstances in which these transactions occurred, with emphasis upon the areas of inquiry that have already been indicated. The sequence of witnesses observed was that Mr. Lowry followed Mr. O ' C o n n o r in dealing with this aspect, along with the other matters addressed in this chapter, in accordance with a statement of evidence prepared and furnished in advance of his testimony. The various banking and finance witnesses then testified and, because some fresh matters were then raised which had not been notified to Mr. Lowry w h e n he was asked to prepare his statement, he was recalled near the end of that further evidence to address those matters. 2.28 In his initial evidence, Mr. Lowry dealt with some general banking matters before referring to the off-shore transactions. Although he had long held bank accounts in Thurles, and did not suggest that officials there w o u l d have breached confidentiality, he said that he wanted to ensure that people from his locality knew as little as possible about his private banking business. It accordingly became necessary to deal with a Dublin bank, and the reason he chose Allied Irish Banks on Dame Street was because he knew an official there, who came from the same part of Tipperary. He accepted responsibility for the poor state of his accounts, and those remaining items that could not be traced, but emphasised on this, and on many later occasions in this evidence, that he had given a worldwide waiver of confidentiality to facilitate the Tribunal's work. Given the lengthy process of reconstruction that had been undertaken, he stated that a majority of transactions were now explained, leaving only a discrepancy of approximately ? 3 1 , 0 0 0 . 0 0 over a ten year period. He acknowledged that he had a practice of holding cheques for a long time, pooling t h e m and taking an odd sum in cash w h e n making an aggregate lodgment, so that an even figure appeared as lodged; save for such limited cash amounts, he stated that he always lodged monies received to his various bank accounts. 2.29 Turning to the off-shore transactions, Mr. Lowry testified, in accordance with his statement, that he had purchased from Allied Irish Banks in O'Connell Street a draft for Stg.?55,000.00, on 14 th January, 1991. sources of funds He could not recall the been used for the purchase, but believed they must have comprised of those remaining payments set out in the Tenth Schedule to the McCracken Report that had not otherwise been accounted for, although he could not exactly prove this. As far as he could recall, he was directed to the O'Connell Street branch by personnel in his own Dame Street branch, although he could not recall w h o in fact was so involved. He a c k n o w l e d g e d that these other payments noted in the McCracken Report ranged over a considerable time previously, and said that, whilst he did w a l k around regularly with cheques in his pocket, he REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 38 would not have held t h e m for so lengthy a period of time. T h e y must therefore have been put s o m e w h e r e , but despite having given much thought and agonising to this, all he could say was that he did not cash the cheques, but plainly did conduct some business with them, so that they must have been s o m e w h e r e in Allied Irish Banks in Dame Street. He had never seen the funds in his account in Dame Street, and had given no instructions that they were to be put in the O'Connell Street branch, where he held no account. His best recollection was that he was told it was necessary to visit the O'Connell Street branch, and that the transaction in question could be carried out there, but not in Dame Street. The reason he wanted to put money off-shore in the Channel Islands w a s for the benefit of his family. There was obviously some telephone or other contact between officials in the two Allied Irish Banks branches in question. Since the aggregate of the six cheques not yet accounted for was approximately Stg.?65,000.00, Mr. Lowry believed he had used approximately S t g . ? 1 0 , 0 0 0 . 0 0 to pay off a debt owed to Allied Irish Finance, so the resultant balance would in broad terms have equated with the amount o f t h e off-shore deposit. 2.30 The arrangement w h e r e b y he w e n t to O'Connell Street was not of his making, and he thought that he proceeded there on the same day as he w e n t to Dame Street. Although he was not carrying any letter or other documentation from Dame Street, he found that the s u m of S t g . ? 5 5 , 0 0 0 . 0 0 was available to him there, and duly proceeded to complete the transaction. Regarding the reference, in Mr. O'Connell's m e m o r a n d u m to the Channel Islands, to enclosing a history card, Mr. Lowry had no recollection of having any prior dealings in O'Connell Street, such as would give rise to this. He acknowledged his signature on the short handwritten letter of December, 1991, f r o m the Dame Street branch to its Channel Islands counterpart. Insofar as any other witness might say that Mr. Lowry came to O'Connell Street accompanied by a financial consultant, this was absolutely incorrect, and it was his recollection that he was on his own. He could not recall any discussion of the issue of exchange control in O'Connell Street. W h e n he reverted to dealing with Dame Street for the later aggregated deposit in December, 1991, he did not recall which official he may have dealt with there, but it must have been s o m e o n e at m a n a g e m e n t or senior level. From his prior business experience, Mr. Lowry would have had s o m e experience of obtaining bank drafts to pay suppliers in England from his existing accounts. 2.31 Mr. Liam O'Connell, the then assistant manager at the O'Connell Street He recalled meeting Mr. Lowry once, in 1991, at a brief of JC branch, then testified. introductory meeting at the branch, brought about by a representative Financial M a n a g e m e n t Limited. As was then the normal practice, Mr. Lowry was accompanied to the meeting by a representative of that firm, w h o s e name he could not recall, and introduced as s o m e o n e w h o would be doing business with the bank. He could not remember whether or not an account was opened there REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 39 and then, but acknowledged his signature on the m e m o r a n d u m of 14 th January, 1991, addressed to the manager of the Channel Islands branch. As to its reference to a history card, normally this would have a sample signature, and details regarding the particular client and the account held in a particular branch. As best he could recall, Mr. Lowry was not simply sent down by the Dame Street branch, and it would have been very strange if he came with nothing and procured a draft. The branch did little w o r k with its Channel Islands counterpart, and for a transaction s u c h as this it would have been usual to check where the customer was already banking. He did not then know that Mr. Lowry was a T.D., and he was not introduced as such, or as an existing Allied Irish Banks client. Whilst his recollection of events was hazy, and he had had little opportunity to examine any available documentation, through only j u s t having returned from holidays, he believed that the financial consultant would effectively have directed affairs, and requested the particular transaction in question. As to exchange control, this would on the face of things have been required for the opening of such an account in the Channel Islands. Whilst stating that he would not have sent the funds abroad without exchange control, he acknowledged that, from such documentation as had become available, it did not appear there had been compliance with exchange control requirements. It was the case that either exchange controls were complied with, or the law was being broken. 2.32 The representative of the financial consultants, Mr. S e a m u s O'Neill, He had been a director of JC Financial M a n a g e m e n t Limited, then testified. advising on insurance and pension matters, in 1991, and recalled on an occasion during that year meeting Mr. Lowry at the latter's c o m p a n y ' s premises in Thurles. A mutual acquaintance brought Mr. O'Neill to Mr. Lowry's premises, w h e r e he was unable to interest Mr. Lowry in purchasing an insurance or pension product, but he also indicated to Mr. Lowry that the connections of JC Financial M a n a g e m e n t Limited with Allied Irish Banks might enable a better rate of return to be obtained from that bank, on investing money, than otherwise. He recalled Mr. O'Connell new clients to the telling him that this might be the case, if he introduced O'Connell Street branch. However, Mr. Lowry was, to the best of his knowledge, the only person he had referred to the bank on that basis. On s u b s e q u e n t contact being made after the Thurles visit, Mr. O'Neill set up a meeting at the O'Connell Street branch, and arranged to meet Mr. Lowry outside it. Mr. Lowry was late, and indicated that he had had business "in a bank", entering, Mr. O'Neill introduced which was not identified. On Mr. Lowry to Mr. O'Connell, but had nothing further to do with their subsequent dealings. Most such business had by Mr. O'Neill with the bank involved mortgages on which, unlike investment business, a commission was payable, but he nonetheless hoped to improve his already good relations with Mr. O'Connell by introducing further business. The meeting took between fifteen and thirty minutes, and on conclusion Mr. O'Neill and Mr. Lowry left the branch and s h o o k hands. Mr. O'Neill received no intimation that any REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Nor was his c o m p a n y ' s recalled Page | 40 business had been done, whether off-shore or otherwise. account in Allied Irish Banks involved in any related transaction. He informing Mr. O'Connell that Mr. Lowry was a T.D. and a businessman, and was glad to introduce what seemed a good prospect. Those were his only two meetings with Mr. Lowry. The bulk of his daily business related to insurance and pensions, rather than off-shore investments, and he was not familiar with exchange control procedures. 2.33 S o m e other Allied Irish Banks witnesses, then attached to the two branches in question, also testified, and it is unnecessary to detail all that was stated. Ms. Mairead Lynham was, in 1991, another Assistant Manager at the O'Connell Street branch, and acknowledged having been a signatory of the letter of 17 th July, 1991, from her branch to the Jersey branch, seeking the return of the funds deposited with interest. She stated that she had no recollection of the transaction, and surmised that the normal practice would have been for a colleague from the Foreign Exchange Department to have brought the letter to her for signature, w h e r e u p o n she would normally have inquired of the other official whether or not that person was happy with the transaction. She confirmed that Mr. Lowry at no time had any account in the O'Connell Street branch, and that its involvement was accordingly unusual. S h e similarly found the absence of any documentation relating to receipt of the cheque from Jersey surprising, but said that if there was any irregularity in the transaction, she was unaware of it. 2.34 S o m e further evidence was heard from Mr. O'Connell, who took issue with Mr. O'Neill's account that Mr. Lowry was specifically introduced to him as a T.D. and businessman, and said that, had that been the case, the interview would not have been conducted at the public counter. He remained utterly unable to throw any light on the issues of how the O'Connell Street branch got value for the draft, and compliance or lack t h e r e o f w i t h exchange control procedures. 2.35 there. Evidence was also heard from Mr. Liam O'Brien, Manager of the Dame Manager was Street branch at the time, and Mr. Peter Tierney, then an Assistant In the course of that evidence, somewhat belated information presented regarding certain of the Dunnes Stores payments set out in the Tenth Schedule to the McCracken Report, which had hitherto been unaccounted for. This related to such cheques having been presented for payment at the Dame Street sterling branch and, whether through the at the Banks' normal process of presentation agents, or of instruments London collecting through presentation at the Ulster Bank in Newry itself, value for t h e m being given to Mr. Lowry. Nonetheless, in particular for those substantial Dunnes Stores payments to Garuda most recently preceding the off-shore sterling payments of January and December 1991, which Mr. Lowry felt must have funded the investments, there was nothing approximating to an appropriate history of how those amounts were REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter credited to Mr. Lowry. Other than some 1 general recollection of dealing with Page | 41 cheques in favour of Garuda that were credited to some other account, perhaps on three or four occasions, Mr. Tierney stated that he was unable to recall individual transactions, and had no memory of cash being provided, which for such relatively large amounts would have required some notice or preparation. 2.36 Mr. Tierney acknowledged that, due to a mutual Tipperary connection, he was the person w h o handled most of Mr. Lowry's banking business in Dame Street. He agreed that, if Mr. Lowry handed cheques over the counter in Dame Street, and did not receive cash for them, they would have to have been credited for his benefit in some account. He alluded to some possibility of a suspense account being used, but acknowledged that, even in that instance, there would require to be some documentary reference to the customer. 2.37 The issue of exchange control was also addressed, both as regards the issue of the draft for Stg.?7,562.72, which appeared not to have been debited to any of Mr. Lowry's accounts at the branch, and the subsequent aggregated offshore deposit of S t g . ? 1 0 0 , 0 0 0 . 0 0 . Mr. Tierney acknowledged his handwriting on both the application form for the draft, and in the body of the handwritten letter of December, 1991, signed by Mr. Lowry, requesting confirmation from Jersey o f t h e S t g . ? 1 0 0 , 0 0 0 . 0 0 deposit. 2.38 O'Connell It has to be said that the general exchange control position regarding these transactions largely mirrored w h a t had emerged from the evidence of Mr. in connection with the O'Connell Street branch, with a professed adherence to the requirements then imposed on bankers being accompanied by an utter absence of evidence of compliance, for purposes of the relevant transactions. S o m e mention of the banks' retention policy regarding documents, and of a more relaxed regime being operative in the final years of exchange control, do not explain the complete absence of evidence of compliance from any source. With regard to the initial S t g . ? 5 5 , 0 0 0 . 0 0 draft, regard is also had to the general content and lack of relevant entries on the form of application for that instrument. Whilst both Mr. O'Brien and Mr. Tierney made mention of a limited practice of furnishing foreign drafts in limited amounts to trusted customers w h o were contemplating possible commercial purchases of goods abroad, there was no suggestion from Mr. Lowry that any such context arose on these occasions, and it was acknowledged by Mr. Tierney that such a practice entailed no inbuilt safeguard for repatriating funds, if the foreign sales did not proceed. Brief evidence regarding the operation of exchange control was also heard from Mr. Philip Dalton, o f t h e Central Bank of Ireland, confirming that, even with the more relaxed procedures applicable in the final years before abolition of exchange control at the end of 1992, some transactions, including the opening of deposit accounts abroad, always required specific permission. For the opening of offREPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 42 shore deposit accounts on behalf of Mr. Lowry in 1991, Mr. Dalton advanced the view that this was the type of transaction for which exchange control could not have been obtained, and expressed himself surprised if any bank manager was of the view exchange control could be obtained, in such circumstances. 2.39 remained On foot of the fresh information emerging, Mr. Lowry was recalled, and of the view that all the cheques made out by Dunnes Stores to Streamline Enterprises were entrusted to his bankers, although the 6 t h and 7 th payments in the Tenth Schedule to the McCracken Report, for S t g . ? 1 9 , 7 3 0 . 0 0 and S t g . ? 1 5 , 8 2 5 . 0 0 respectively, had not been s h o w n as having been credited to any account of Mr. Lowry. He stated that he did not get cash or drafts for them, and that upon presentation at Dame Street they remained within the Allied Irish Banks system until they w e n t to f o r m a portion o f t h e initial off-shore deposit. said that he rarely gave instructions as to in which account money He presented should be credited, tending to leave this aspect to the official he dealt with, and expecting that the form of lodgment used would be to his best advantage. Regarding the two Dunnes Stores payments in question, he said that he probably did "express a n intention", occasion on 22 n d w h e n presenting t h e m in Dame Street upon the same November, 1990, and that it was possible that the staff in Dame Street could have had the understanding that the sums in question would not go into his current or deposit accounts. It was only with Mr. Tierney, and members of his t e a m in Dame Street, that he dealt in regard to these matters, rather than with any junior bank official, and whilst he had no direct recollection as to who may have directed him from Dame Street to O'Connell Street for the initial transaction, he thought that it was probably Mr. Tierney. CONCLUSIONS 2.40 Noting the cash payments by Mr. Patrick Doherty and Mr. Bill Maher, relevant the cheques made payable to cash by Mr. Patrick Whelan, and the testimony of Mr. Doherty, Mr. W h e l a n and Mr. Lowry, the Tribunal is satisfied that in each of these transactions Mr. Lowry sought payment in cash. It has to be concluded that, even where money received was lodged to bank accounts, this was motivated by a wish on Mr. Lowry's part to mask the transactions and avoid the tax liabilities that would have arisen in relation to monies received. 2.41 Whilst credit is due to Mr. O'Connor for identifying the further Dunnes is yet a further Stores payment of ? 1 5 , 0 0 0 . 0 0 to Mr. Lowry, its emergence demonstration of the covert arrangements devised between Mr. Dunne and Mr. Lowry to remunerate Mr. Lowry in a manner that would evade tax. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 2.42 short-term 1 In disclosing to the Tribunal his financial arrangements made for the purchase of the premises at Carysfort Avenue, Blackrock, County Page | 43 Dublin, it is a matter of significance that Mr. Lowry failed or omitted to disclose additional financial arrangements, that he indicated in later evidence were entered into, in the context of that house purchase, a matter which will be examined in detail in a later chapter. 2.43 Regarding the aspects of exchange control and tax compliance that undoubtedly were applicable to the off-shore deposit accounts opened on behalf of Mr. Lowry during 1991, the conclusion is unavoidable that Mr. Lowry, and some officials attached to both the Dame Street and O'Connell Street branches of Allied Irish Banks, knowingly and improperly combined to circumvent these. It is beyond doubt that s o m e clandestine form of receiving and dealing with these monies was devised to enable the opening of off-shore investment accounts to be shielded f r o m the gaze of both Revenue and the Central Bank of Ireland. In this manner, a public office holder was enabled to avoid tax, to participate in a type of transaction that involved taking a stand against the currency, and thereby received higher real rates of return than would have been available if the law had been complied with. Given the extent of inadequacy and ambiguity in both testimony and documentation as to the conduct of Mr. Lowry's business in the branches of Allied Irish Banks involved, it is unnecessary to make precise findings as to all aspects of w h a t transpired, but it has to be stated that such conduct was inadequate, in breach of clear procedures, and indeed byzantine. 2.44 was Even though the a m o u n t of unidentified lodgments ultimately found relatively limited in proportion to the turnover of Mr. Lowry's business interests, his financial arrangements in general disclosed palpably inadequate book-keeping, a w a n t of transparency in his dealings, and a disposition to declare and discharge his tax liabilities far below w h a t could reasonably be expected f r o m a holder of public office. 2.45 Had the Tribunal's inquiries not been delayed in the year 2000, consequent on Mr. Charles Haughey's health problems, it may well have been the case that the Tribunal's w o r k would have concluded before March, 2001, or not unduly long thereafter, in advance of further material information coming to the attention of the Tribunal, regarding Mr. Lowry's finances. Had that been so, this short chapter would have represented the entire of the Tribunal's Report of its investigations of Mr. Lowry's financial affairs pursuant to paragraphs (e) and (f) of its Terms of Reference. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 3 THE ESAT/TELENOR $50,000.00 DONATION TO FINE G A E L INTRODUCTION 3.01 A payment of $ 5 0 , 0 0 0 . 0 0 which ultimately no one connected with it P a g e | 44 appeared to want, had its origins in certain fundraising activities on behalf of the Fine Gael party, initiated by the late Mr. David Austin. For much of his business career, Mr. Austin had been a senior executive of the Smurfit Group, and had resided at various times in Ireland, England and France. Although never a trustee or other officer of Fine Gael, he had for some years been involved in a relatively loose and informal w a y with fundraising activities for it, arranging golf classics and some similar functions. covered by this Volume of this During his period of involvement in matters Report, he had unhappily been Part of the diagnosed as suffering from an illness that was likely to prove fatal, a condition he s e e m s to have faced with no little courage and fortitude, and his death resulted in early November, 1998. Apart from his role in the present transaction, his earlier involvement in the making of a payment to Mr. Charles Haughey has already been noted in Part I of the Report, and the events set forth in a succeeding chapter, involving f i n a n c i a l a r r a n g e m e n t s with Mr. Michael Lowry, will again indicate a pivotal involvement on his part. As was acknowledged by both Mr. Lowry and Mr. Denis O'Brien in evidence, each of t h e m had long-standing personal friendships with Mr. Austin, the former for approximately seventeen years in the context of shared political and horse-racing interests, and the latter since boyhood in S o u t h County Dublin, in a family and water sports context. Given the events in this chapter, and chapters 5 and 12 of this V o l u m e , it is worthy of note that on 4 t h May, 1995, Mr. Lowry, as Minister for Transport, Energy and Communications, appointed Mr. Austin a director of Aer Lingus, a matter of record which was acknowledged by Mr. Lowry in the Official Report of proceedings in Dail Eireann on 20 t h February, 1996. 3.02 Having become the senior partner in the Government formed in December, 1994, Fine Gael faced substantial accumulated debts. Mr. Lowry was then the Chairman of the trustees of the party, and appears to have been widely regarded as a person with particular aptitudes for fundraising, not merely on behalf of Fine Gael, but in prior projects related to Gaelic Athletic Association causes. There appears to have been a feeling within Fine Gael that, since Fianna Fail had in the past successfully undertaken fundraising activities in the USA, this course could usefully be emulated, now that Fine Gael were back in Government. This view was articulated in a letter of 4 t h July, 1995, written by Mr. Austin to Mr. Lowry in his capacity as Chairman of the trustees. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 THE FUNCTION A N DT H E PAYMENT Page | 45 The fundraising function is proposed by Mr. David Austin 3.03 Headed "Most Private and Confidential" and addressed to the Minister at his Dublin office, this letter from Mr. Austin proposed that the two meet to discuss in greater detail a proposal for a fundraising event to be held in the USA by w a y of a private dinner, on Thursday, 9 t h November, 1995, with the Taoiseach present as guest of honour. He proposed that the function be held in an appropriate New York Hotel or club, and that a maximum of thirty American business executives be invited at a cost of $7,500.00 make per head. A and small those Barrett, organising committee should be formed to arrangements, attending the dinner should include the Taoiseach, Ministers Lowry, Yates, Kenny and Mr. Peter Sutherland, who w a s also envisaged as heading the committee. Invitations of high quality should issue, accompanied by letters signed by one of the senior party figures expected to attend. A draft list of prospective invitees w a s appended to the letter. A copy of this letter can be found in the Appendix to this chapter. 3.04 Over the ensuing months, arrangements for the function 9th were finalised, and it was duly held in the 21 Club in New York on 1995, which was a little over two weeks November, on 25 t h after the a n n o u n c e m e n t October, 1995, that Esat Digifone had been the successful consortium in the G S M licence competition. Documentation was made available to the Tribunal by Fine Gael, recording the persons w h o attended the dinner and the amounts received from them, and there was similarly made available a follow-up list of persons who were intended targets, including a number seemingly intended to be contacted by Mr. Lowry. Of some six such persons, the first listed was Mr. T h o m a s Mulcahy of Allied Irish Banks, and an entry beside that name was to the effect that "Spoke they are contributing to the Taoiseach, at this stage". not attending, and it is not clear whether Whilst Mr. Lowry's overall evidence on this transaction will be set out later in the chapter, it is fair at this juncture to note that he had no recollection of receiving Mr. Austin's letter, recalled being too busy either to attend the function or take any active role in its organisation, and made no contact with Mr. Mulcahy, or any other persons listed as referable to him. Mr. Denis O'Brien is asked for a donation and the payment is made offshore 3.05 contains The documentation relating to the organisation of the function licence arose no reference to any person connected with the successful and the basis on which any contribution in this sphere consortium, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 46 appears to relate to a telephone approach, made by Mr. Austin to Mr. Denis O'Brien, the Chairman of both Esat Digifone and Esat Telecom. As Mr. O'Brien's recollection was that Mr. Austin discussed the possibility of Mr. O'Brien attending the dinner, he believed the conversation must have been prior to the dinner on 9 t h November, 1995, but only by a period of some days or a week. Mr. O'Brien's evidence was that in the telephone conversation Mr. Austin indicated the date, venue and nature of the function, his involvement in it as a fundraiser, and requested that "Esat" take two tables at the function at a suggested tariff of $50,000.00. Mr. O'Brien's recollection of his response was that he indicated that neither Esat T e l e c o m nor himself would participate or make a donation, but that Telenor, his Norwegian partner in the Esat Digifone consortium, might be interested in contributing, as they were keen to become involved in Irish affairs, and with this in mind he would discuss the matter with Mr. Arve Johansen, then the most senior executive involved in the Esat Digifone project, and have him contact Mr. Austin. 3.06 Whilst Mr. O'Brien testified that he rang Mr. Johansen in this regard shortly after his conversation with Mr. Austin, Mr. Johansen in evidence had no such recollection. From this point on, indeed, a number of differences e m e r g e d between the testimony of witnesses attached to Telenor, and that of witnesses attached to the other partners in the Esat Digifone consortium. It will be necessary to return to some of these differences at the conclusion of this chronological s u m m a r y of the main events that transpired. The companies that comprised the Esat Digifone consortium were Esat Telecom, of w h o m Mr. O'Brien was non-Executive Chairman, and Telenor, International a Norwegian and State-owned Underwriting communications company, Investment Limited (IIU), chaired and controlled by Mr. Dermot Desmond. Both Telenor and Esat T e l e c o m held 4 0 % interests in Esat Digifone, with the remaining 2 0 % held by IIU, w h e n the G S M licence was finally issued in 1996. 3.07 Mr. Johansen and Mr. O'Brien agreed that the matter of the donation was discussed at the conclusion of a meeting between them, in Oslo on 8 t h December, 1995, although their respective accounts of w h a t took place are That meeting was held to discuss the proposed e n g a g e m e n t of as Chief Executive Officer of Esat Digifone. Whilst at widely differing. Mr. Barry Maloney loggerheads over the issue of whether the $ 5 0 , 0 0 0 . 0 0 donation was to be paid by Telenor in its own right, as testified by Mr. O'Brien, or merely to facilitate the then uncapitalised Esat Digifone which would duly reimburse it, an initial decision that Telenor should make the payment was arrived at. It is likewise not in issue that Mr. O'Brien telephoned Mr. J o h a n s e n with a contact telephone number for Mr. Austin, and although Mr. O'Brien was of the view, contrary to Mr. Johansen, that a London rather than a Dublin number w a s furnished, the late production of a "post-it" note by Mr. Johansen shortly before he first gave REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 47 evidence, containing a Smurfit Group number at Clonskeagh, Dublin, supported the latter being the case. A copy of this note can be found in the Appendix to this chapter. 3.08 On 11 th December, 1995, which was for Mr. Johansen a day of air travel, he telephoned Mr. Austin at this Dublin number, and found that Mr. Austin was expecting his call, knew the a m o u n t of the donation, and that it had been agreed with Mr. O'Brien. W h e n Mr. Johansen said that if he was to make the payment sought, his c o m p a n y would need s o m e form of paper documentation, Mr. Austin responded that he would issue an invoice, and that this w o u l d be expressed as having been for consultancy work. On Mr. Johansen further inquiring as to how the payment would be, in these circumstances recognised by Fine Gael as a donation, Mr. Austin replied that that would not be a problem, and he would see to it that this was acknowledged by top people within the party, mentioning Mr. Lowry, and the then Taoiseach, Mr. John Bruton. In support of his recollection, Mr. Johansen referred to certain entries on the "post-it" note written by him at the time of the telephone call, including references to Mr. Bruton and Mr. Lowry and, in Norwegian, to the sending of an invoice. 3.09 Mr. Austin promptly sent to Mr. Johansen from his English residence in Chelsea, London, a letter and invoice, both dated 14 th December, 1995. The former was brief, and merely stated: "Dear Mr. Johannson [s/c]. Please agreed find invoice for consultancy work for the duration of 1995 order". as with Mr. Denis O'Brien. I hope that you will find this in The letter was signed by Mr. Austin, and it also bore a s u b s e q u e n t handwritten internal Telenor m e m o r a n d u m in Norwegian, dated 20 t h December, 1995, which was addressed to "Per", must be paid by us and and was translated by Mr. Johansen as meaning invoiced as management cost to Digifone", "this with the signature indicated as being that of Mr. Knut Digerud, another Telenor executive associated with the project, who had in turn passed it on to his colleague Mr. Per Simonsen. Copies of both that letter and the invoice can be found in the Appendix to this chapter. 3.10 w o r k for The accompanying invoice was expressed as being for 1995 as per agreement, was in the sum consultancy with a of $50,000.00 conversion to Norwegian Kroner, and contained an instruction that payment should be made by a bank draft in favour of Mr. Austin, forwarded to a n u m b e r e d account in Bank of Ireland, St. Helier, Jersey. Mr. Johansen testified that this was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 48 the first intimation he received that the payment was to be made to an off-shore bank account. At the bottom right-hand corner of the invoice there w a s a file reference "David F.T. Austin/FG/Dec 3.11 95." On 29 t h December, 1995, Mr. Johansen duly arranged for the s u m of $50,000.00 to be transferred to Mr. Austin's off-shore Jersey account through Telenor's bankers, Den Norske Bank. 3.12 The resultant indebtedness of Esat Digifone to Telenor was noted as the converted s u m of ? 3 1 , 6 0 0 . 0 0 due in relation to Mr. David Austin, in a handwritten accountant internal who working for paper Esat prepared by Mr. Colm Maloney, 1995, an and worked Digifone between November, February, 1996. This w a s an initial exercise towards preparation of a set of accounts for Esat Digifone to the end of 1995, and was carried out at the request of Mr. Maloney's then Chief Financial Officer, Mr. Peter O ' D o n o g h u e . With regard to recouping the amount, which Mr. Johansen said he effectively paid on behalf of Esat Digifone, three successive invoices were issued to Esat Digifone by Telenor. It is right to say that, w h e n Mr. Johansen was the sole initial witness who testified on behalf of Telenor, certain of the information provided by him in relation to these invoices and related aspects proved from later evidence to be inexact and inaccurate, and as the Tribunal inquiry into these events progressed in greater detail, it proved necessary to recall Mr. Johansen, and hear the testimony of other Telenor witnesses at a later stage in the sittings. Three invoices 3.13 Of the three invoices issued by Telenor to Esat Digifone, the first was dated 3 r d January, 1996, was numbered 1000050, and was in the a m o u n t of Norwegian Kroner 316,000.00, which corresponded to $50,000.00. This invoice also contained an express reference to "Consultant David F.T. Austin". A copy of this first invoice can be found in the Appendix to this chapter. Mr. J o h a n s e n ' s initial evidence was that, on receipt of this, it was conveyed to Mr. Per Simonsen, Esat Digifone Project Manager and the individual earlier referred to in Mr. Austin's documentation as "Per", that this was unacceptable to Esat Digifone, and that a fresh invoice should be sent in the amount of $50,000.00, without any reference to Mr. Austin. A handwritten entry in Norwegian on the first invoice recorded this, and that the invoice had accordingly been shredded. A second invoice was thereupon issued, bearing the s a m e number, in the a m o u n t of $50,000.00 and referring to a consultancy fee in respect of Telenor. It was dated 31 s t December, 1995, presumably being backdated to come within that financial year. A copy of this second invoice can be found in the Appendix to this chapter. This apparently was also unacceptable to Esat Digifone, which requested that it REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 49 be reversed by the issue of a credit note, and that a further invoice in Irish currency be issued s o m e four to six weeks later. Telenor w a s again amenable to this variation, a credit note for $ 5 0 , 0 0 0 . 0 0 was issued on 24 t h January, 1996, and the third and final invoice, number 1000084, was issued on 27 t h March, 1996, in the amount, of ? 3 1 , 3 0 0 . 0 0 . A copy of both the credit note and this third invoice can be found in the Appendix to this chapter. This was charged to the running account between Telenor and Esat Digifone, and was discharged by Esat Digifone as part of an appreciably larger aggregate payment made on 30 t h June, 1996. The donation is acknowledged but is unwelcome 3.14 Johansen Meanwhile, other events were unfolding elsewhere. Although Mr. had not sought from Mr. Austin a written a c k n o w l e d g m e n t of the payment, he nonetheless received one dated 19 th February, 1996, in w h a t was referred to in evidence as a s o m e w h a t cryptic form, making no explicit reference to Fine Gael but stating: "This was certainly not something that was taken payment lightly on my part be assured and of not on those from (sic) who have received their appreciation 3.15 and thanks." please Later in that month, probably on Saturday, 24 t h February, 1996, the Having Taoiseach Mr. John Bruton had a telephone conversation with Mr. Austin. approved Mr. Austin's A m e r i c a n project, Mr. Bruton had duly attended the New York dinner as planned, and was appreciative of Mr. Austin's endeavours and the financial receipts that accrued from the function to Fine Gael. It had been intended that the two would have lunch together in Government Buildings on 23 r d February, 1996, but high level negotiations with other international political leaders in regard to the Peace Process forestalled this. By w a y of some the recompense, it was arranged that the two would speak by telephone following day, so that Mr. Bruton could t h a n k Mr. Austin and hear whatever he wished to say. Mr. Bruton recalled the telephone conversation in evidence, stating that since he w a s not in a position to take notes of w h a t was said, it was probably the case that Mr. Austin rang him, rather than the converse. Mr. Austin told him that there w a s money available from Esat Digifone interests for Fine Gael, although Mr. Bruton did not believe that any amount was mentioned. He thought Mr. Austin mentioned Mr. O'Brien by name, but could not be sure of this. Being mindful of how recently it had been a n n o u n c e d that Esat Digifone had w o n the competition for the mobile phone licence, Mr. Bruton was a d a m a n t that no donation should be accepted by Fine Gael from that source at that time, and made this clear to Mr. Austin, despite the latter's anxiety that Fine Gael should REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 50 accept the money. It was also Mr. Bruton's recollection that Mr. Austin made some mention of the money being available in a bank account, and this conveyed to Mr. Bruton the impression that the money was still under the control of the donor, rather than Mr. Austin. Seeking to convey that the donation should not then be accepted by the party, without causing offence, or ruling out for all time a possible donation f r o m that source, Mr. Bruton believed he used the phrase "leave it where it is". In evidence Mr. Bruton was disposed to accept that this phrase was less than entirely clear or unambiguous, but he had sought to make it clear to Mr. Austin that acceptance by Fine Gael of the donation at that juncture was quite inappropriate. In the light of this, w h e n he subsequently learned of w h a t had in fact transpired in regard to the covert transmission o f t h e donation, Mr. Bruton felt that some "sleight Austin. of hand" had been exercised by Mr. The donation is transmitted to Fine Gael disguised as a contribution from Mr. David Austin 3.16 Over the following months, during which the licence was being negotiated with Esat Digifone and actually a w a r d e d on 16 th May, 1996, nothing transpired in relation to the donation, which remained in Mr. Austin's off-shore Jersey account. The next significant occurrence, which did not occur for almost a year, was an occasion, probably in late April, 1997, w h e n Mr. Austin rang Mr. Jim Miley, the General Secretary of Fine Gael, at the party headquarters in Dublin. It was then the run-up period to the 1997 General Election, and Mr. Miley recalled in evidence that, after he had made inquiries about Mr. Austin's health problems, which he knew had curtailed his fundraising activities, Mr. Austin told him that he wanted to make w h a t he clearly indicated was a personal donation. Whilst not disclosing the amount, he indicated it would be sizeable, and said "it's dollar account". in my 3.17 At a time that was probably soon after Mr. Austin's telephone call to Mr. Miley, he made a further telephone call, in this instance to Mr. Frank Conroy, an old friend of over thirty years' standing, and a member of the capital branch of Fine Gael, who had long been prominently involved in party fundraising. Austin told the late Mr. Frank Conroy that he was sending Mr. him money for transmission to Fine Gael, something Mr. Miley was aware of and w a s expecting. Mr. Austin also told Mr. Conroy that the money came from the 1995 New York dinner that had been attended by the Taoiseach, but no mention was made of Esat Digifone, or anyone connected with the licence process, so Mr. Conroy inferred the funds were the tail-end of the money raised in New York. He duly received a cheque payable to himself from Mr. Austin for the equivalent in Irish pounds of $ 5 0 , 0 0 0 . 0 0 and, as requested, endorsed it and transmitted it to Fine Gael. Having had the cheque made out to himself personally for e n d o r s e m e n t to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 51 Fine Gael, rather than made out directly to that party, was a departure from accepted fundraising practice, of which he disapproved, and despite his friendship with Mr. Austin, Mr. Conroy in evidence expressed himself as very annoyed on learning more fully the history of the payment, and at the manner in which he had become involved. Michael Lowry for some Mr. Conroy also said he had been a friend of Mr. through mutual political and horse-racing years, interests; he knew Mr. Denis O'Brien only slightly, and w h e n public controversy in relation to the matter arose in 2001, he recalled receiving a telephone call from Mr. O'Brien, expressing regret that Mr. Conroy had become involved. 3.18 Whilst the contribution made available to Fine Gael through Mr. Conroy was one of the larger sums received at that period, it arrived at a hectic and demanding time prior to the General Election, and only very limited attention was then paid to it, although it was noted that past personal contributions f r o m Mr. Austin had been of sums a great deal less than in this instance. DEALINGS BETWEEN PARTNERS The donation becomes an issue in the Esat Telecom IPO 3.19 to the As the later months of 1997 passed, the position accordingly was that Fine Gael had received the monies comprised in the donation, but knew little as full circumstances or background. For his part, Mr. O'Brien had determined to proceed with a public flotation of Esat Telecom, and to promote this had embarked with colleagues upon a vigorous "roadshow" in the USA. As the projected date of flotation approached, it was obvious that any possible infirmity affecting the G S M licence awarded to its associate c o m p a n y would necessarily entail grave consequences, and that potential concern was further heightened by the establishment of this Tribunal on 26 t h S e p t e m b e r , 1997, part of whose Terms of Reference clearly related to acts or decisions undertaken in the course of public office by Mr. Lowry. 3.20 The prospectus prepared by Esat T e l e c o m preparatory to the flotation conveyed some limited information to intending investors with regard to the G S M licence award. Under a section headed "Risk ofEsat Digifone License", Factors", with a further sub- heading "Importance it was stated: "Esat Digifone awarded offers cellular services 1996. in Ireland pursuant to a GSM licence in May The Irish government certain decisions has established made under the a tribunal auspices of inquiry of certain to investigate government REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter ministers, one of whom Michael by Mr. 1 is the former Lowry. Lowry The Minister decisions GSM for Transport, Energy & will Page | 52 Communications, include the award have to be investigated license to Esat of the Digifone. GSM a Allegations license. material been made of improprieties of the in the award GSM license of the Revocation adverse or modification would have affect on the Company. While there can be no assurance, tribunal revoked 3.21 will recommend or otherwise that the Company does not expect license that the be the award of the GSM should modified". During the weeks prior to the issue of this prospectus on 7th November, 1997, the issue of a possible improper payment from Mr. O'Brien to Mr. Lowry having been acknowledged in a conversation between Mr. O'Brien and Mr. Barry Maloney, in late 1996, was raised among the directors and shareholders of Esat Digifone, and caused acute and understandable concern. A series of formal and informal meetings, procedures and inquiries followed, full details of which will be set out in a succeeding chapter, and the position was c o m p o u n d e d later in October, w h e n Mr. Johansen brought to the attention of his Esat Digifone colleagues the circumstances of the $50,000.00 Fine Gael donation. Whilst this issue was considered the less critical of the two besetting the company, matters continued to be in a state of high alert, and on 4 t h November, 1997, a meeting of the Esat Digifone directors was held to discuss concerns relating to the prospectus and possible consequences. It appears that this was not constituted as a board meeting, but as a meeting of the individual directors in the presence of their respective legal advisers, Messrs. McCann Fitzgerald, solicitors for Esat Digifone itself, Messrs. William Fry, solicitors for Esat T e l e c o m and its nominee directors, and Messrs. Kilroys, solicitors for Telenor and its nominee directors. The meeting was held at the offices of IIU, Mr. Dermot D e s m o n d ' s c o m p a n y , in the Financial Services Centre in Dublin. Necessity to establish that money had been duly received by Fine Gael 3.22 In the discussion at the meeting relating to the donation, it appears to have been decided that it would be necessary to prove that the money was duly received by Fine Gael, and thereby exclude any possibility that Mr. Lowry personally benefited by it, which would have rendered disclosure to this Tribunal inevitable. Yet, rather than seeking such confirmation from Fine Gael, w h a t would be decided was that a letter would be sought from Mr. Austin, confirming that basis of payment. 3.23 Whilst a representative of William Fry appears to have offered to contact Mr. Austin for this purpose in the first instance, w h a t in fact happened REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 53 was that one of the Esat Digifone directors, Mr. Leslie Buckley, perhaps with the assistance of an associate, Mr. Paul Connolly, contacted Mr. Aidan Phelan to this end. Mr. Phelan was an accountant and financial adviser to Mr. O'Brien, and in the USA in the concluding phase of the "roadshow" was then working promoting the flotation. Mr. Phelan promptly contacted Mr. Austin, who was well known to him, at his then residence in France, with w h a t was obviously an urgent request, but the state of Mr. Austin's illness w a s such that he could not comply immediately, and Mr. Phelan had to make further contact within a day or so. On foot of this latter contact, an undated handwritten letter was forthwith furnished by fax by Mr. Austin and in turn sent by William Fry to McCann Fitzgerald on 7 th November, 1997. It was signed by Mr. Austin and stated at the outset that it was from him, and was addressed "to whom follows: it concerns". It w e n t on to state as "I confirm that as Chairman of the Fund Raising Committee for a of dinner raising Telenor held in the 21 Club in New York in Dec. monies for the "Fine Gael" '95, for the purposes a contribution Party - I received from A S . for the amount of$50,000. I duly forwarded 3.24 these funds to the Fine Gael party." Following a further meeting on 5th November, 1997, and other dealings between the directors, it was decided to issue the prospectus on 7 th November, 1997, with the reference to risk factors associated with the licence according in substance with what has been quoted. The IPO proceeded successfully. Telenor's concerns and actions: direct approach to the Fine Gael party 3.25 However the misgivings held by Mr. J o h a n s e n in relation to the donation had increased rather than lessened as events unfolded, and in January, 1998, Telenor sought advice from their Irish solicitors as to whether the payment should be brought to the attention of this Tribunal. Having obtained that advice, Telenor was of the view that the handwritten letter from Mr. Austin did not amount to sufficient proof that Fine Gael had in fact received the donation, so that it would be preferable and advisable to seek direct confirmation f r o m the party itself. The task of telling the other shareholders in Esat Digifone of Telenor's intention to approach Fine Gael directly was entrusted to Mr. John Fortune, w h o acted as one of Telenor's three non-executive directors on the Esat Digifone board for a period of slightly over a year, between August, 1997, and September, 1998. Apart from Mr. Fortune's prior experience as an investment banker, and as chief financial officer to a NASDAQ-listed company, it w a s felt by REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 54 Telenor that engaging one Irish director might be more conducive to improving relations with other shareholders then board representation. 3.26 persisting with exclusively Norwegian Mr. Fortune gave evidence that in or around 10 th February, 1998, he verbally informed both Mr. O'Brien and Dr. Michael Walsh, who was the other IIU representative on the Esat Digifone board along with Mr. Desmond, of Telenor's intention to obtain prompt confirmation from Fine Gael that the party had actually received the donation, on a basis that Mr. Austin's handwritten letter was thought insufficient. Mr. Fortune's recollection was that, whilst Dr. Walsh showed immediate understanding of Telenor's wish to clear up this aspect, Mr. O'Brien's initial response was negative, and he said that since Esat Digifone had reimbursed Telenor for the donation, it, rather than Telenor, should seek confirmation from Fine Gael; he volunteered to go to Mr. Austin and have him obtain a response from Fine Gael, but said this should be deferred for a short time because Mr. Austin was then undergoing chemotherapy, w h e r e u p o n Fortune responded that "it will be done", Mr. and Telenor would proceed to make direct contact with Fine Gael as soon as possible. 3.27 Telenor enlisted the public relations consultant, Mr. Fintan Drury, to That meeting in fact contact Fine Gael, in order to arrange a prompt meeting. proceeded in the party's Dublin headquarters in Upper Mount Street, on the evening of Friday, 13 th February, 1998, with Mr. Drury and a member of Kilroys, representing Telenor, and the General Secretary, Mr. Jim Miley and Mr. Kevin O'Higgins, solicitor to the party, representing Fine Gael. Mr. Fortune testified that he had, in advance, spoken further to Dr. Walsh, and made abortive efforts to communicate by telephone and fax with Mr. O'Brien, who had gone to New York, to update t h e m with events, so that, even if a precise time and venue was not conveyed, it was made clear to the other shareholders that a meeting was promptly proceeding. Inquiries are made by Fine Gael but the Tribunal is not informed 3.28 On foot of w h a t he had learned from the Telenor representatives, Mr. Miley carried out s o m e initial inquiries, and on 16 th February, 1998, telephoned Mr. John Bruton, by then Fine Gael leader in opposition. He told him that it s e e m e d as if the $ 5 0 , 0 0 0 . 0 0 donation disclosed by Telenor was one and the same as the ? 3 3 , 0 0 0 . 0 0 donation received from Mr. Austin in May, 1997. Recalling his earlier conversation with Mr. Austin, and his instructions that the proposed donation be left where it was, Mr. Bruton stated that he would not have approved, had he known the money was later paid to Fine Gael, and instructed that it be returned at once. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 3.29 1 Between 17 th and 23 r d February, 1998, Mr. Miley had some three In the course of these conversations, Page | 55 telephone conversations with Mr. Austin. Mr. Austin confirmed that he had approached Mr. O'Brien for a contribution to the New York fundraising dinner. He further told Mr. Miley that Mr. O'Brien indicated that he wished to have the donation paid via Telenor in order to ensure confidentiality. Mr. Austin accordingly made arrangements with Telenor to have the money paid to him, and held the money until May, 1997, w h e n he passed it on to Fine Gael. He had been contacted in 1997, to confirm that he passed the Mr. Austin also recalled who had expressed money onto Fine Gael, and had given such confirmation. that he had mentioned the donation to Mr. Bruton, misgivings about receiving it, and who would never have known that the payment had in fact been made. Mr. Austin was emphatic that he had had no discussions with Mr. Lowry on the matter, as Mr. Lowry had nothing whatever to do with the contribution. He acknowledged to Mr. Miley that he had told him appreciably less than the full facts, w h e n he first expressed his wish to make a personal contribution prior to the General Election. Mr. Miley was s o m e w h a t annoyed, and felt many questions remained unanswered, but in the circumstances of the relationship, and Mr. Austin's declining state of health, was reluctant to press matters unduly. W h e n Mr. Miley told Mr. Austin that Fine Gael was resolved to return the money, Mr. Austin was opposed to this, and stated that handing it back would make it s e e m that the payment was underhand or flawed in the first instance. Fine Gael return the donation to Telenor ?33,000.00 3.30 by way of a cheque for All these conversations and dealings over two w e e k s meant for Mr. Miley and Fine Gael that w h a t had previously been thought a w e l c o m e personal pre-election donation from Mr. Austin had now been shown to be a transaction beset with difficulties. Apart f r o m deciding to return the money, the party now shared with Telenor the dilemma of resolving whether or not the donation fell within the Terms of Reference of this Tribunal. If it did, unpalatable t h o u g h that conclusion might be, there would be no other available option but to report the transaction to this Tribunal. On 2 n d March, 1998, the solicitor to Fine Gael, Mr. Kevin O'Higgins, wrote to Kilroys on behalf of Telenor, alluding to the changed and ambivalent circumstances that had been brought to light regarding the donation, and enclosing a cheque payable to Telenor in the s u m of ? 3 3 , 0 0 0 . 0 0 , by w a y of its return. A mutual apprehension as to any possible involvement or connection with the donation on the part of Mr. Lowry was evident in discussions between the respective solicitors on receipt of the letter. T h e n on 6 t h March, 1998, Kilroys wrote to Mr. O'Higgins, requesting confirmation that Mr. Lowry was not a named account holder of any of the party accounts into which the monies were paid, and stating that, on the basis that this could be confirmed, Telenor REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 56 believed that the donation did not fall within this Tribunal's Terms of Reference. S o m e further correspondence and discussion followed, culminating in a letter of 25 t h March, 1998, from Mr. O'Higgins to Kilroys, confirming that as of the time w h e n the contribution was paid over to the party in May of 1997, Mr. Lowry was not a named account holder, and at that time had neither authority nor signing capacity in relation to the same. In fact, by the time the contribution was received by Fine Gael, as opposed to the substantially earlier time w h e n it was first paid to Mr. Austin, Mr. Lowry was no longer a m e m b e r of Fine Gael, and obviously had likewise ceased to be a trustee or a person with any remaining authority in relation to the party accounts. At the time of the New York dinner in the latter part of 1995, and throughout 1996, he had been Chairman of the party trustees and a signatory on the Fine Gael accounts. party were and remain the property of its trustees, The accounts of the the trusts subject to regulating their duties. 3.31 Whilst the correspondence between the solicitors was taking place, Fine Gael on 13 th March, 1998, received the written opinion of senior counsel, which was to the effect that the donation did not fall within the Tribunal's Terms of Reference, and was accordingly not required to be reported to it. Mr. Miley indicated some degree of surprise, mingled with relief, at this, but acknowledged that at the time neither he nor any legal advisers to Fine Gael had available to t h e m such potentially important documentation as the various letters of Mr. Austin, the successive invoices, and the "post-it" note made by Mr. Johansen. Telenor return the cheque for ?33,000.00 to counter by sending a bank draft to Telenor 3.32 Fine Gael; Fine Gael At the time of Fine Gael's return of the cheque to Telenor, Mr. Miley also made contact with Mr. Denis O'Brien, telephoning him on 27 t h February, 1998, and then meeting him on the following 4 t h March, 1998. He conveyed to Mr. O'Brien the course that the party felt obliged to take, saying that no offence was intended, and although Mr. O'Brien urged that the cheque should not be returned, Mr. Miley was not in a position to negotiate. telephone on 2nd The two spoke again by June, 1998, at which stage Telenor had returned to Fine Gael the cheque which had been issued to it by Fine Gael on 2 n d March, 1998, a course subsequently c o u n t e r m a n d e d by Fine Gael, by the issue this time of an equivalent bank draft f r o m Fine Gael to Telenor. According to Mr. Miley's note of the conversation, Mr. O'Brien stated that he felt he had to send back the cheque: "given should that we were asked take it back. for money in the first place, we don't feel we We think if we had taken it back, we would look about." guilty. We have nothing to be guilty REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 3.33 1 Some fractious exchanges also took place between the Esat Digifone Page | 57 shareholders after the return of the donation by Fine Gael, commencing with a letter of 24 th March, 1998, which Mr. Johansen handed to Mr. O'Brien, indicating that the donation had been returned, but that since Telenor had been reimbursed for making the payment in the first instance, the Fine Gael cheque had been endorsed and was enclosed. On the following 30 t h March, 1998, Dr. Walsh of IIU wrote to Mr. Johansen, indicating that the cheque had been passed to him by Mr. O'Brien, but that, since it had been crossed account payee only, it could only be lodged to the account of Telenor. The letter also referred to an assurance provided by Telenor by letter of 6 t h November, 1997, in the context of the issue of the Esat Telecom prospectus, that it had "taken could in any wayjeopardise the Esat Digifone mobile licence." no action which 3.34 There seems little point in detailing the convoluted letters exchanged between the Esat Digifone shareholders over ensuing months in 1998, which led to the cheque being returned to Fine Gael, a course that was rekindled in 2001, after Fine Gael in the wake of media disclosures sent the solicitors to Telenor a bank draft for the amount equivalent to the original donation. Punctuated by letters between representatives of Telenor and Esat Digifone, whose only common thread was profound anxiety that the other should take the benefit of the money, the draft passed incongruously to-and-fro, and, when last mentioned in evidence, appeared to have come to rest somewhere in Esat Digifone. After media coverage of these matters at public sittings, it was scarcely surprising that the correspondence received by the Tribunal included requests from both Mullingar Active Retirement Association and a CBS Monkstown Junior School "Children help Children" project in Dublin, to the effect that, if no one really wanted the money in question, each would be grateful to avail of it. EVIDENCE O F MR. ARVE JOHANSEN AND O F OTHER TELENOR OFFICIALS 3.35 Before concluding this chapter with some account of what was stated in relation to the donation in the evidence of both Mr. O'Brien and Mr. Lowry, it is necessary to return to aspects of the evidence given on behalf of Telenor. As already stated, the initial evidence given by Mr. Johansen when he was the sole witness called on behalf of Telenor, in relation to material aspects of the three successive invoices furnished to Esat Digifone and of the ongoing dealings had by Telenor personnel with Mr. O'Brien, was misleading or at least incomplete. In essence, although Mr. Johansen in his earlier evidence undoubtedly referred to matters referred by Esat Digifone to Mr. Per Simonsen, the Project Manager provided by Telenor, he did then indicate the shredding of the initial invoice was carried out on instructions from Dublin, and further indicated a likelihood of direct personal dealings had by him with Mr. O'Brien, in which the latter was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 58 made or appeared aware of the basis upon which Mr. Austin was implementing the donation. W h e n Mr. Johansen again testified in October, 2001, on which occasion Mr. Per Simonsen, Mr. Knut Digerud and Mr. Jan Edvard T h y g e s e n also gave evidence as Telenor representatives, the position on these matters appeared as follows. 3.36 Regarding actual dealings with Mr. O'Brien, Mr. Johansen accepted that he could not prove direct contact with Mr. O'Brien on the lines he had initially thought probable; however, having considered and discussed matters in more detail, in particular with Mr. Per Simonsen, he stated that he did clearly convey to Mr. O'Brien, on 20 t h December, 1995, the crucial basis upon which Mr. Austin had sought to mask the donation as an invoice for consultancy services to Telenor, and sought payment to his off-shore Jersey bank account. that he had received by post on invoice from Mr. Austin, dated 19 th He stated December, 1995, the relevant letter and 14 th December, 1995. With a view to preparing for a board meeting of Esat Digifone the following day in Dublin, he s h o w e d Mr. Digerud the letter and invoice, explaining w h a t they were, and then put these in his briefcase to bring to Dublin to s h o w t h e m to Mr. O'Brien for approval. The following day, he travelled early to Dublin with Mr. Digerud for the board meeting, which was held in The Malt House, Grand Canal Quay. 3.37 At a point either before or during a break in that meeting, he had a discussion with Mr. O'Brien, at which Mr. Digerud was present, although he did not participate. received. Mr. Johansen showed Mr. O'Brien the original letter and invoice He informed Mr. O'Brien that he w o u l d arrange for Telenor to facilitate the $ 5 0 , 0 0 0 . 0 0 payment as requested by Mr. O'Brien, and then invoice Esat Digifone for an equivalent s u m by w a y of reimbursement, as also agreed. He did not recall whether he mentioned that Mr. S i m o n s e n would be managing this reimbursement process, but did remember Mr. O'Brien agreeing to the payment o f t h e invoice from Mr. Austin, and its reimbursement by Esat Digifone to Telenor as a Telenor expense. Later on the same occasion, Mr. Johansen handed Mr. Digerud the original invoice and letter, and asked him to arrange for the processing of the payment of the invoice and subsequent reimbursement by Esat Digifone to Telenor. Mr. Johansen stated that he did not thereafter deal further with Mr. O'Brien or Mr. Digerud in relation to processing the transaction, but he was a d a m a n t that he had made clear to Mr. O'Brien the basis upon which Mr. Austin was proposing to proceed and that Mr. O'Brien indicated that this was acceptable to him. 3.38 Mr. Johansen w a s also asked to c o m m e n t on a matter that had been raised whe n Mr. O'Brien first gave evidence, to the effect that, in the course of the shareholders' negotiations, Telenor had contrived to force or pressurise Esat REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 59 Digifone to pay to it the amount of the donation made by it in the first instance. In his response to this, Mr. Johansen w a s emphatic that no such question arose, that the payment was a very limited and uncontroversial part of extensive negotiations, that could never remotely have been viewed as a sticking point, and that all that was done was to give effect to reimbursement in accordance with the initial agreement. He stated that neither verbally nor in writing had any such basis of forced or pressurized payment been advanced, until Mr. O'Brien first gave evidence. As to the variations between the initial and latter evidence tendered on behalf of Telenor, Mr. Johansen acknowledged that this had caused him and his colleagues some embarrassment, but he said that pressure of business and difficulties of liaising had made it difficult to address all aspects in the first instance, and that Telenor had done its utmost to assist the Tribunal, in circumstances where its witnesses were not compellable in Ireland, and where it had little or nothing to gain from such cooperation. 3.39 Although Mr. J o h a n s e n ' s evidence received some corroboration from Mr. Knut Digerud, the former Chief Executive Officer of Esat Digifone, in relation to the events of the 8 t h , 19 th and 20 t h December, 1995, probably the potentially most significant additional evidence tendered on behalf of Telenor w a s that of Mr. Per Simonsen, as to dealings had in relation to the successive raised by Telenor. invoices Mr. S i m o n s e n stated that he was a Telenor employee, and February, had been Esat Digifone Project Manager between May, 1995, and 1996. In the course of w h a t was a period of frantic activity, he was in late December, 1995, informed by Mr. Digerud that Telenor had been requested by Mr. O'Brien to facilitate a payment in respect of a fundraising dinner, and had agreed to do so. Mr. Digerud deputed him to implement payment by Telenor, on the basis of Mr. Austin's letter and invoice, which were furnished to him shortly before Christmas, and then to seek re-indemnification from Esat Digifone in turn. Mr. S i m o n s e n stated that it was only much later that he ascertained that the payment was in fact a political contribution. W h e n he received the letter and invoice, the former bore the handwritten instruction from Mr. Digerud which has already been mentioned, that is, the note which recorded: "this must be paid by us and invoiced 3.40 as management cost to Digifone". Mr. S i m o n s e n further stated that, around that time, he received a telephone call from Mr. O'Brien, in which Mr. O'Brien indicated concern about Mr. Austin's name being mentioned on documentation from Telenor seeking reimbursement of the payment. This presented no difficulty to Mr. S i m o n s e n , who had understood that the amount should be invoiced as a Telenor cost to Esat Digifone; he had transmitted the documentation to the accounts department, instructing that payment should be made to Mr. Austin, following which an invoice should be issued to Esat Digifone for the same amount, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter designated as a Telenor consultancy fee. 1 He believed he had conveyed this Page | 60 instruction on the last w o r k i n g day before Christmas, and on returning to w o r k on 3 r d January, 1996, following, an individual in the accounts department came to him and gave him copies of both Mr. Austin's invoice and the invoice that was to be raised by Telenor to Esat Digifone for reimbursement. Observing that the latter bore the words "consultant David FT Austin", he realised that this was inconsistent with his instructions and inquired if the invoice had yet been faxed. W h e n he was informed that it had been, he telephoned Esat Digifone and spoke to a person in the Dublin office, whose name he was unable to remember. He indicated that the original text of the invoice has been incorrect and requested that the original invoice be shredded. W h e n the Dublin employee indicated that this had been done, Mr. S i m o n s e n then requested that a second invoice would be prepared and sent, omitting the name David FT Austin, for $50,000.00. 3.41 Mr. Simonsen stated that he subsequently received a further telephone call f r o m Mr. O'Brien, informing him that he did not wish the currency on the invoice to be in US dollars, and would prefer it to be in Irish currency. O'Brien then requested that the issue of such a "revised" Mr. invoice be delayed for a period of four to six weeks. Again these requests presented no problem, and Mr. S i m o n s e n accordingly instructed the accounts department that a credit note should be issued, to reverse the apparent US dollar indebtedness, and that after a period of four to six weeks, a third version of the invoice should be issued in Irish pounds. 3.42 The Tribunal also heard brief evidence from Mr. Jan Edvard Thygesen who had been Chief Executive Officer of Esat Digifone between November of 1995, and his replacement by Mr. Digerud, on 19 th February, 1996. He stated that in the course of these duties, he had not been made aware of, or had any involvement in any aspect of the payment, its reimbursement or related documentation. It was accordingly the sworn testimony of the various Telenor witnesses that only Mr. Johansen, Mr. Digerud and Mr. S i m o n s e n on the Telenor side were conversant with the transaction. Mr. Thygesen was also questioned in relation to certain recollections of Mr. Colm Maloney who, as mentioned earlier, in the course of accountancy duties for Esat Digifone during a brief period of service, had prepared a handwritten m e m o r a n d u m of inter-company between Esat Digifone and Telenor, as of 31 s t December, balances In his 1995. subsequent evidence, Mr. Maloney stated that, following inquiries as to any indebtedness to companies with w h o m Esat Digifone had dealings, he inserted in his m e m o r a n d u m a reference to a s u m of ? 3 1 , 6 0 0 . 0 0 as outstanding to Telenor "re. David Austin". Thinking the s u m a substantial one for w h a t Mr. Maloney from his general knowledge surmised to be an indebtedness for public relations, Mr. Maloney thought it probable that he had brought the matter to the attention of Mr. T h y g e s e n in the course of a brief conversation, w h e r e u p o n Mr. Thygesen, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 61 although he gave Mr. Maloney no information, left the accountant with the impression that he was familiar with the matter. When this was put to Mr. Thygesen in evidence, he stated that he had no recollection whatever of the handwritten document or, by implication, of the conversation with Mr. Maloney. He declined to speculate as to whether or not it was surprising that, as the most senior Telenor executive involved with Esat Digifone, he was not made aware of company. In evaluating these what, by any realistic appraisal, was an unorthodox and exceptional transaction to involve a State-owned telecommunications matters, it must in fairness to Mr. Thygesen be borne in mind that, although Mr. Maloney appeared an impressive and dispassionate witness, he was disposed, at the end of a searching cross-examination by counsel for Telenor, to withdraw this contention that Mr. Thygesen appeared familiar with the transaction in the course of their brief conversation. EVIDENCE O F MR. DENIS O'BRIEN 3.43 The account of events given in evidence by Mr. O'Brien commenced by Mr. acknowledging that Mr. Austin had been a lifelong family friend, initially through swimming interests shared by the O'Brien and Austin families. Although O'Brien had had some business contacts with Mr. Austin going back as far as 1983, it was only at the outset of the events now under consideration, in late 1995, that he became aware that Mr. Austin was actively involved in fundraising activities on behalf of Fine Gael. 3.44 Mr. O'Brien recalled in his evidence being telephoned by Mr. Austin in late 1995, in respect of the forthcoming Fine Gael fundraising dinner that was to be held in the 21 Club restaurant in New York, with the Taoiseach Mr. Bruton in attendance. Mr. O'Brien Mr. Austin inquired if Esat would be prepared to take two tables at responded that neither he nor his company would consider the dinner, and indicated a suggested donation in the amount of $50,000.00. participating or making a donation, but mentioned his partner Telenor as a body that might be interested, in view of being keen to become involved in Irish affairs. Mr. O'Brien told Mr. Austin that he would discuss the matter with Mr. Johansen of Telenor, and request him to contact Mr. Austin. Mr. O'Brien recalled telephoning Mr. O'Brien believed that Mr. Johansen on that Mr. Johansen soon after this conversation with Mr. Austin, informing him about the dinner and requesting him to contact Mr. Austin. he had given occasion. 3.45 Mr. O'Brien continued that he recalled going to Oslo on 8 t h December, After dealing with that business, Mr. O'Brien recalled again Mr. Austin's UK telephone number to 1995, to discuss with Telenor the possible employment of Mr. Barry Maloney with Esat Digifone. discussing with Mr. Johansen the matter of Mr. Austin's approach and the Fine REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Gael dinner in New York. Shortly 1 after returning from Oslo, Mr. O'Brien Page | 62 telephoned Mr. Johansen, and it was his evidence that he also then furnished Mr. Johansen with Mr. Austin's UK telephone number, possibly after a telephone call to him from Mr. Austin. 3.46 Mr. O'Brien then referred to copies of the letter and invoices sent by Mr. Austin to Mr. Johansen, each dated 14 th December, 1995, but stated that he had received these only on 4 t h November, 1997, from Telenor. He did not discuss or agree with Mr. Austin the basis w h e r e b y Mr. Austin invoiced Telenor for the donation, and expressed it as being for consultancy services, or that Esat Digifone should, after payment, be invoiced as a m a n a g e m e n t cost. Mr. O'Brien believed Mr. Austin's reference in the letter to an agreement with Mr. O'Brien was an exaggeration of his role in putting Mr. Austin and Telenor in mutual contact. He believed his initial telephone call from Mr. Austin was prior to the actual dinner on 9 t h November, 1995, as he recalled Mr. Austin discussing the possibility of Mr. O'Brien actually attending the dinner, and having an opportunity of meeting the Taoiseach. 3.47 As to the successive invoices furnished by Telenor to Esat Digifone, Mr. O'Brien stated that his role of non-executive Chairman of Esat Digifone at the time, was such that documentation of this type would not have been, and was not brought, to his attention. Accordingly, he could not c o m m e n t on these documents, nor was he then aware of, or able to assist in relation to the lengthy period that the donation appears to have lain in Mr. Austin's Jersey off-shore account, until it was transmitted as an apparently personal donation from Mr. Austin, through Mr. Conroy, to Fine Gael in May, 1997. 3.48 Regarding the absence of any reference to the payment in the prospectus prepared for the Esat T e l e c o m flotation, Mr. O'Brien stated that this was because it was considered that the donation was a legitimate political contribution by an affiliate company, Esat Digifone. 3.49 With regard to the time that Telenor brought the payment to the attention of Fine Gael, Mr. O'Brien had no recollection of having been informed of any intention to do this, and was unaware of w h e n it was done. being approached by Mr. Jim Miley, on behalf of Fine Gael on He recalled February, 27 t h 1998, and subsequently meeting with him. On that occasion, he refused to accept the return of the cheque from Fine Gael. W h e n Fine Gael sent a cheque for the amount of the donation to Telenor, which in turn endorsed it to Esat Digifone, Mr. O'Brien discussed the matter with Dr. Michael Walsh of IIU, agreed that acceptance by Esat Digifone would effectively imply that the original payment had been wrongful, and the cheque w a s thereupon returned to Telenor. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 3.50 1 Consequent upon the acquisition of Esat Digifone by British Telecom, Page | 63 Mr. O'Brien confirmed that he had had no involvement with either Esat T e l e c o m or Esat Digifone since resigning in September, 2000. Referring back to his initial telephone call from Mr. Austin, Mr. O'Brien thought this was in the first w e e k of November, 1995. Although Mr. Austin as a senior businessman w o u l d have known the distinction between Esat T e l e c o m and Esat Digifone, Mr. O'Brien's recollection was that the form of the approach was simply for a contribution from "Esat". W h e n Mr. O'Brien told Mr. Austin that neither he, nor Esat Telecom, would in the dinner, he did so because his instinct was that it was participate inappropriate, and not the correct thing to do. One reason for this was the close proximity to the conclusion of the G S M evaluation process. He recalled that there was much controversy and media c o m m e n t at the time, perhaps reflecting the views of disappointed candidates. Even though the competition had been w o n fairly and squarely, Mr. O'Brien t o o k the view that, to have contributed at that particular time would not have been the right thing to do. He mentioned Telenor to Mr. Austin, because he had known for a while that Telenor w a n t e d to get involved in Irish affairs. He did not purport to offer Mr. Johansen any advice in the matter. Whilst Mr. O'Brien's view that a contribution was inappropriate was initially offered only on behalf of Esat Telecom, he was in the course of further questioning disposed to take the view that it would also have been inappropriate on the part of Esat Digifone; this indeed was a view with which other directors of Esat Digifone in subsequent evidence readily concurred. 3.51 With regard to the reimbursement of Telenor by Esat Digifone, Mr. Esat Digifone pay: in the course of a large O'Brien stated that Telenor "made" number of issues arising between the shareholders, Telenor exerted particular pressure on this matter, and since it was only part of a much bigger picture, Mr. O'Brien and his associates had to agree to reimbursement. alone, he would have refused. 3.52 "roadshow" Had the issue stood At the time of the crisis meetings in November, 1997, immediately prior to the Esat T e l e c o m IPO, Mr. O'Brien said he was too committed to the to approach Mr. Austin for the required letter, but could have proposed Mr. Aidan Phelan as an appropriate person known to Mr. Austin. It was, he agreed, unfortunate that the issue necessitated a sick man being disturbed. As to w h y someone might not simply have telephoned Fine Gael instead for the required confirmation, Mr. O'Brien said he did not know, but sometimes people did not do the obvious thing. He was unable to assist as to whether or not an approach to Fine Gael then would perforce have failed to elicit confirmation that the particular payment had been received. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 3.53 1 Regarding Mr. John Fortune's account of his conversation with Mr. Page | 64 O'Brien about Telenor's intention to make direct contact with Fine Gael in or around 10 th February, 1998, Mr. O'Brien stated that he had no recall of any such conversation, and he viewed Telenor as having undertaken an absolute solo run in the manner of approaching Fine Gael. Mr. O'Brien added that it was in any event a mistake for Mr. Austin, or anyone else on behalf of Fine Gael to have approached him for a donation at the particular time in question, w h e n there was much controversy in the media, and whingeing by disappointed aspirants for the licence. 3.54 In the course of Mr. O'Brien's examination, he was also questioned in relation to some matters which he appeared to have stated in the course of the meeting of directors on 4 t h November, 1997. A m o n g the various notes of w h a t transpired at that meeting were those of Kilroys, to Telenor, and Mr. O'Brien was disposed to agree that, subject to some limited reservations, these notes In that comprised a substantially full and helpful record of w h a t had taken place. note, Mr. Kevin O'Brien, one of the members of Kilroys, was recorded as having asked Mr. O'Brien whether the payment was made by Telenor, by Mr. O'Brien himself, or by Esat Digifone, w h e r e u p o n Mr. O'Brien acknowledged that he wanted the payment to be made outside the country. Questioned about this by Tribunal counsel, Mr. O'Brien responded that he did not remember saying precisely that, but that probably it was that Telenor, as an overseas company, would make the donation, adding that he could have said w h a t had been attributed to him. The notes continued, as was put to Mr. O'Brien, to the effect that Mr. O'Brien stated that he was not sure w h o ended up paying, that Telenor paid Mr. Austin, and that he did not know whether, in making payment to Mr. Austin, Telenor were saying that they were paying on their own, or s o m e o n e else's behalf. At a stage shortly thereafter in these notes, Mr. Kevin O'Brien was noted as putting to Mr. Denis O'Brien that Telenor was paying Mr. Austin, on Mr. O'Brien's behalf, w h e r e u p o n Mr. O'Brien responded that he was not sure. 3.55 Mr. O'Brien gave s o m e recalled evidence on this matter on 22 n d October, 2001, which was after the additional Telenor evidence given by Mr. Johansen, Mr. Digerud, Mr. S i m o n s e n and Mr. Thygesen. Regarding the account of w h a t transpired during a break in the Esat Digifone board meeting in Dublin on 20 t h December, 1995, Mr. O'Brien denied that he had then been shown the letter and invoice of Mr. Austin from some days previously, or that a conversation on the lines described by Mr. Johansen t o o k place. Mr. O'Brien was equally a d a m a n t in denying that he made either of the telephone calls to Mr. S i m o n s e n as described in his evidence, seeking on each occasion to amend the form of reimbursement invoice from Telenor to Esat Digifone. W h e n questioned as to w h y Telenor should offer false evidence against him, Mr. O'Brien inclined to the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 65 view that this may have been because Telenor did not succeed in a bid that they had subsequently made to acquire Esat Digifone, and because they may not have made full and frank disclosure back in Norway as to the circumstances in which they made the contribution to Fine Gael. EVIDENCE O F MR. MICHAEL LOWRY 3.56 first When Mr. Michael Lowry gave evidence to the Tribunal for some six issue he addressed, and the essence of his evidence was that his days at the end of October and start of November, 2001, the donation was the connection with the matter was no more than slight and peripheral. As to other persons involved, Mr. Lowry said he had for many years been a close personal friend of Mr. Austin, and apart from common interests in Fine Gael and horseracing, the two regularly attended social functions together. He enjoyed a similar relationship with Mr. Conroy. He knew Mr. O'Brien well from around the early 1990s, meeting him regularly at social functions, but he would not have been a close friend like Mr. Austin and Mr. Conroy. Whilst Mr. Lowry was a Government Minister, Mr. O'Brien never requested any political favours from him, and nor did Mr. Lowry ever seek or obtain any political contributions from Mr. O'Brien. The latter may well be the case, but it is nonetheless noteworthy that during the year 1995, commencing from the month of March, and the year 1996, significant donations to and support of Fine Gael was evident on the part of Mr. O'Brien and his companies. 3.57 It was Mr. Lowry's evidence that, shortly after becoming Chairman of Fine Gael, in 1993, he was appointed as Chairman of the trustees of the party, and continued in that role until his resignation in November, 1996. Mr. Lowry stated that he had no knowledge whatsoever regarding the Telenor payment. As a Fine Gael trustee, he was aware that a fundraising activity was taking place in New York, but had no involvement whatever in its organization, and no contact with Mr. Austin, Mr. O'Brien or Mr. Conroy in relation to any aspect of it. He knew only in a general way that it was being organized, and became aware of specific details only through media revelations earlier in 2001. Accordingly he had no knowledge of any dealings had between Mr. Austin and the Taoiseach, Mr. Bruton, or of the payment in May, 1997, of the donation to Fine Gael by Mr. Austin, through the agency of Mr. Conroy, or indeed any subsequent material dealings between those concerned. 3.58 Mr. Lowry was of the view that Mr. Austin, whilst never a large scale or consistent fundraiser for Fine Gael, was nonetheless a strong supporter, who was prepared to use his extensive corporate business contacts to assist in raising finance. In the course of their friendship, no week would go by, and in the latter years hardly a day, without contact between the two, mainly by telephone. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Private Page | 66 Regarding Mr. Austin's letter to Mr. Lowry of 4 t h July, 1995, headed "Most and Confidential", proposing the New Y o r k fundraising function, Mr. Lowry stated that he had no recollection of receiving the letter, which he thought may have gone to his ministerial private secretary. He accepted that the letter had been sent, but became aware of its contents only after being furnished by the Tribunal. W h e n Mr. Austin first informally raised the idea of the function with him, he explained to Mr. Austin that he would be extremely busy and unable to make a decision on the matter, and proposed that Mr. Austin contact Mr. Bruton directly about it. Accordingly, Mr. Lowry felt that the letter to him was a courtesy copy to the Chairman of the trustees, on foot of Mr. Bruton requesting that the idea be expressed in a proposal. Mr. Lowry also stated that, having checked his diary, he was out of the country on ministerial business on both of the dates proposed in the letter for a meeting. 3.59 Thereafter, Mr. Lowry believed that the Taoiseach brought the proposal to the attention of the party trustees, and following discussion at a meeting, the party approved of the function proceeding. Mr. Lowry did not attend the function, and despite the reference to him in the letter, did not recall being asked to attend. Since the Taoiseach had committed himself to attending, this did not particularly surprise Mr. Lowry. Nor did Mr. Lowry recall any question of his being asked to approach any potential guests, with a view to attending the function or contributing. 3.60 Even if he may have s e e m e d a person particularly suited to enhance the fundraising prospects of the function, Mr. Lowry said the reality of events at the time was that he was running the busiest of all Government Departments, with enormously d e m a n d i n g commitments both domestically and in a European Union context, and he simply did not have the time to do anything more as regards the function than encourage it from a distance. Apart from his initial discussion with Mr. Austin, his only later relevant contact with Mr. Austin was to communicate to him the complimentary and appreciative c o m m e n t s made by the Taoiseach and some trustees at a meeting shortly after the actual function. Otherwise he had no discussion or contact with Mr. Austin, in relation to any aspect of the event. Whilst Mr. Lowry had no doubt that the competition for the licence was conducted in a manner that was extremely impartial and fair, with no interference from him, he took the view as a matter of political reality, f r o m the point of view of perception, that it would have been unwise to seek a contribution from the successful competitor, in the immediate aftermath of the result. Accordingly, much as he had valued Mr. Austin as a person and friend, it was w r o n g and unwise for him to have sought this particular contribution. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C hapter 3 CONCLUSIONS 3.61 W h a t was in essence a political donation to Fine Gael, the senior party Page | 67 in Government, agreed to be paid by or within Esat Digifone in the immediate aftermath of its successful outcome in the G S M competition was made in a manner which, having regard to its false and misleading documentation, the initial payment to an off-shore Jersey account, and the eventual delayed and misrepresented form of transmission to Fine Gael, was secretive, utterly lacking in transparency, and designed to conceal the fact of such payment by or on behalf of the donors. 3.62 Given the then prevailing time and circumstances, the making of such a donation by Esat Digifone, or by any of the entities or shareholders within it, was inappropriate Any and imprudent, that either in the manner that transpired legitimate as or an otherwise. suggestion payment by Telenor was expression of interest in Irish affairs, but not by any other entity or shareholder within the Esat Digifone consortium, was specious and untenable. 3.63 Tribunal No person or entity connected with the payment saw fit to notify the of it, notwithstanding a substantial degree of knowledge of its clandestine circumstances and proffered return, and it is likely that, without the media disclosures that occurred in 2001, the matter would have remained hidden from public knowledge. The entitlement of such persons to seek and act on legal advice is not in question, but it is nonetheless viewed by the Tribunal as regrettable that no such disclosure whatsoever to a public Tribunal of Inquiry transpired. Whilst allowance is made for the factors mentioned at 3.31, this observation nonetheless is seen as applying to Fine Gael, whose role both in Government and Opposition had been instrumental in the establishment of this Tribunal, in favour of which establishment its Oireachtas members had unanimously voted. 3.64 Of matters which received consideration within Esat Digifone and its constituent entities or shareholders, it appears to the Tribunal that firstly, the nature and purport of the payment ought primarily to have been assessed as of the time of its transmission to Mr. David Austin, rather than w h e n he belatedly caused it to be received by Fine Gael, and secondly, in examining the circumstances of the payment, recourse should in the first instance have been had to Fine Gael as supposed recipients, rather than to Mr. Austin. 3.65 With regard to certain matters arising in the evidence heard, the Tribunal is of the view that: firstly, Mr. Denis O'Brien sought to have payment made initially by Telenor, not in its own right, but on behalf of the entire Esat REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 68 Digifone consortium, whether by reason of undercapitalization, confidentiality, or both; secondly, Mr. O'Brien had notice and awareness of the substantive matters involved in the making of the payment, including related documentation; and thirdly, the suggestion that the reimbursement of the a m o u n t of the donation by Esat Digifone to Telenor was "forced" the weight of the evidence. 3.66 upon it is improbable, and unsupported by Although Mr. Austin had envisaged that Mr. Lowry would occupy a leading role in the New York fundraising project, Mr. Lowry's own evidence was to the effect that pressure of other business precluded this, and that he had no involvement in, or knowledge of, the $ 5 0 , 0 0 0 . 0 0 payment at the relevant time. This was borne out by the evidence of the General Secretary of Fine Gael, Mr. Jim Miley, in relation to conversations had by him with Mr. Austin. It is nonetheless the position that, at the time w h e n the actual payment was transmitted to Mr. David Austin and for a considerable time thereafter, Mr. Lowry was Chairman of the Fine Gael party trustees, and a signatory on the Fine Gael accounts. 3.67 Whilst it was acknowledged by Mr. John Bruton that in his conversation w h e n Taoiseach with Mr. Austin on or around 24 t h February, 1996, his use of the phrase "leave it where it is" was less than entirely clear or unambiguous, the Tribunal is satisfied that he sought to convey to Mr. Austin that acceptance of the donation was then entirely inappropriate. This is confirmed by his s u b s e q u e n t direction that the donation should immediately be returned to the donors on learning that, contrary to his wishes, the donation had in fact been received by Fine Gael. 3.68 As in other instances involving Mr. David Austin, the absence of disclosure of the payment, or its circumstances, materially impeded the capacity of the Tribunal to investigate the payment, in particular by precluding it from hearing Mr. Austin's own account of events prior to his death in 1998. 3.69 November, Whilst not the instigators of the making of the payment, Telenor elected to acquiesce in its making, w h e n clearly aware of its false documentation and disguised nature, and in so doing acted inappropriately. 3.70 The Tribunal's inquiry into this payment was primarily material to an understanding of its wider inquiries into other financial transactions to w h i c h the same individuals were party, and in particular, Mr. O'Brien, Mr. Austin and Mr. Phelan, and with which Mr. Lowry had a direct involvement. The payment, which was intended as a donation to Fine Gael, was not one that was made, either directly or indirectly, to Mr. Lowry within the meaning of paragraph (e) of the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Tribunal's T e r m s of Reference. 1 Mr. Lowry was, at the relevant time, Chairman of Page | 69 the trustees of the party, in w h o m the property and assets of the party were vested. W h e n the payment was made by Telenor, on behalf of Esat Digifone, to Mr. Austin in December, 1995, it was received by Mr. Austin, and held by him on behalf of the trustees, including Mr. Lowry. It follows therefore that, once Mr. Austin lodged the proceeds of that payment into his off-shore account with Bank of Ireland, Jersey, that bank account became impressed with a trust in favour of the trustees, including Mr. Lowry, and it became an account for the benefit of Mr. Lowry, in c o m m o n with all accounts then held by Fine Gael, within the meaning of paragraph (f) of the Tribunal's Terms of Reference, and the Tribunal was obliged to inquire under that paragraph into the source of money held in that account. It is however appropriate to state that there was no evidence that Mr. Lowry in his personal capacity benefited from this donation to Fine Gael. 3.71 The source of the lodgement on 29 t h December, 1995 to account no. 6 6 0 6 4 / 2 with Bank of Ireland, Jersey, held in the name of Mr. Austin, and received by him on behalf of and for the benefit of Fine Gael, of which Mr. Lowry was then a trustee, and ultimately credited to an account in the name of Fine Gael, was the sterling proceeds of a transfer of $50,000.00 from an account in Den Norske Bank, in the name of Telenor, which payment was made by Telenor on behalf of Esat Digifone, and was a donation to Fine Gael made by Telenor on b e h a l f o f Esat Digifone, at the instigation of, and was promoted by, Mr. O'Brien. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 P a g e | 70 CONVERSATIONS BETWEEN M R . DENIS O ' B R I E N A N D MR. BARRY MALONEY A N D THEIR AFTERMATH INTRODUCTION 4.01 On an occasion in the latter months of 1996, subsequent to the award of the G S M licence to Esat Digifone on 16 th May of that year, a conversation t o o k place between Mr. Denis O'Brien and Mr. Barry Maloney, respectively Chairman and Chief Executive Officer of the successful consortium. Although certain aspects of that conversation are disputed, including its date and venue, it is not in issue that Mr. O'Brien, in the course of urging Mr. Maloney to expedite the making of certain success payments relative to the licence award, made a reference to having had to make two payments of ? 1 0 0 , 0 0 0 . 0 0 each, one of which was either stated, or understood to have been to Mr. Michael Lowry. 4.02 The potentially far-reaching implications of the conversation remained in abeyance for many months, and were again discussed by the two men, longtime friends and business associates, only in the course of a series of meetings in the period preparatory to the Initial Public Offering (IPO) of Esat T e l e c o m in 1997. Again, differences emerged in the accounts of w h a t transpired, but following legal advice, Mr. Maloney felt obliged to, and did make disclosure of w h a t had arisen to the other directors and shareholders in Esat Digifone. 4.03 was soon The understandable alarm felt by those directors and shareholders compounded by awareness of the further critical issue of the Esat/Telenor payment to Fine Gael. Both matters had to be considered against a backdrop of the imminent flotation, approval of any appropriate reference to possible risk in the prospectus to be issued, and the establishment and a n n o u n c e m e n t of T e r m s of Reference of this Tribunal, so it was natural that an intense period of discussions and meetings of varying degrees of formality followed. Very extensive notes and m e m o r a n d a o f t h e content of these meetings were made available on request to the Tribunal by the persons involved, and their legal advisers. Whilst claims of legal professional privilege were initially asserted on behalf of s o m e of those involved, regarding portions of this material, these for the most part were subsequently waived or abandoned. Public sittings then proceeded in considerable detail, with the testimony of those persons involved, and production of the various notes and m e m o r a n d a . To set forth all of these, even in a truncated form, would extend this chapter to inordinate lengths. Also, in investigating the substantive underlying possibility that an improper payment was made by Mr. O'Brien to Mr. Lowry, it must be borne in mind that certain of the evidence received entailed elements of hearsay, and whilst Tribunals are entitled to exercise greater latitude than Courts of Law in addressing such evidence, fair REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 71 procedures require that factual conclusions and findings be based upon evidence that in the aggregate has been adequately tested, and is of sufficient quality and reliability. 4.04 Whilst mindful of this, the content of the relevant conversations and between Mr. O'Brien and Mr. Maloney, and of the subsequent meetings discussions held between the various shareholders and directors, with the benefit of legal advice, together with the courses of conduct decided upon, and taken in relation to the two issues, are relevant and important matters for consideration, not merely in isolation, but in conjunction with other evidence, and in the context of assessing credibility of crucial witnesses. 4.05 As to the numerous notes and memoranda, for certain of the latter and larger meetings, detailed contemporaneous notes were prepared by solicitors in attendance, and these are viewed as likely to have more accurately and fully set forth w h a t transpired, than the more fragmented and personal content of many of the individual directors' notes. 4.06 Accordingly there will now be set out an abridged account of: (i) the respective conversations and dealings had between Mr. O'Brien and Mr. Maloney relating to a payment by the former to Mr. Lowry, as recounted in evidence by each of them, and; (ii) the principal meetings held in consequence, together with actions and decisions taken on foot of them; (iii) reference will be made to some relevant fresh matters that were raised in the course o f t h e related public hearings o f t h e Tribunal. W H A T W A S SAID A N D W H E R E Mr. Barry Maloney's account of what transpired Old 4.07 friends It was not until May, 2001, that the Tribunal learned of the exchanges between Mr. Maloney and Mr. O'Brien which gave rise to the issues confronted by Esat T e l e c o m and Esat Digifone in October and November, 1997, in advance of the Esat T e l e c o m IPO. This followed from inquiries made by the Tribunal of both companies, which had in the previous year been acquired by British Telecom, in relation to the Esat/Telenor donation of $ 5 0 , 0 0 0 . 0 0 to Fine Gael. It was in the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 72 context of the Tribunal's examination of the actions which had been taken by Esat Digifone and Esat Telecom, in advance o f t h e IPO, to ascertain the circumstances surrounding that donation, that Mr. Maloney, having been specifically asked about those actions, informed the Tribunal of the other significant aspect of the inquiries put in train at that time. As it was Mr. Maloney w h o first brought the matters giving rise to this chapter to the attention of the Tribunal, his account of events will be outlined first, although as matters transpired, Mr. O'Brien, who addressed these matters in conjunction with the Esat/Telenor p a y m e n t to Fine Gael, was the earlier to testify. 4.08 Maloney's By w a y of background, Mr. Maloney recalled that he and Mr. O'Brien Mr. Mr. had been close and long-standing friends since student days. Even w h e n employment took him overseas, t h e y stayed in contact, and Maloney had invested in various of Mr. O'Brien's business enterprises, including Esat Telecom. The idea of Mr. Maloney returning from his e m p l o y m e n t with Rank Xerox in the USA to take up the position of Chief Executive Officer with Esat Digifone in the w a k e of its recent licence success was first raised with him by Mr. O'Brien, and then supported by Mr. Arve Johansen of Telenor. In the event, Mr. Maloney initially took up the role of Chief Executive Officer jointly with Mr. Knut Digerud from 30 t h July, 1996, latterly acting solely in that behalf from 1 s t July, 1997, and set about the many marketing, personnel and other functions entailed in building up the c o m p a n y following the formal award of the licence. Mr. O'Brien was non-executive Chairman of Esat Digifone, and also of Esat T e l e c o m , and regular meetings were held between Mr. Maloney and himself to review progress in building up the company. At this point, Mr. Maloney's recollection was that relations between the two men remained cordial, although differences had arisen between Mr. O'Brien and Mr. Digerud. I've had to make two payments 4.09 of ?100,000.00 each One such meeting was, in Mr. Maloney's recollection, on a date he could not precisely identify in October or November, 1996, in Mr. O'Brien's office in The Malt House, in Dublin. In the course of it, Mr. O'Brien raised the issue of success payments that were due to certain consultants w h o had w o r k e d on the bid for the licence. Mr. Maloney responded that, when such expenditure was he would make and already had on occasion made appropriately vouched, payment, but he could not make such proposed payments as remained until full supporting paperwork w a s to hand. Mr. O'Brien expressed frustration, stating that he was meeting the individuals concerned from time to time socially, and was embarrassed that they remained unpaid. the individuals concerned were, or It w a s Mr. Maloney's recollection that Mr. PJ Mara and Mr. Stephen have included Cloonan, and that in the former's case, which Mr. O'Brien may already referred to, no documentation had been received, whilst in regard to the latter, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter subsequent settlement work in lieu and of negotiation initial share 1 proved option necessary entitlements. to agree a financial Page | 73 As the conversation continued, with Mr. Maloney becoming s o m e w h a t exasperated, he recalled Mr. O'Brien then saying: "Well, you think you've of?100,000 got problems. I've had to make two Lowry", payments each, one ofwhich was to Michael or words similar. associated with Knowing that Mr. Michael Lowry was the G o v e r n m e n t Minister the formal award of the licence approximately six months previously, Mr. Maloney was surprised and taken aback by this, viewing w h a t he had heard as improper and possibly corrupt, and responded that he "didn't to know", want and that, as far as he was concerned, it had nothing to do with Esat Digifone, meaning that he did not wish to become involved, or learn more of something that was Mr. O'Brien's affair. According to Mr. Maloney, no more was said, and the meeting ended. It didn't go 4.10 through Months passed, during which Mr. Maloney discharged such success payments as remained, once vouching documentation came to hand. Feeling the matter of the payment raised in their conversation was not related to Esat Digifone, Mr. Maloney said that he put this issue out of his mind and did not raise it, although he acknowledged that he did not wish to be digging too deep. According to Mr. Maloney, it was in fact Mr. O'Brien who reverted to the content of the earlier conversation on a number of occasions, and this, together with publication of the Terms of Reference of this Tribunal, and preparation of a reference to related risk to the licence in the prospectus for the Esat T e l e c o m flotation, brought the matter into sharper focus for Mr. Maloney. 4.11 The first such reference was, in Mr. Maloney's recollection, at the end of one of his regular liaison meetings with Mr. O'Brien, on a Monday in August, 1997, shortly prior to Mr. O'Brien's marriage. As Mr. O'Brien was picking up his papers at the conclusion of the meeting, he used words to the effect that: "Do you remember I told you about the payment to Lowry. Well, I Just want to let you know I didn't do it. Thank God I didn't do it." Again the meeting ended without any response on the part of Mr. Maloney. 4.12 The next relevant conversation was at another such liaison meeting between the two, in one of their offices. Whilst he could not be positive, Mr. Maloney felt that this was on a further Monday meeting in August, probably a REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 74 w e e k following the earlier one, and again prior to Mr. O'Brien's departure for his wedding and honeymoon. On this occasion, again at the conclusion of the meeting, Mr. O'Brien broached the subject, using words to the effect of: "I know happen. you must be worried, and I Just want to assure through." you it didn't I did not make thepayment. It didn't go Once more, Mr. Maloney made no response, and the meeting concluded, but the concerns he felt after these two further meetings, over the possibility of improper payments in the context of the impending IPO, and establishment of this Tribunal, grew over ensuing weeks, augmented by certain shareholder differences, some technical and operational issues, and a generally deteriorating relationship between both men. It got stuck with an 4.13 House. intermediary T h e y met again on the afternoon of 8 t h October, 1997, in The Malt Mr. Maloney recalled that he then outlined his concerns in the context of his position, and pressed upon Mr. O'Brien that he should not at that point in time proceed with the IPO. Mr. O'Brien responded that, although he had no particular wish to do so then, he was being pressed to proceed by US financial institutions, and sought to reassure his colleague that there was no cause for concern or deferral of the IPO, since he had made no payment to Mr. Lowry. Mr. Maloney's concerns continued, and as they left the office and w e n t down the stairs, Mr. O'Brien said: "Like, you are not buying it, are you? You don't believe me?" or words similar. Mr. Maloney referred to the series of conversations they had had as causing him much worry. Mr. O'Brien responded: "Well, what I didn't tell you was that I was going to make the payment, I thought about it but I didn't do it." but it got stuck with an intermediary. He also said: "It didn't go through. 4.14 Had it gone through, I couldn't be doing the IPO." Although notes provided by Mr. Maloney in relation to this meeting referred to Mr. O'Brien informing Mr. Maloney that money w e n t to a middle-man, but not to Mr. Lowry or his account, Mr. Maloney in evidence was disposed to accept that Mr. O'Brien did not use the word middle-man, and that this was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 75 merely an inaccurate transposition on his part; however, he stated that he had a very clear recollection of the term "intermediary" 4.15 being used. It was shortly prior to that meeting of 8 t h October, 1997, that Mr. Maloney had first confided in any third party regarding the matters Mr. O'Brien had raised, by recounting t h e m to Mr. Fergus Armstrong, of Messrs. McCann Fitzgerald, solicitors to Esat Digifone, in order to seek legal advice on behalf of Esat Digifone. Whilst claims of legal professional privilege were asserted in relation to certain communications and advices in this regard, it nonetheless became obvious that Mr. A r m s t r o n g viewed w h a t had arisen as critical and alarming: if any improper payment had in fact been made, it could imperil the flotation and compromise Mr. Maloney's own position, and accordingly the flotation should be deferred, and the board of Esat Digifone made aware of w h a t had arisen. Mr. Maloney recalled Mr. O'Brien saying in the course of the 8 t h October meeting that, if Mr. Maloney wished to bring the matter to the board, he Mr. O'Brien was agreeable, whilst still expressing sensitivity about Telenor representatives becoming aware of it. 4.16 In this context, it was inevitable in the that other board members of and what advisers would become involved days following. A s u m m a r y transpired at the main ensuing meetings and enquiries will follow, but it is first necessary to conclude Mr. Maloney's account of dealings had specifically with Mr. O'Brien in relation to the matter under investigation, and then set forth O'Brien's occasions. partly diverging account of w h a t passed between t h e m on Mr. these Monkey off my back 4.17 Following further advice from Mr. Armstrong, Mr. Maloney again met with Mr. O'Brien on the morning of 13 th October, 1997. In evidence, he stated that he had noted in advance the matters he felt would have to be raised, in particular the hazards entailed in proceeding with the Esat T e l e c o m IPO if impropriety could be shown, and no intimation of risk having been conveyed to prospective investors, beyond the limited prospectus reference to risk factors already referred to in an earlier chapter; in this context he noted that it would be necessary for him to appeal to Mr. O'Brien to: "delay and the IPO until after the Tribunal", "if he refuses, the risk", I want the monkey off my back and the Board to be part of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 76 to which end he would seek a board meeting, or share his concern with another director. 4.18 At this 13 th October meeting, Mr. Maloney conveyed these concerns to Mr. O'Brien, but felt he was not getting very far, so he gave him a copy of Mr. Armstrong's ahead. preliminary advices, in order to emphasise the potential pitfalls He recalled that Mr. O'Brien then asked him to come across the road for a coffee to Paddy Kavanagh's, a nearby public house, and whilst there enquired as to who also knew of these conversations, to which Mr. Maloney responded that no one other than Mr. A r m s t r o n g as Esat Digifone's solicitor did. They parted, but later in the morning Mr. Maloney recalled receiving a telephone call from Mr. O'Brien, asking that he meet with Mr. O'Brien and Dr. Michael Walsh, an Esat Digifone Director who, along with Mr. Dermot Desmond, had been nominated to represent IIU on the board. This duly t o o k place, and will be reverted to as the first meeting involving non-legal Esat Digifone representatives beyond Mr. O'Brien and Mr. Maloney, in due course. 4.19 However, the last relevant meeting between Mr. Maloney and Mr. O'Brien without others from Esat Digifone present was on the night of the same day, at approximately 11:00pm, when Mr. Maloney said he w e n t to Mr. O'Brien's house in a last gasp attempt to change his mind, and induce him to defer the IPO, in circumstances that Mr. Maloney was finding increasingly stressful. Calling at that time of night was not a course he took lightly, and he recalled that Mr. O'Brien was in fact out on his arrival, w h e r e u p o n he sat in the kitchen with Mr. O'Brien's wife and a female relative, over a f e w glasses of wine, until Mr. O'Brien's return. T h e y then went to another room, and discussed w h a t was now undoubtedly a crisis further. Once more Mr. Maloney pressed for a deferral of the IPO, and alluded to the need for a board meeting, w h e r e u p o n Mr. Maloney recalled Mr. O'Brien stating that he did not w a n t Telenor to be informed of w h a t had arisen, fearing they would leak it to the media. Mr. Maloney responded that Mr. O'Brien, w h o had he could not keep the information from Telenor, and become agitated, responded that Mr. Maloney had not handled the situation well, and was making life difficult for Mr. O'Brien. Mr. Maloney also recalled making mention o f t h e need to involve US lawyers in relation to the position there, which would need board approval, but Mr. O'Brien made it clear that he did not wish this. 4.20 As will be seen w h e n dealing with subsequent meetings of Esat Digifone personnel w h e n the process of inquiry into the issue had been set in train, Mr. O'Brien was in the course of these to contend that his initial remarks to Mr. Maloney were made in the context of a j o k e or bravado element; w h e n this was put to Mr. Maloney in the course of his examination at the Tribunal's sittings, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 77 he said that, from his knowledge of Mr. O'Brien over several years, he regarded w h a t was said by him as having been stated in a manner that was serious, and that this also applied to their s u b s e q u e n t conversations. entirely Mr. Denis O'Brien's account of what transpired I have paid 4.21 ?200,000.00 Now to Mr. O'Brien's account, as given in evidence, regarding his conversations and dealings with Mr. Maloney about the matter examined in this chapter. He recalled, in this instance similarly to Mr. Maloney, that the initial conversation had taken place in the context of his having expressed concerns to Mr. Maloney about w h a t he felt was slowness on the latter's part in paying success fees to certain consultants and advisers who had been involved in the successful licence bid. He believed, referring to a diary entry, that the conversation took place on the afternoon of S u n d a y , 17 th November, 1996, and differed particularly from Mr. Maloney in recalling that it arose in the course of a run with him, lasting one and a half hours. Mr. O'Brien felt he had already supplied Mr. Maloney with any necessary vouching documentation to enable him to make the payments, believed the situation of the individuals, which he had raised on previous occasions, had become serious, and he felt he needed to tackle Mr. Maloney on it. He said to Mr. Maloney: "If you think you have got problems ?200,000" paying these people, I have paid or words similar. This he said was a strategy he adopted, knowing the psychology of his colleague, to induce him to make the delayed payments, by conveying that he himself was suffering pain; it was however, he said, a false statement, as he had made no such payment or payments. the course of this conversation. He made no mention of Mr. Lowry in Nor did Mr. O'Brien recall Mr. Maloney remarking that he did not w a n t to know. Whilst Mr. O'Brien did not then go on to say the remark was unfounded, he thought Mr. Maloney would have known from his tone of voice that it was not to be taken at face value. 4.22 Mr. O'Brien recalled that the outstanding payments to consultants and advisers over which he had been concerned, were made a relatively short time after the conversation by Esat Digifone, although at the time Mr. O'Brien had thought he himself would have to pay them. He next recalled a further conversation with Mr. Maloney in the s u m m e r of the year following, in July or August, 1997, at one of the weekly meetings the two of t h e m used to have. He said that Mr. Maloney raised the issue of "the Tribunal", the McCracken Tribunal having reported in A u g u s t of that year, and asked whether any money had been REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Mr. O'Brien replied Page | 78 paid to Mr. Lowry, not referring to the run the previous year. categorically in the negative. Knowing that his remark at the earlier conversation was spoken in jest, Mr. O'Brien said he would have had no reason to raise it with Mr. Maloney. 4.23 Mr. O'Brien believed that the matter was again raised by Mr. Maloney during w h a t he felt was a further Monday morning meeting between t h e m , on 8 t h October, 1997. Although this was a W e d n e s d a y , nothing turns on that fact. On this occasion, Mr. Maloney asked was there any problem about a payment to Mr. Lowry, and Mr. O'Brien assured him that that was absolutely not the case. Issue being raised to cause 4.24 trouble As to 13 th October, 1997, Mr. O'Brien agreed with Mr. Maloney that there had been two meetings between them, the latter having also been attended by Dr. Michael Walsh. Following the former, which took place at 9:00am, with the issue again being raised and Mr. O'Brien questioning w h y the matter was now being raised by Mr. Maloney, Mr. O'Brien said he was left with an uneasy feeling about the "agenda" being pursued by Mr. Maloney, so he telephoned Dr. Walsh and set up the further lunch-time meeting. 4.25 solely, Regarding the night-time meeting of 14 th October, 1997, at Mr. O'Brien's house, which was the last relevant encounter between the two of t h e m Mr. O'Brien differed f r o m Mr. Maloney as to its initial circumstances, recalling that it was shortly after he returned home after dinner with his wife, at about 11:00pm, that Mr. Maloney knocked on his door, and said he w a n t e d to talk to him, w h e r e u p o n they w e n t to the living room. Maloney "fairly short shrift", Mr. O'Brien said he gave Mr. being annoyed at the late hour of the visit, and recalled Mr. Maloney again urging that the IPO be deferred; he may also have requested that there should be a greater degree of disclosure relevant to the issue in the provisional form of prospectus then being used, colloquially known as the "red herring" prospectus. It was only at an appreciably later stage than this that he recalled reference being made to the T e r m s of Reference of this Tribunal. 4.26 By this stage Mr. O'Brien was of the view, and this was the context of his unease expressed over Mr. Maloney's agenda, that the issue was being raised to cause trouble, and stop the IPO taking place, rather than bona fide in the course of Mr. Maloney's duties as Chief Executive Officer of Esat Digifone; he recalled that, within two months of the initial conversation between t h e m , and subsequently in or around July of 1997, Esat T e l e c o m had launched public bond issues to raise finance, on each of which occasions a prospectus was prepared and registered with the Securities and Exchange Commission in the USA, and yet REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 79 on neither occasion had Mr. Maloney raised the issue, or expressed concern in a n y w a y , still less in the immediate aftermath o f t h e first conversation. M A I N S U B S E Q U E N T M E E T I N G S H E L D A N D A C T I O N S T A K E N IN CONSEQUENCE. 4.27 Commencing with Dr. Michael Walsh's lunch-time attendance to meet Mr. O'Brien and Mr. Maloney on 13 th October, 1997, an increasingly intense process of consultation and enquiries between those primarily involved in Esat Digifone and their legal advisers, and subsequently between the same personnel in Esat Telecom, into the crisis that had arisen was set in train and continued for three and a half weeks. In appraising what took place, of particular interest are: (i) the cumulative degree of detail as to the full meaning and intent of Mr. O'Brien's initial remark to Mr. Maloney, chiefly as evinced by Mr. O'Brien in response to many queries addressed to him; (ii) the range of factors or concerns adverted to or noted by those pursuing the enquiries, and; (iii) what actually was done or undertaken in seeking to resolve the problem. 4.28 Dr. Walsh was in no doubt from the outset of the gravity of the matter which had arisen, and initially sought a form of letter to be agreed between Mr. O'Brien and Mr. Maloney confirming that, as stated by Mr. O'Brien at the lunchtime meeting, no payment had in fact been made to Mr. Lowry. Such a letter was prepared later that day by Mr. O'Brien. Dr. Walsh telephoned events, although he expressed his fellow IIU servants representative on the Esat Digifone board, Mr. Dermot Desmond, to inform him of confidence that the quality of civil involved in the licence competition would have left no room for impropriety. Mr. Desmond was similarly concerned, but annoyed that Mr. Maloney had taken so long to raise the matter. Evil thoughts never brought to fruition 4.29 On the following day, 14 th October, 1997, Mr. Maloney came to see Dr. Mr. Maloney told Walsh, after discussing the legal position with Mr. Armstrong. and that money intended for Mr. Lowry had got "stuck" Dr. Walsh he was concerned because he believed an intermediary was involved, for some unexplained reason. Whether or not this was raised by Mr. Maloney on the previous day, which from Dr. Walsh's notes the latter thought improbable, it was certainly referred to on 14 th October, 1997. Dr. Walsh had sent Mr. Maloney a written memorandum REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter before that second meeting, indicating 1 that, in all the circumstances, and Page | 80 particularly since it s e e m e d no actual payment had been made, he did not feel that Esat Digifone had cause for concern. However, he noted that Mr. O'Brien "admits "never to having had evil thoughts", brought to fruition", but had confirmed that those thoughts were happened, and stated that he did not "like what had was totally unacceptable behaviour". and what was contemplated He was also insistent that Esat Digifone and its directors should not be liable in any fashion for the content of Esat T e l e c o m ' s prospectus. 4.30 In the course of this second meeting, Mr. Maloney also mentioned that the intermediary was aware of Mr. O'Brien's intention to give money to Mr. Lowry. Since, on the previous day Mr. Maloney had s e e m e d content that nothing adverse had actually happened, this e n h a n c e d rather than alleviated Dr. W a l s h ' s worries. Although Dr. Walsh shared Mr. D e s m o n d ' s view that Mr. Maloney should have reported the matter earlier, he nevertheless w a s disposed to believe Mr. Maloney regarding the matter raised, having found him a very good chief executive officer, and enjoyed a satisfactory relationship with him. 4.31 Over the days following, matters were discussed with urgency between Mr. D e s m o n d and Dr. the shareholders in Esat Digifone and their legal advisers. Walsh were concerned at the degree of gravity with which the c o m p a n y solicitors appeared to be viewing the position, w h e n it s e e m e d even from Mr. Maloney's account that no actual p a y m e n t by Mr. O'Brien to Mr. Lowry had been made, or at least completed; they acknowledged that, if it was certain that Mr. O'Brien had made a payment to Mr. Lowry, that should be disclosed to this Tribunal. circumstances, In the Mr. Desmond requested that Dr. Walsh arrange a meeting of those primarily involved and of the shareholders in Esat Digifone, which was duly fixed for 20 t h October, 1997, at the IIU offices. extensively to promote the Esat Telecom Since Mr. O'Brien was travelling he participated by way of IPO, conference call, as also did Mr. Johansen and Mr. Rolf Busch, Telenor's senior legal adviser. This meeting, which was chaired by Mr. Desmond, was also attended by Mr. Maloney, Dr. Walsh, Mr. Leslie Buckley and Mr. John Callaghan, Directors of Esat T e l e c o m and Esat Digifone, and it was characterised as a meeting of representatives of Esat Digifone shareholders, with Mr. Maloney present as an invited guest. A wind-up: apology to Mr. Barry Maloney 4.32 At the meeting, Mr. O'Brien was called on to explain the circumstances of the original conversation with Mr. Maloney. He responded that no p a y m e n t had actually been made, and stated his remarks were in the nature of " a wind-up", because he was getting a lot of grief from Mr. Maloney about paying expenses REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter which arose as part of the bid process. 1 He apologised for the difficult position he Page | 81 had put Mr. Maloney in, and said that w h a t he had stated was whilst out on a run, and was j u s t a bit of bravado on his part. Mr. O'Brien was on subsequent occasions also to refer to elements of a j o k e or bravado being behind w h a t he had said, and it seems that this was the first occasion on which such an element was attributed to w h a t had hitherto been characterised as a conversation of serious intent. Following he a detailed accepted his discussion, assurance Mr. that Desmond nothing informed untoward Mr. had O'Brien that, whilst occurred, he was very upset by w h a t had arisen, and if it transpired that he was being misled he would sue Mr. O'Brien, or indeed anyone else w h o had done anything which could undermine Esat Digifone, for d a m a g e caused. To this end, he sought assurances f r o m each of the shareholders that nothing had been done which could impact adversely upon the licence. He also expressed annoyance with Mr. Maloney for having delayed in raising the issue. It was in conclusion resolved that all reasonable steps should be taken to ensure nothing untoward had happened and, assuming this to be so, to ensure m a x i m u m protection for Esat Digifone in the context o f t h e Esat T e l e c o m IPO against any possible liability to intending investors. To this end, it was agreed that: (i) Mr. O'Brien would furnish a letter as previously discussed confirming no impropriety; (ii) Mr. Maloney and Mr. Callaghan would engage with the Esat T e l e c o m accountants, and ensure relevant books were checked to confirm that there was no improper payment disclosed, and; (iii) Mr. Maloney and Dr. Walsh would deal with Esat Digifone's solicitors to ensure the fullest legal protection for it. Inquiries conducted 4.33 Some discussion with the solicitors accordingly followed on 21 s t October, 1997, and Dr. Walsh noted a telephone call to him at the request of Mr. O'Brien from Mr. Owen O'Connell, a partner in the firm of Messrs. William Fry, solicitors to Esat Telecom, agreeing that Mr. Armstrong's advices should be circulated to the board, and that, if Mr. Maloney felt it necessary to brief the board further regarding his concerns, that opportunity should be provided, since Mr. O'Connell felt it was likely Mr. Maloney w o u l d be called as a witness by this Tribunal. In evidence, Mr. O'Connell had no specific recollection of this conversation, feeling that his first substantive involvement with matters dated from the following day, but not an inordinate a m o u n t turns on this. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 4.34 1 On 22 n d October, 1997, Mr. O'Brien and Mr. Aidan Phelan, his financial Page | 82 adviser and also a consultant retained in regard to the IPO, whose role relating to the Esat/Telenor payment to Fine Gael has been noted in the previous chapter, met with Mr. O'Connell at the offices of William Fry, and discussed the matters raised by Mr. Maloney. In a lengthy telephone call to Dr. Walsh on the s a m e day, Mr. Maloney reiterated his belief that a third party was involved, even though no transaction had gone through, and he felt Esat Digifone could be in trouble because of Mr. O'Brien's intention. A board meeting was fixed for the following day, and it is fair to say that all the shareholders and directors of Esat Digifone involved by this stage approached matters with a considerable degree of concern and apprehension. 4.35 At 9:00pm on 23 r d October, 1997, which was the time most suitable in the context of travelling commitments, a meeting was held at the offices of IIU. Following further legal discussions, it was in the ultimate not designated as a formal board meeting, and was attended by Mr. Armstrong as Esat Digifone's legal adviser, along with Mr. Johansen, Mr. Busch, Mr. Knut Digerud and Mr. John Fortune on behalf of Telenor, Mr. O'Brien, Mr. Buckley and Mr. Callaghan on behalf of Esat Telecom, by Mr. Desmond and Dr. Walsh on behalf of IIU, the former by conference call, and by Mr. Maloney. Dr. Walsh indicated that the primary business was whether or not, in the context of the matters that had arisen (as noted earlier, the issue of the Esat/Telenor payment of $ 5 0 , 0 0 0 . 0 0 had by now become an additional concern for the directors), Esat Digifone should support the Esat T e l e c o m IPO which was under way. on whether w h a t had transpired between Discussion ensued, initially Mr. O'Brien and Mr. Maloney was Mr. Busch noted that it referable to Esat Digifone, as opposed to Esat Telecom. s e e m e d the inevitable conclusion of Mr. Armstrong's advices that the IPO should be postponed. Dr. W a l s h however stated that such a course could only be taken on reasonable grounds, and Mr. Desmond stressed the damage to all Esat companies that a deferral would occasion, stating that he would be happy to accept an appropriate letter of denial from Mr. O'Brien as c o m p a n y Chairman, backed by documentation from the c o m p a n y auditors, and adding: "there is a lust to overthrow success." Thereupon Mr. A r m s t r o n g acknowledged that it was open to the directors to accept and act on written assurances from Mr. O'Brien, and certification from auditors, that nothing untoward had occurred. Both Mr. Maloney and Mr. O'Brien reiterated much of w h a t they had already expressed, with the former stating that, whilst he accepted Mr. O'Brien's word, he still felt uneasy, and believed that Esat Digifone was at risk, insofar as a third party had knowledge of w h a t had been intended. Mr. O'Brien again assured all present that no actual payment had been made and said that he could not recall all details of the conversation, but it was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 83 in a context of payment of success fees, following which the matter was not again raised by Mr. Maloney until some five or six w e e k s previously. 4.36 Whilst much further discussion is recorded in the various m e m o r a n d a of the meeting made available, w h a t was probably the most important fresh matter to emerge was in regard to the nature or identity o f t h e intermediary that had been referred to by Mr. O'Brien. At one point Mr. Callaghan queried whether any third party had been named, given Mr. O'Brien's reference to p a y m e n t having "got stuck". It appears that Mr. O'Brien then gave for the first time the explanation that the intermediary w a s W o o d c h e s t e r Bank, which was the financial institution at that time primarily involved in his dealings. Mr. Maloney stated that his main concern was that there was a middle-man or intermediary other than j u s t a bank involved, and said that, if called to this Tribunal, his evidence would be the same as w h a t he had stated that evening. Discussion then turned to the less critical The meeting concluded on issue of the Esat/Telenor payment of $50,000.00. the basis that the discussion would be resumed a w e e k thereafter, and that, in addition to implementing the courses already set in train, legal advice would be obtained f r o m the USA, and a written communication would be made to the underwriters retained for the IPO, clarifying the limits of Esat Digifone's responsibilities. 4.37 On 30 t h October, 1997, Mr. Callaghan, Mr. Buckley and Mr. Aidan Phelan called to the offices of William Fry to see Mr. O'Connell. The context of the meeting was that Mr. Callaghan and Mr. Buckley, as c o m m o n directors of both Esat T e l e c o m and Esat Digifone, were formally notifying the solicitors to Esat T e l e c o m of all that had transpired, and copies of the advices given to Esat Digifone by Messrs. McCann Fitzgerald were given to Mr. O'Connell, along with copies of statements by both Mr. O'Brien and Mr. Maloney. Mr. O'Connell felt that the basis of Mr. Aidan Phelan's presence was by virtue of him being a consultant to the IPO, and involved with the promotional roadshow. 4.38 From Mr. O'Connell's notes of this meeting, it appears reference was made to an Esat Digifone board meeting earlier that day, in which Mr. Knut Digerud, as one o f t h e Telenor representatives, had expressed particular anger at w h a t had arisen, and was insistent on "pulling" the IPO. It had also been decided, seemingly on foot of advices taken in the USA by McCann Fitzgerald, that a meeting in the form of a structured inquisition should be held the following week, in which Mr. O'Brien in particular would be questioned on both critical matters by a McCann Fitzgerald representative other than Mr. Armstrong, with a view to better enabling the Esat Digifone board to form a view on the appropriate course to be taken. Other portions of Mr. O'Connell's notes indicate that there was discussion of many of the matters that had by then emerged including: REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 4 Page | 84 "intermediary - Woodchester?", " other ?100k?", "payment stuck" "had thought about making payment but chose not to do it" in addition to the matter of the Esat/Telenor payment. It also appeared that the earlier board meeting had deputed Mr. Callaghan and Mr. Buckley to approach Mr. O'Connell. There was also reference to the ongoing investigations, the imminent issue of the prospectus the following T u e s d a y week, and it s e e m s that Mr. O'Connell was asked to consider the whole matter and consult with O'Brien. 4.39 Mr. Further to his instructions, Mr. O'Connell set about making contact with Mr. O'Brien, who was on the west coast of the USA, and arranged that they should effectively meet half way, in Boston, on 1 s t November, 1997. He also made contact with Ms. Ann Foley, Mr. O'Brien's bookkeeper, with a view to assembling relevant information f r o m Woodchester Bank, pursued some matters relevant to the Esat/Telenor $50,000.00 payment with the solicitors to Telenor, and discussed the overall position with Dr. Walsh. From his notes of his conversation with Dr. Walsh, it s e e m s he was told that there was no denial of the existence of an intermediary, and there was a suggestion it w a s Woodchester, which: "Jarred a bit, but people prepared 4.40 to accept it." On 1 s t November, 1997, Mr. O'Connell traveled to Boston to meet Mr. O'Brien as arranged, and during his flight prepared notes on a wide range of matters, primarily the issues that would be raised and the questions that would be asked at the forthcoming inquisition. As with a variety of other notes and m e m o r a n d a prepared by him, Mr. O'Connell made these notes available to the Tribunal, although he stated that w h e n they were made they were never intended for any purpose other than his own use. He indicated that they were largely to provide an agenda or questionnaire for the detailed interview he was going to conduct with Mr. O'Brien on arrival. 4.41 addressed A m o n g s t many other matters alluded to in these notes, Mr. O'Connell such issues as w h a t exactly was said in the initial conversation between Mr. O'Brien and Mr. Maloney, and the venue and date of the occasion; he mused as to whether it was reasonable to accept that such serious matters REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 possibilities Page | 85 were addressed in a j o c o s e or bravado context, addressed some regarding the supposed second payment of ? 1 0 0 , 0 0 0 . 0 0 , and considered the phrase "stuck with intermediary"; in this regard he wrote that the implication that Woodchester was the intermediary was not consistent, and speculated as to whether there was another intermediary instead of, or as well as, Woodchester; he noted as portion of one of the responses advanced by Mr. O'Brien: "had thought about making a payment, but chose not to do it"; he observed that if the original statement was acknowledged but not adequately explained, there could be serious effects in regard to "Tribunal, values"; possible price, pols, share he alluded to the possible position of Mr. Michael Lowry at the time, and contacts had by Mr. O'Brien with him, nothing that many, on any appraisal, then existed in the telecommunications field, and speculated whether anything material was known about funding or involvement in regard to the Carysfort Avenue, Blackrock house purchase by Mr. Lowry; he considered the degree of particularity with which it w a s going to be necessary for him to check Mr. O'Brien's accounts, listing them, dealing with all withdrawals beyond a certain minimum a m o u n t since 1995, or an aggregate of smaller sums to the same payee, and nothing the element of "offshore payment". The notes ranged over many matters, and have been of s o m e value to the Tribunal as representing the reflections of a senior lawyer seeking to advise the board of Esat T e l e c o m on the throes of the undoubted crisis that had arisen, as he j o u r n e y e d to meet its chairman, Mr. O'Brien. 4.42 Having arrived in Boston, Mr. O'Connell met with Mr. O'Brien, and over an approximately six hours' duration questioned him closely on matters likely to be raised at the forthcoming inquisition. He made f e w notes, stating that he viewed it as his priority to assess and observe Mr. O'Brien as he responded to questions, but did obtain Mr. O'Brien's responses to six questions, which Mr. Armstrong had furnished to Mr. O'Connell, and which obviously were indicative of w h a t was likely to be raised in the course o f t h e inquisition. Mr. O'Connell already had w h a t was described as a "Draft Fitzgerald", Statement of Denis O'Brien to McCann which recounted w h a t he recalled o f t h e circumstances o f t h e pivotal conversation in the course of a run, denied that any money was paid by him to Mr. Lowry for the Esat Digifone licence, and expressed regret to Mr. Maloney and the board for the anxiety and trouble occasioned by the matter, whilst concluding that: "a casual and untrue remark into something significance." which made in a social context should not be blown to its will have consequences out of all proportion REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 4.43 1 Although the responses to the six questions accorded with much that Page | 86 was stated by Mr. O'Brien on other occasions around this time or in evidence, certain other matters arose, and since their content represented the most considered response at that time on the part of Mr. O'Brien to the controversy, it is worth setting out their substance. 4.44 Question One concerned whether Mr. O'Brien's explanation Mr. of the O'Brien conversation was responded: in accordance with Mr. Maloney's impression. "My recollection ofthe conversation business, is that it was non-serious, sport and women i.e. two very one old pals bullshitting Sunday 4.45 morning." about out on a run Question Two concerned whether it was reasonable that c o m m e n t s of Mr. O'Brien's such a serious nature would have been made out of bravado. response was: "Yes - anyone who knows me knows life in general that I will laugh too seriously). about anything. (I Just do not take myselfor I have known Barry for 22 years, we have the most extraordinary that experiences. Nothing was sacred between us and there was nothing could not bejoked 4.46 about." Question Three addressed where the conversation took place. Mr. O'Brien replied: "I remember mountains remember the conversation near Roundwood taking in October place while running in the Wicklow I to last year. On the day in question my diary...We agree badly twisting point." my ankle. I have checked differ on this 4.47 Question Four was as to the significance of the second ? 1 0 0 , 0 0 0 . 0 0 payment, to which Mr. O'Brien responded: "There was no first payment of ?100,000 nor any second payment. I said I had paid to out two amounts get the finger Cloonan. each out of bravado, to PJ Mara, to persuade Barry out and the bonuses Eddy Kelly and Stephen REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter If payments would 1 had ever been made, most people to ML, but there would assume one of them be assured Page | 87 have been is no one else who could of that scale. reasonably to have got a payment There was nothing person in the mind of either of us as to who a second bravado." (?100) might be. As I've said, the whole thing wasjust There then followed some further remarks about the circumstances of the bonus payments, occasions. of a similar nature to w h a t was stated by Mr. O'Brien on other 4.48 Question Five queried the expression "Payment got stuck with an intermediary", to which Mr. O'Brien furnished the following explanation: "In Oct 96, I had a couple of million pounds in cash from property and things were and going share deals (IFSC & sale of shares very well for me. to US investors) Meanwhile, someone ML was under attack politically and in the media, and told me his company was (an expletive used to signify that the c o m p a n y was in trouble). I felt and still feel that ML had always both as regards the licence, been above board and fair with Esat and our disputes with TE [Telecom Eireann]. I decided ?100,000. purpose. that I would help him out with his company by giving for him that I earmarked ?100k of deposits with Woodchester All of this was on my mind at the time of my conversation the mountainside. I doubled payment, for I pretended However that I had already shortly with Barry on and the made the payment, I realised that effect. afterwards if I made it, would be misunderstood. Thank God I s a w sense and did nothing intermediary', Woodchester. I about it. meant Whether that or not I used the phrase earmarked amount 'stuck with an was left in the For the record, I frequently with the had discussions with ML concerning deny promises by the Esat that I or Telecom's would warfare TE [Telecom Eireann], and issue. However, wouldn't no discuss auto-dialler understanding in relation of any kind were ever sought licence." from or given Minister to the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 4.49 1 The Sixth and last question was phrased as concerning "13th versus 23rd October meeting re intermediary", October, Page | 88 Barry Maloney responded: to which Mr. O'Brien "I don't remember saying anything would at the 13th October lead to conclusions meeting which was called the to an only for half an hour, which intermediary importance transfer was anyone of this since that the so other than Woodchester. Woodchester made would Anyway, only have would I don't see been have used been money if I had the payment. the They intermediary only in the sense of making payment. I think there might have been a misunderstanding Barry." 4.50 here between me and Following Mr. O'Connell's return to Dublin, he proceeded to write to the directors of Esat T e l e c o m summarising events to date. On 4 t h November, 1997, he received from Mr. O'Brien's bookkeeper, Ms. A n n Foley, documentation from Woodchester Bank regarding Mr. O'Brien's bank accounts, and in particular all details of withdrawals from those accounts in excess of ? 2 5 , 0 0 0 . 0 0 . It appears that it was Mr. O'Connell w h o had selected this s u m as the m i n i m u m payment requiring examination for purposes of the inquiry being pursued. 4.51 Also on that day, at 2:15pm, the planned inquisition meeting took place at the offices of IIU at the Irish Financial Services Centre. Mr. Desmond, Dr. Walsh, Mr. Buckley, Mr. Digerud, Mr. Fortune and Mr. Callaghan attended in person, with Mr. O'Brien and Mr. Johansen present by telephone. Legal advisers to each of the three shareholders attended, amongst w h o m Mr. A r m s t r o n g stated that w h a t was intended was not a formal board meeting, but a meeting of directors aided by legal advisers, seeking by w a y of a question and answer session to understand better the two issues that had arisen. After a review of recent events and some general discussion, by arrangement Mr. Michael Kealey, a litigation partner of McCann Fitzgerald, w h o had not previously been involved in dealing with either issue, proceeded to question Mr. O'Brien. The f o r m a t was not ideal, since teleconference facilities had not proved possible to arrange, so those present were confined to hearing Mr. O'Brien's responses. W h e n questioned bank, about Woodchester, he said it was the intermediary, and his principal where he had seven or eight personal accounts. He was happy that all these be opened up. He stated that the initial conversation had taken place on a run near Roundwood, probably on or near 17 th November, 1996, and had been in the context of overdue success fees to be paid. It w a s a light-hearted conversation, befitting two persons w h o had long been friends, and in an effort to persuade payment, Mr. O'Brien wrongly said he had had to make two payments of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter ? 1 0 0 , 0 0 0 . 0 0 each. 1 Although he did not mention Mr. Lowry, he acknowledged Page | 89 the context may have appeared referable to him as one of the recipients. It was Mr. Maloney's response that he did not w a n t to know, and it had nothing to do with the company. Mr. O'Brien said that his reference had been bravado, and neither payment had in fact been made. In further response to Mr. Kealey, Mr. O'Brien said that, although it was not then in the public domain, he knew Mr. Lowry's business Streamline was in major difficulty, and starting to collapse. As to subsequent meetings with Mr. Maloney the following year, he acknowledged having said: "I didn't actually do it, thank God", and admitted he had thought about paying Mr. Lowry: he had been flush with cash, and felt that Mr. Lowry had been above board in relation to his dispute with T e l e c o m Eireann. He could have provided ? 1 0 0 , 0 0 0 . 0 0 out of his W o o d c h e s t e r deposits, but realised it would have been misinterpreted. In saying the money was stuck with an intermediary, he meant that it had been earmarked out of Woodchester. But he changed his mind, and no payment was made. W h e n put by Mr. Kealey that, in normal usage, a reference to an intermediary would not s e e m to refer to a bank, Mr. O'Brien said he differed, that it obviously did mean a bank, and that people in any event do not always say the obvious thing. 4.52 some S o m e further questions were asked by others in attendance, including matters relating to the Esat Telenor $50,000.00 payment, before Mr. O'Brien departed to take up his c o m m i t m e n t s in the USA. Mr. Maloney then, at the request of Mr. Armstrong, addressed a number of matters, stating that it was his understanding that Mr. O'Brien had not been referring to a bank w h e n a third party intermediary was raised, and that it was only on the previous 23 r d October, 1997, that Woodchester was first mentioned. He confirmed his account of the venue o f t h e initial conversation, stating that he and Mr. O'Brien had indeed gone running on most S u n d a y s at that time, but that the occasion in question t o o k place in The Malt House. 4.53 This long series of meetings concluded with meetings respectively of Esat T e l e c o m and Esat Digifone on 5 t h and 6 t h November, 1997. On the second day, there was also a conversation between Mr. O'Connell and Mr. Aidan Phelan, in which the latter informed the former, in regard to Mr. O'Brien's bank accounts that, whilst a household expenses account and a UK salaries account existed, there were no other significant accounts that required examination in the context of the exercise undertaken. The upshot of the meetings was that the IPO of Esat T e l e c o m would proceed as planned, and Esat Digifone would not object to it, on the basis of the w a r n i n g in the actual prospectus remaining, without specific reference to either controversy, though given greater prominence than in its draft REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 90 form, subject to the other matters resolved upon, including the checking and certification of the bank accounts of Esat Digifone and of Mr. O'Brien, the provision of an appropriate affidavit from Mr. O'Brien and, in relation to the Esat/Telenor $ 5 0 , 0 0 0 . 0 0 payment, a letter from Mr. Austin confirming that he had paid the s u m in question to Fine Gael. In addition, over the concluding days of the process, letters had been exchanged between Esat Digifone, IIU, Telenor and Esat Telecom, to the effect that none of t h e m had taken any action which could in any w a y j e o p a r d i s e the licence. Non-disclosure to internal inquiry of substantial covert payments from Woodchester account of Mr. Denis O'Brien 4.54 matters The was evidence necessarily required to lengthy be heard detailed, in reviewing especially all the in foregoing to the and regard testimony of Mr. O'Brien and Mr. Maloney. Due to the clear conflicts between them, and the importance involved in their resolution, more latitude in crossexamination was allowed than in most earlier Tribunal sittings, even after extensive examination by Tribunal counsel. Apart from the two principal witnesses and Mr. O'Connell, evidence was also heard f r o m Esat Digifone directors, Dr. Michael Walsh, Mr. Dermot Desmond, Mr. Leslie Buckley, Mr. John Callaghan and Mr. Arve Johansen. S o m e Esat/Telenor $50,000.00 other Esat Digifone testimony was limited to the payment. Whilst some relatively limited differences emerged in the testimony of these witnesses, with Mr. John Callaghan observing that banks in general terms were frequently described as financial intermediaries, none was disposed to say, in addressing the proposition that Woodchester Bank may have been the "intermediary" with which "payment got stuck", that he would similarly have described w h a t in the circumstances had occurred. 4.55 Phelan, Reference has already been made to the involvement of Mr. Aidan Mr. O'Brien's accountant and financial adviser in the meetings and considerations that were then proceeding. The inquiries put in train by the boards of Esat Digifone and Esat T e l e c o m entailed a scrutiny of Mr. O'Brien's bank accounts, and an examination of all payments from those accounts in excess of ?25,000.00. That task was undertaken by Mr. O'Connell, and he stated that he had inquired of Mr. Aidan Phelan about all of Mr. O'Brien's personal accounts, and was assured that, apart from those accounts identified, no other accounts had been overlooked. Whilst Mr. Phelan could not recall that exchange, he stated that he did not disbelieve Mr. O'Connell's evidence, and confirmed that he was aware of the inquiry then being conducted by Mr. O'Connell. 4.56 Mr. Phelan did not on that occasion disclose to Mr. O'Connell that in July of the previous year, that is July, 1996, some six weeks after the G S M licence had been issued to Esat Digifone, Mr. Phelan, on Mr. O'Brien's instructions, had REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 91 withdrawn ? 4 0 7 , 0 0 0 . 0 0 from an account of Radio Investments NV, the c o m p a n y through which Mr. O'Brien held his broadcasting interests, at W o o d c h e s t e r Bank, by w a y of repayment to Mr. O'Brien of a loan due to him by that company. Mr. Phelan had then transferred that s u m of ? 4 0 7 , 0 0 0 . 0 0 to a special purpose account opened by him, on behalf of Mr. O'Brien, in his own name in Allied Irish Banks, Isle of Man. He had thereafter made disbursements f r o m that account on Mr. O'Brien's instructions, including two payments, in July, 1996, amounting to ? 1 5 0 , 0 0 0 . 0 0 to Mr. David Austin; one by cheque for ? 5 0 , 0 0 0 . 0 0 dated 10 th July, 1996, and the other by telegraphic transfer to an account held by Mr. Austin in Bank of Ireland, Jersey. Mr. Phelan never disclosed to Mr. O'Connell the fact of this account held by him in his name on behalf of Mr. O'Brien, or the payments made out of it, all of w h i c h exceeded the threshold level of payments into which Mr. O'Connell was charged to inquire. Nor for that matter did Mr. O'Brien, who was fully aware o f t h e extent and purpose of Mr. O'Connell's investigations. 4.57 The failure of both Mr. Phelan and Mr. O'Brien to disclose that information to Mr. O'Connell, or to the boards of Esat T e l e c o m and Esat Digifone, in the context o f t h e investigations then being undertaken in advance o f t h e Esat T e l e c o m IPO is addressed in greater detail in the succeeding chapter. Suffice to say at this juncture, that the disclosure of those other payments to Mr. Austin, through w h o m the Esat/Telenor $ 5 0 , 0 0 0 . 0 0 donation had been channelled to Fine Gael, would undoubtedly have caused even greater concern on the part of the two companies, of the and would certainly had have necessitated and a deeper Mr. consideration information which emerged, in particular O'Brien's explanation that money he had earmarked in Woodchester Bank for payment to Mr. Lowry, had become "stuck with an intermediary", w h e n Mr. Austin had already acted in that capacity in the payment of the $ 5 0 , 0 0 0 . 0 0 donation to Fine Gael. Had such deeper consideration been given, and additional inquiries made of Mr. Austin, it is conceivable that the ultimate application of all, but ?3,000.00, of that ? 1 5 0 , 0 0 0 . 0 0 , by transfer to an account in Mr. Michael Lowry's name in Irish Nationwide, Isle of Man, should have emerged. 4.58 Certain additional matters not apparently canvassed at the time o f t h e IPO were also raised in the course of this extensive evidence. It was put to Mr. Maloney by counsel for Mr. O'Brien that his recollection of the dates of the various meetings with Mr. O'Brien was inaccurate and unreliable and, more forcefully, that in omitting to raise the matter of the initial conversation until a time close to the IPO the following year, he was not bona fide acting in the interests of the c o m p a n y of which he was chief executive officer; this, it was further suggested, was consistent with a pattern s h o w n by his actual resignation from the company late in the previous year, at a time of particular sensitivity in its development and fund raising, and reflected a clear preference on the part of Mr. Maloney for a flotation of Esat Digifone rather than Esat Telecom. Much detail REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Maloney's Page | 92 was advanced on this matter, but it will suffice to note that Mr. substantive response was that, whilst a flotation of Esat Digifone would indeed have had preferable aspects for him, he had always acted with proper regard to all involved, particularly Mr. O'Brien: this was exemplified by his readiness, on the occasion of his earlier resignation, to return on an almost immediate basis in response to a personal appeal to him from Mr. O'Brien, out of regard for their long friendship, even though substantial residual issues regarding his entitlements remained to be addressed. In no sense, he said, had he at any stage sought to sabotage the Esat Telecom IPO, or act in any male fide fashion. 4.59 Other directors, in particular Mr. Buckley and Mr. Desmond, were also critical of Mr. Maloney with regard to his timing in raising the issue. Mr. O'Brien in evidence further expressed concern as to the belated manner in which certain notes and memoranda of meetings relied upon by Mr. Maloney were produced only after the relevant phase of evidence had commenced; Mr. Maloney responded that it was only upon returning to Ireland to give evidence that he had had occasion to review some remaining documentation, a portion of which transpired to be relevant, and that the relevant content of his notes was amply borne out in notes separately prepared by his solicitor. 4.60 The IPO of Esat Telecom in any event proved successful, and its sale, together with Esat Digifone and other related companies, to British Telecom in 2000 proved highly lucrative. Only in 2001 did the two issues which absorbed so much attention at the time of the flotation, together with the other transactions that were never brought to the attention of either board, come to public and Tribunal knowledge. CONCLUSIONS 4.61 Noting that the events addressed in this chapter were considered of investigate the sufficient gravity to imperil the forthcoming Initial Public Offering of Esat Telecom, and that it was clearly anticipated that this Tribunal would fit to make timely disclosure thereof to it. 4.62 Whilst the conflicts of evidence between Mr. Barry Maloney and Mr. granting of the GSM licence, the Tribunal regrets that none of those involved saw Denis O'Brien in relation to their relevant conversations and dealings related more to matters of intent than content, the Tribunal in general finds the testimony of Mr. Maloney the more persuasive and coherent. 4.63 Having regard to the fact that much of what was disclosed by Mr. Maloney to the Tribunal, and then contained in his evidence, was confirmed as to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 93 its content by Mr. O'Brien, the Tribunal finds such relative accuracy on the part of Mr. Maloney as tending to support his account on certain disputed matters, including the venue of the first material conversation, and the circumstances of the late-night visit by Mr. Maloney to Mr. O'Brien's home. 4.64 Although it was the evidence of Mr. O'Brien that he did not bring to finality the making of any payment to Mr. Michael Lowry, the Tribunal must have due regard to Mr. O'Brien's own evidence and account to the effect that, at the time of his initial conversation with Mr. Maloney, he had decided to give a s u m of ? 1 0 0 , 0 0 0 . 0 0 to Mr. Lowry, and had earmarked a like sum, in deposits with Woodchester, for that purpose. 4.65 The justifications advanced in evidence by Mr. O'Brien for his remarks to Mr. Maloney in their initial conversation, w h e r e b y he initially attributed his motivation to a form of tactical pretence, and then indicated that the remarks were addressed and in a jocose implausible. or A bravado similar context, view is appear taken to on the Mr. Tribunal O'Brien's unconvincing identification of the banking entity Woodchester as the intermediary involved. 4.66 As earlier stated, the various matters arising in w h a t has been described as the m o n e y trail portion of the inquiry required to be revisited in the context of the entire aggregate of evidence heard, and this applies in particular to the matters discussed in this chapter. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 3 FROM CARYSFORT T O MARBELLA INTRODUCTION 5.01 Had the progress of the Tribunal's w o r k prior to 2 0 0 1 not been delayed Haughey against the State and the P a g e | 94 by proceedings instituted by Mr. Charles Tribunal, and by special arrangements adopted to take account of Mr. Haughey's failing health for the purposes of hearing his evidence, there was at least a possibility that its inquiries might have concluded before the appearance in The Sunday Tribune of Mr. Matt Cooper's article dealing with the $50,000.00 Investec donation to Fine Gael, or before certain later communications from Bank, successor to W o o d c h e s t e r , concerning a loan, elements of which, appeared to have involved both Mr. Michael Lowry and Mr. Denis O'Brien. These disclosures made in February and March, 2001, prompted much of the Tribunal's w o r k from that date onwards. 5.02 Whilst the circumstances surrounding the $ 5 0 , 0 0 0 . 0 0 donation to Fine Gael have already been outlined in detail, further reference will be made to t h e m in this chapter in the context of the internal inquiries made within Esat Digifone in 1997 on the occasion of the Initial Public Offering, that is, the flotation, of shares in Esat Telecom. At this stage it is sufficient to recall that Mr. David Austin was centrally involved in the fundraising exercise of which the covert $50,000.00 was a part, and specifically was the pivotal figure in the routing o f f u n d s from Esat/Telenor to Fine Gael. 5.03 The Investec disclosures ultimately prompted inquiries by the Tribunal into w h a t has become known as the Cheadle transaction, and later, and as a result of a related disclosure by Mr. Aidan Phelan, into w h a t has become known as the Mansfield transaction, both of which are addressed in subsequent chapters of this Volume of this Part of the Report. 5.04 particular In examining aspects of the $50,000.00 payment to Fine Gael, and in the role of Mr. David Austin in arranging the contribution, and thereafter in the covert routing of the funds to Fine Gael, the Tribunal had been granted access to details of Mr. Austin's bank accounts, including his off-shore bank accounts, and specifically his off-shore accounts in the Channel Islands. The Tribunal's access to these accounts enabled it to examine and to track movements on the accounts. Some time shortly after the Tribunal had c o m m e n c e d examining these off-shore accounts, the Tribunal was informed by Mr. Lowry's advisers that a s u m of ? 1 4 7 , 0 0 0 . 0 0 had been paid, as Mr. Lowry contended, by w a y of a loan to him, by Mr. Austin, during the autumn of 1996, and subsequently repaid in circumstances referable, according to Mr. Lowry, to the disposal of his short-lived Carysfort house purchase. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.05 1 Thereafter, over a number of years, the Tribunal instituted inquiries various financial transactions, together with related property Initially Page | 95 concerning transactions, which appeared to involve Mr. Lowry and Mr. Denis O'Brien. the Tribunal examined transactions involving properties in the UK. In scrutinising those matters, it was noted that from time to time reference was made to a Doncaster Rovers transaction. The Tribunal was assured by Mr. O'Brien that this had no connection whatsoever with Mr. Lowry, and Mr. Lowry himself provided similar assurances. However, about eighteen months after the Cooper/Investec disclosures, an article appeared in The Irish Times, from which it emerged that the solicitor representing the O'Brien interests in the Doncaster purchase had, in a letter to Mr. Lowry, described Mr. Lowry as having a "total involvement" in the transaction. The Tribunal thereafter instituted inquiries into the Doncaster Rovers transaction. 5.06 The inquiries therefore with which succeeding chapters of the Report will be concerned pertain in the main to four property transactions, and related financial dealings, which are as follows: (i) property at Carysfort Avenue, Blackrock, County Dublin. (ii) property at Mansfield, Hill Top Farm, Chesterfield Road, Gapwell, Bolsover, England. (iii) property at Cheadle, formerly St Columbus Church, Wilmslow Handforth, Cheadle, England. Road, (iv) property at Doncaster Doncaster, England. Rovers Football Club premises at Belle Vue, For ease of reference these transactions will be referred to respectively as the Carysfort, Mansfield, Cheadle and Doncaster transactions. THE N E W CONTEXT O F THECARYSFORT TRANSACTION 5.07 In the course of the Tribunal's inquiries into Mr. Lowry's affairs in the period prior to the Cooper/Investec disclosures, the purchase of a property on Carysfort Avenue, Blackrock, County Dublin, had been alluded to. On the face of it the transaction was described to, and accepted by, the Tribunal as a simple house purchase funded by a loan from the Irish Nationwide Building Society. In order to understand the impact of the Cooper/Investec disclosures, it is important to put the state of the Tribunal's inquiries as at the date of those disclosures in context. At the outset of its work, and following on from its T e r m s of Reference, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 96 and reflecting also the approach of the McCracken Tribunal, the Tribunal had in the main conducted its investigations along w h a t has come to be known as the "money trail". Up to from 2001, the in Tribunal believed both that its it had received full cooperation Mr. Lowry conducting preliminary private investigations, and its public inquiries in connection with his financial affairs. 5.08 Mr. Denis O'Connor, an experienced accountant and an adviser to Mr. Mr. O'Connor had assisted Mr. Lowry McCracken Tribunal. Mr. Lowry, was made available to the Tribunal. in connection with evidence he had given to the O'Connor provided the Tribunal with assistance in the course of its preliminary private investigations, and in the course of the evidence heard at its sittings. public In evidence, he recounted his instructions from Mr. Lowry to furnish the Tribunal, to the fullest extent possible, with a complete account of Mr. Lowry's financial affairs: and that to that end he had been accorded complete cooperation by his client, and had been provided with full access to all of his client's affairs. 5.09 As already detailed in Chapter 2, the Tribunal's inquiries revealed a number of payments made to Mr. Lowry over and above those identified in the course of the evidence given to the McCracken Tribunal. This new evidence, as already mentioned, involved payments from Mr. Ben Dunne, Mr. Pat Doherty, Mr. Bill Maher and Mr. Patrick Whelan. In the case of all of these payments, Mr. Lowry testified, and in support of his testimony, brought evidence to the attention o f t h e Tribunal, that the payments were made for w o r k done or value given; that in other words, they were all demonstrably commercial payments. 5.10 Needless to say in the main it was those individuals identified or potentially identified as the providers of funds, in the course of the examination of the money trail, who determined the perspective of the Tribunal's inquiries into any decisions made by Mr. Lowry in the exercise of his ministerial functions which potentially could come within the ambit of the Tribunal's Terms of Reference. By the conclusion of the Tribunal's initial inquiries into the money trail, that is, by June, 1999, it appeared that, as was the case with the inquiries of the McCracken Tribunal, Mr. Ben Dunne was still the main provider of payments to Mr. Lowry warranting scrutiny within the ambit of the Tribunal's Terms of Reference. 5.11 The Tribunal's early inquiries concerning Mr. Lowry's accounts, including his Irish Nationwide Building Society loan account, as already outlined in detail in Chapter 2, resulted in information concerning the Carysfort purchase, from which it appeared that Mr. Lowry had obtained the assistance of a builder, Mr. Michael Holly, in securing the premises. Mr. Lowry had expressed an interest REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 1 Page | 97 to Mr. Holly, amongst other friends and acquaintances of his, in acquiring such a property. Mr. Holly successfully bid for the property at auction. Mr. Lowry at the time was abroad on European Union business. Mr. Holly facilitated Mr. Lowry by allowing him the opportunity to take over the purchase on the basis that, if Mr. Lowry expressed no interest on his return from abroad, he himself w a s happy to complete the purchase. This was the extent of the information relayed to the Tribunal concerning Mr. Holly's involvement. On the basis that this was a simple purchase funded by a Building Society, and the Tribunal's belief that it had been provided with what was represented to it as an account of all of the circumstances connected with Mr. Lowry's acquisition, ownership and disposal of this property, there was nothing to warrant further scrutiny. In particular no mention had been made of the role of Mr. Austin in connection with Mr. Lowry's acquisition, ownership, refurbishment or disposal of this property. Timing of initial disclosures concerning role of Mr. David Austin in financial dealings with Mr. Michael Lowry and Mr. Denis O'Brien 5.12 S o m e short time following the disclosure by Mr. Lowry's advisers that a s u m of ? 1 4 7 , 0 0 0 . 0 0 had, as he informed the Tribunal, been paid to him by way of loan by Mr. David Austin, the Tribunal was contacted by Raidio Teleffs Eireann. This was on 3 r d May, 2001. By that date, the Tribunal had not circulated any other persons with information concerning the dealings between Mr. Lowry and Mr. Austin. The communication from RTE indicated that it had obtained information concerning the dealings between Mr. Lowry a nd Mr. Austin, and that it proposed to broadcast details of those dealings on the 6:00pm news transmission. response to concern expressed by the Tribunal that this could In compromise until its ongoing confidential inquiries, RTE agreed to defer the transmission 9:00pm broadcast and, since legal and practical considerations disposed the Tribunal not to pursue measures of legal restraint, this duly proceeded. It referred, amongst other matters, to a loan of ? 1 4 7 , 0 0 0 . 0 0 having been made to Mr. Lowry, whilst he was a Cabinet Minister, by payment into an off-shore account in an Isle of Man bank, and then having been repaid to Mr. Austin with interest within a f e w months thereafter. 5.13 Following this disclosure, Messrs. William Fry, solicitors to Mr. Denis O'Brien, notified the Tribunal by letter of 16 th May, 2001, and in subsequent correspondence, of another property transaction, in this instance between Mr. Austin and Mr. O'Brien, and which was stated to have taken place at a time some short while prior to the dealings between Mr. Lowry and Mr. Austin. The essence of the information relayed by William Fry on behalf of Mr. O'Brien was that he had paid Mr. Austin ? 1 5 0 , 0 0 0 . 0 0 , the purchase price, for a holiday property in Marbella. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.14 5 By this time therefore, the Tribunal had been informed of two transfers Page | 98 of funds, in regard to each of which Mr. Austin was a c o m m o n element. Firstly, the payment of ? 1 5 0 , 0 0 0 . 0 0 by Mr. O'Brien to Mr. Austin which was deposited in an off-shore account of Mr. Austin in Jersey in the Channel Islands. Secondly, there was a payment some short time later by Mr. Austin from that same Jersey account, of ? 1 4 7 , 0 0 0 . 0 0 , to Mr. Lowry, lodged to an off-shore account of Mr. Lowry in the Isle of Man. In examining these matters, it s e e m s appropriate in the first instance uncontroverted, facts as to the to set forth w h a t s e e m e d to be the, mainly m o v e m e n t of funds f r o m Mr. O'Brien to Mr. Austin on the one hand, and the m o v e m e n t of funds from Mr. Austin to Mr. Lowry on the other, and to deal with w h a t the related witnesses w h o were available to testify stated as to the purposes underlying the m o v e m e n t s o f f u n d s in each case. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Movement of ?147,000.00 from Mr. Denis O'Brien to Mr. Michael Lowry Transfer of ?407,000.00 from Mr. Denis O'Brien's Radio Investments NV account in Woodchester/ Investec Bank to Diest Trading account in AIB, (IOM) on 03/07/96 Transfer of ?407,000.00 from Diest Trading account in AIB (IOM) to new account of Mr. Aidan Phelan in AIB (IOM), opened specifically to receive this sum, on 10/07/96 Cheque for ?50,000.00 to Mr. David Austin, issued on 10/07/96 Lodgement of cheque for ?50,000.00 to Mr. David Austin's account 66064-4 in BOI, Jersey, Channel Islands, on 07/08/96 Draft payable to Mr. Austin in the sum of ?147,000.00 lodged to Mr. Michael Lowry's account in Irish Nationwide (IOM), on 21/10/96 Transfer from Mr. Michael Lowry's account in Irish Nationwide (IOM), of ?148,816.93 to Mr. David Austin's account 66064-4, in BOI, Jersey, Channel Islands, on 07/02/97 Transfer of ?100,000.00 Internal transfer of ?100,000.00 from Mr. David Austin's account in BOI, Jersey, Channel Islands to his account 66064-4 in the same bank on 26/07/96 from account of Mr. Aidan Phelan in AIB (IOM), to Mr. David Austin's account in BOI, Jersey, Channel Islands, on 19/07/96. This diagram illustrates how ?150,000.00 was transmitted from Mr. Denis O'Brien's Radio Investments NV Account in Woodchester Bank, Dublin, (subsequently known as Investec Bank) through Allied Irish Banks, Isle of Man and Bank of Ireland, Jersey, Channel Islands, to Mr. Michael Lowry's Irish Nationwide, Isle of Man Account. It remained in that account until 7th February, 1997, when ?148,816.93 was transferred through Allied Irish Banks, Dame Street, Dublin, back to Mr. David Austin's Account Number 66064-4 in Bank of Ireland, Jersey, Channel Islands. 7th February, 1997 was the date on which the McCracken Tribunal was established. P a g e | 99 Chapter 5 THE CENTRAL FACTS O F THE MONEY TRAIL Page | 100 Off-shore transfer of funds from Mr. Denis O'Brien to Mr. David Austin 5.15 From information provided by Mr. O'Brien in evidence, and through his solicitors, it appears that in the summer of 1996, amongst the various accounts held by him and his connected enterprises, with what was then known as Woodchester Bank, was one referable to Radio Investments NV, a subsidiary company within his Communicorp Group, that was then wholly or predominantly owned by Mr. O'Brien, and which accordingly was not part of, and was distinct from Esat Digifone. 5.16 At or around the beginning of July, 1996, Mr. O'Brien instructed his financial adviser, Mr. Aidan Phelan, to transfer a sum of ?407,000.00, from that RINV account at Woodchester Bank, and to open a new account in the Isle of Man. The Isle of Man account was to be opened not in Mr. O'Brien's name, but in Mr. Phelan's name, with that sum of ?407,000.00. Mr. Phelan, who was an authorised signatory on the RINV account, duly made the withdrawal on 3 rd July, 1996, and the money was transferred through Allied Irish Banks, Dublin, to Allied Irish Banks, Isle of Man, on foot of routing instructions provided by Mr. Phelan, or another associate of Mr. O'Brien. Until the arrangements for the setting up of a new account could be finalised by Mr. Phelan, the money was lodged to the Allied Irish Banks, Isle of Man, off-shore account of Diest, a trading company that imported goods from the Far East for sale in Europe, and in which Mr. Phelan had an interest. A new account was then opened in Mr. Phelan's name. The address ascribed to the account was Cape Cod, Hyannis, USA, which was a business and correspondence address used periodically by Mr. Phelan, and a colleague, for dealings in sports goods. Copies of the account statements for the RINV account in Woodchester/Investec Bank, and the Mr. Aidan Phelan account in Allied Irish Banks, Isle of Man, referred to above can be found in the Appendix to this chapter. 5.17 This account had been opened by Mr. Phelan purely for the purpose of It had not been conveyed to the Isle of Man bank receiving Mr. O'Brien's money. that the funds belonged to Mr. O'Brien and not to Mr. Phelan. This arrangement was probably unique in Mr. Phelan's entire period of acting as a financial adviser to Mr. O'Brien. Once the funds were transferred, Mr. O'Brien gave Mr. Phelan a series of instructions as to particular payments to be made to specified individuals. Although the account was not closed until 17 th May, 1999, and the last cheque paid out of it on 12 th May, 1997, there was no significant activity on the account after 26 th July, 1996, when the funds on the account had largely been dissipated. It was during a short period therefore, between the transfer of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 101 the ? 4 0 7 , 0 0 0 . 0 0 to the Isle of Man on 10 th July, 1996, and the 26 t h of that month, that most of the significant activity on the account t o o k place. 5.18 1996. After two initial debits were made to the account, there was a payment by w a y of cheque for ? 5 0 , 0 0 0 . 0 0 drawn in favour of Mr. David Austin on 10 th July, That was followed by a further payment in favour of Mr. Austin, in this instance of ? 1 0 0 , 0 0 0 . 0 0 , by telegraphic transfer to an account held by Mr. Austin in Bank of Ireland, Jersey, in the Channel Islands on 19 th July, 1996. This was the same bank as that in which Mr. Austin held the Esat/Telenor donation of $50,000.00 between December, 1996 and May, 1997. On 26 t h July, 1996, Mr. Austin transferred the ?100,000.00 within his accounts to an account, specifically created for holding Irish funds, namely, account number 66064-4. On 7 th August, the earlier cheque payment of ? 5 0 , 0 0 0 . 0 0 w a s lodged to this same Irish pound designated account. A copy of the account statement for Mr. David Austin's account in Bank of Ireland, Jersey, referred to above can be found in the Appendix to this chapter. Off-shore transfer of funds from Mr. David Austin to Mr. Michael Lowry 5.19 The funds remained in that account of Mr. Austin's until 16 th October, 1996, when, following a request to that effect, Mr. Austin's Jersey Bank furnished him with a draft payable to himself for the s u m of ? 1 4 7 , 0 0 0 . 0 0 , funded by a debit to account number 66064-4. This draft appears to have been furnished by Mr. Austin to Mr. Karl Tully, a senior official in Irish Nationwide (IOM) Limited. Irish Nationwide (IOM) Limited was an Isle of Man bank, based in Douglas, Isle of Man. It was wholly o w n e d by the Dublin-based Irish Nationwide Building Society. The draft was furnished to Mr. Tully with instructions that its proceeds should be deposited in a new account in Mr. Michael Lowry's name. The Isle of Man bank duly recorded on 30 t h October, 1996, that this amount had been credited, as of 21 s t October, 1996, to an instant access account in the name of Mr. Lowry. Copies of the bank draft for ? 1 4 7 , 0 0 0 . 0 0 , and the Irish Nationwide (IOM) Bank confirmation referred to above can be found in the Appendix to this chapter. 5.20 required As a new customer of Irish Nationwide (IOM) Limited, Mr. Lowry was to complete account opening documentation. It appears that the relevant form was obtained by Mr. Austin, and sent to Mr. Lowry by post, and completed by him in manuscript either in Dublin, or Tipperary. This documentation was headed "private some surprising features. and confidential", and its contents included Mr. Lowry set forth his address as being that of accountants, Messrs. Brophy Butler Thornton of Foxrock, Dublin, although it was acknowledged by both Mr. Lowry and the partner in that firm retained by him, Mr. Denis O'Connor, that no permission to that effect had been sought from that firm. In fact, Mr. O ' C o n n o r stated in evidence that he only became aware of the fact REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 102 that this address was used on the account towards the end of April, 2001, that is, at the time of the Tribunal's then inquiries into these matters. The form proceeded to state that no correspondence should be sent to Mr. Lowry except on request, and curiously, set forth Mr. Lowry's occupation as being that of c o m p a n y director, although as a serving Cabinet Minister at the time, Mr. Lowry was required to and had in fact resigned his directorship in Garuda Limited t/a Streamline Enterprises. A copy of the account opening documentation signed by Mr. Lowry can be found in the Appendix to this chapter. 5.21 There appears to have been no activity on the account until, on 7 t h days February, 1997, pursuant to written instructions sent by Mr. Lowry two previously, a s u m of ? 1 4 8 , 8 1 6 . 9 3 was transferred through the agency of Allied Irish Banks, in Dublin, to the account of Mr. Austin, account number 66064-4, with Bank of Ireland, Jersey, Channel Islands. After deduction of a s u m for commission and expenses, this left only a small balance of ? 1 6 4 . 5 3 standing to the credit of Mr. Lowry's account. 7 th February, 1997, was the day upon which the McCracken Tribunal was established. Copies of Mr. Lowry's written instructions, and the Irish Nationwide (IOM) Bank confirmation, can be found in the Appendix to this chapter. 5.22 Much of this information was obtained by the Tribunal on foot of relevant waivers of confidentiality furnished to Irish Nationwide (IOM) Limited. Also, a director of the Isle of Man bank, Mr. Michael Fingleton, the then long standing Managing Director of its Irish proprietor, Irish Nationwide Building Society, attended public sittings as a witness, albeit primarily in relation to the Society's dealings, in Dublin, with Mr. Lowry in providing mortgage finance for the purpose of the Carysfort Avenue premises. Notwithstanding the connection between the two institutions, c o m m o n directors, and despite waivers and the professed wish of Irish Nationwide Building Society, its proprietor, that full cooperation be afforded, the Irish Nationwide Bank in the Isle of Man declined to accede to the Tribunal's request that Mr. Karl Tully, as the senior official primarily involved in the matters under inquiry, should attend to testify. M A I N E V I D E N C E A T T H E 2001 S I T T I N G S 5.23 examined: During sittings held, mainly in 2001, the following matters were (i) the information originally provided to the Tribunal concerning the purchase by Mr. Lowry of Carysfort; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (ii) 5 relationship Page | 103 the information originally provided concerning Mr. Lowry's with Irish Nationwide Building Society; (iii) the new information concerning Mr. Lowry's dealings with Irish Nationwide (IOM) Limited in the Isle of Man, and the connection between those dealings and Mr. Austin; (iv) information concerning movements of funds between Mr. Denis O'Brien and Mr. Austin; (v) information provided by Mr. O'Brien and others including Mr. Aidan Phelan and Mrs. Maureen Austin in connection with the payment of ? 1 5 0 , 0 0 0 . 0 0 to Mr. Austin; (vi) information provided by Mr. Lowry concerning his dealings with Mr. Austin in connection with the deposit of ? 1 4 7 , 0 0 0 . 0 0 in the Isle of Man bank; (vii) information obtained by the Tribunal from various sources concerning the manner in which the dealings with Mr. Austin were examined in the course of the IPO, and the conclusions at which those inquiring into the matter in the course of the IPO arrived; (viii) information obtained f r o m various sources concerning other aspects of the inquiries conducted in the course o f t h e IPO. 5.24 During the examination of these matters, the main evidence was given by Mr. Aidan Phelan, Mr. Denis O'Brien, Mr. Michael Lowry, Ms. Helen Malone and Mr. Denis O'Connor. As Mr. O'Brien gave evidence to the Tribunal in advance of Mr. Lowry's evidence, it s e e m s appropriate to deal with the information provided by Mr. O'Brien, or his solicitors, and with the evidence given by him, and in particular by Mr. Aidan Phelan, prior to dealing with the information provided by, and the evidence given by, Mr. Lowry. 5.25 Initially the Tribunal obtained two accounts from Mr. O'Brien's solicitors concerning his dealings in relation to Mr. Austin's property. In a letter of 28 t h May, 2001, William Fry, solicitors, on behalf of Mr. O'Brien, informed the Tribunal as follows: (i) that during the s u m m e r of 1996, Mr. O'Brien agreed to purchase from Mr. Austin his Spanish holiday home with the intention of making it available to his parents, who frequently holidayed in Spain; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (ii) the 5 property was located at Aloha, Pueblo, 145, Nueva, Andalucfa, Page | 104 Marbella, and the vehicle w h e r e b y Mr. Austin had enjoyed ownership was a Gibraltar company, T o k e y Investments Limited, whose shares were in turn held by Finsbury Holdings Limited and Finsbury Nominees Limited; (iii) the property was purchased in August of 1996; the sale was effected by transferring the beneficial ownership in the shares to an Isle of Man Trust, W a l b r o o k Trustees (Isle of Man) Limited, to hold those shares for the benefit of Mr. O'Brien; (iv) no solicitors were retained by either side, the sale being effected by a simple transfer of the beneficial ownership of the shares; (v) the affairs of Tokey Investments Limited were administered in Gibraltar by Valmet Limited, a c o m p a n y secretarial service; (vi) with this information, copies o f t h e relevant Declarations of Trust, w h e r e b y the shares in the c o m p a n y were held for the benefit of Mr. O'Brien, were enclosed; from these d o c u m e n t s it appeared that the sale had been effected on 12 th August, 1996, and that the primary Declaration of Trust by the Finsbury companies in favour of W a l b r o o k Trustees was so dated; the later Declaration of Trust by W a l b r o o k Trustees in favour of Mr. Denis O'Brien w a s dated 15 th May, 2001. Copies of the Declarations of Trust referred to above can be found in the Appendix to this chapter. 5.26 By letter of 11 th June, 2001, this version w a s expanded, essentially to the following effect: (i) that it was in April or May of 1996, that Mr. Austin first mentioned to Mr. O'Brien that he was anxious to dispose of his Spanish property, and of an apartment in London, before he died; (ii) a ? 5 0 , 0 0 0 . 0 0 payment was made in early July, 1996, at a time w h e n agreement in principle to purchase had been reached, and so as to evince a c o m m i t m e n t to deal on the property, but no price was fixed; (iii) a sale price of ? 1 6 5 , 0 0 0 . 0 0 was agreed but shortly afterwards Mr. Austin reverted to Mr. O'Brien to say that he had a strong desire to attend the Ryder Cup, which was to be held in Valderrama, Spain, in the autumn of 1997, and he requested that the sale should proceed, but that he would be allowed to retain occupation o f t h e house until after the Ryder Cup; this was agreed, in return for a reduction o f t h e price to ? 1 5 0 , 0 0 0 . 0 0 ; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (iv) a 5 payment of ?100,000.00, to make up the purchase price of Page | 105 ? 1 5 0 , 0 0 0 . 0 0 , was paid shortly after the price was finalised; (v) Mr. Austin was looking after the transfer of ownership in 1996, and initially arranged for Declarations of Trust to be executed by the Finsbury were companies in favour of W a l b r o o k Trustees, and copies of those enclosed with the William Fry letter of 11 th June, 2001; (vi) completion of the transfer was subsequently delayed, by reason of the fact that documentation had been misplaced, by Mr. Austin; although it was suggested that there had been a delay in the completion of the transfer, the Tribunal was still referred to the d o c u m e n t of 12 th August, 1996, as constituting the primary Declaration of Trust; (vii) Mr. O'Brien had no documents regarding the purchase, other than the August, 1996, and May, 2001, Declarations of Trust, which had already been furnished to the Tribunal; (viii) in the course o f t h e correspondence, William Fry provided material waivers sought, and also made available an a m o u n t of documentation relating to title, bank accounts and payments made by Mr. Aidan Phelan, in addition to papers from the various agents involved, some extracts from which were alluded to in s u b s e q u e n t evidence. 5.27 what may A feature of the evidence heard was that, despite the elements of proximity or connection in terms of personnel, time and money used in relation to be called the 'Marbella purchase', and the 'Carysfort loan', the substantive testimony of each of the witnesses who were called was limited to one or other such transaction, and none purported to be conversant with, or able to assist in respect of both, something which obviously the late Mr. Austin would have been able to do had he been alive to testify. Mr. Austin would have been available at an earlier point to provide information or testimony in relation to the money trail, w h e r e b y funds had been transferred from Dublin, routed to one offshore account in the Channel Islands, Isle of Man, then to another off-shore account in the apparently at Mr. Austin's direction, to a and from there, separate off-shore account in the Isle of Man. Mr. Austin would of course also have been available to testify in relation to the covert routing of the $ 5 0 , 0 0 0 . 0 0 Esat/Telenor donation to Fine Gael, the s u b s e q u e n t rejection of that donation, and its later covert re-routing to Fine Gael disguised as a personal p a y m e n t by Mr. Austin. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.28 5 To return to the evidence actually provided, three principal witnesses Page | 106 were heard in relation to these matters; Mr. O'Brien and Mr. Phelan in relation to the following: (i) the opening of the special purpose account in Allied Irish Banks, Isle of Man, with a s u m o f ? 4 0 7 , 0 0 0 . 0 0 withdrawn from Woodchester; (ii) the payment from that account of ? 1 5 0 , 0 0 0 . 0 0 to Mr. Austin, and subsequent dealings in relation to those monies in a context stated by Mr. O'Brien and Mr. Phelan to be referable to the purchase of the Marbella property. Evidence was heard from Mr. Lowry in relation to the financial dealings he had with Mr. Austin in a context stated by him to be referable to the intended refurbishment of the house premises, purchased by him at Carysfort Avenue, Blackrock. 5.29 Before considering their testimony, it is appropriate to refer to a number of witnesses w h o gave shorter and more peripheral evidence on related aspects of these matters, those witnesses being Mr. Michael Fingleton, Mr. Eddie Holly, Mr. Michael O'Leary, Mr. Denis O'Connor and Ms. Helen Malone. Evidence of Mr. Michael Fingleton: twin role as managing director of the building society and director of its off-shore bank 5.30 Mr. Michael Fingleton, had been Managing Director for many years of Irish Nationwide Building Society, and a Director of Irish Nationwide (IOM) Limited, when he testified mainly in relation to a loan made by the building society to Mr. Lowry in respect of the Carysfort Avenue purchase. His testimony also dealt with the circumstances in which the Isle of Man bank had declined to make the evidence of Mr. Karl Tully available to the Tribunal. 5.31 Mr. Fingleton had known Mr. Lowry in a social context, primarily referable to GAA activities, from the late 1980s, but had not dealt with him in his political capacity as Minister or T.D. He recalled receiving a telephone call from Mr. Lowry, near the end of August, 1996, seeking to meet him, to discuss a property purchase. He met him by appointment the following day. At that meeting, Mr. Lowry informed Mr. Fingleton of the purchase of the Carysfort premises for ? 2 0 0 , 0 0 0 . 0 0 , and of his borrowing requirement for the entire of that amount, stating however that he had sufficient finances from his own resources to carry out necessary renovations and refurbishment. Mr. Fingleton approved the granting of the facility. He stated that this was done on a basis which was within his authority, and that it was processed normally on a commercial footing. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.32 5 Mr. Fingleton was able to refresh his memory by reference to a Page | 107 handwritten m e m o r a n d u m , which he had made in the course of his meeting with Mr. Lowry, which he then caused to be placed on Mr. Lowry's mortgage file. This referred to Mr. Lowry and his position as a G o v e r n m e n t Minister, identified the property and its purchase price, noted that funds for necessary w o r k on the property were available from the borrowers own resources, and in addition to reference to the values of Mr. Lowry's Tipperary properties, including a bungalow for sale at ? 7 5 , 0 0 0 . 0 0 , recorded Mr. Lowry's salary as a T.D. and Minister as then being ? 6 5 , 0 0 0 . 0 0 , supplemented by s o m e annual income accruing to his wife, and an annual sum of ? 2 0 , 0 0 0 . 0 0 , assessed as income from the c o m p a n y of which he was noted as being the owner. Noting also that Mr. Lowry required the funds quickly to complete the transaction, Mr. Fingleton then made a further short note to his advances manager, observing that the advance required appeared to be well within the Minister's capacity, that the property s e e m e d to have excellent potential, and requesting that the matter be dealt with as a priority. All necessary arrangements were thereupon finalised speedily, and the loan of ? 2 0 0 , 0 0 0 . 0 0 to complete the purchase was advanced on 4 t h September, 1996, within a matter of days after their initial meeting. 5.33 as the In the course of evidence, reference was also made to a facility known Dual Abode Allowance, whereby Government Ministers, and Junior Ministers, resident outside of Dublin, who, on appointment acquired or rented additional premises in Dublin, obtain entitlement to generous tax allowances and relief in respect of expenditure incurred in purchasing and maintaining, including repairing or renovating, either the Dublin or the original home premises. Fingleton stated that he had been aware from his knowledge of s o m e Mr. such special arrangement, but felt that it had not been discussed between himself and Mr. Lowry w h e n the facility was sought. 5.34 As to the relationship between the Dublin building society and the Isle of Man bank, Mr. Fingleton stated that the former owned the latter in its entirety, but that in terms of operational control the bank was independent of the building society, being run by an Isle of Man board, a majority of w h o s e m e m b e r s were required to be Isle of Man residents, with similar provisions attaching to the management. He further stated that the banking licence, under which the bank carried out its business, was issued in the Isle of Man, and that it w a s vital for retention of its status that control was seen to rest in the Isle of Man, rather than in Dublin. Apart from ownership, Mr. Fingleton acknowledged that the bank deposited its funds with the building society in Dublin, and that a number of directors were c o m m o n to both boards, including himself and the Dublin-based individual w h o had initially chaired both boards. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.35 common 5 It should be observed that the operation and activities of the Irish Page | 108 Nationwide Building Society's Isle of Man subsidiary bore many characteristics in with the operation and activities of Guinness & Mahon, and its subsidiary Ansbacher ( C a y m a n ) Limited, which featured so prominently in the investigations of the Tribunal which formed Part I of its Report. As with Guinness & Mahon, and its Cayman subsidiary, the society and its Isle of Man subsidiary shared common of the directors, off-shore the Isle of Man subsidiary it was was subject to the most regulation location in which established, and strikingly, the Isle of Man subsidiary deposited its funds in Dublin with the society, as the A n s b a c h e r accounts has been deposited with Guinness & Mahon. 5.36 Returning to the matter o f t h e senior Isle of Man bank official, Mr. Karl Tully, Mr. Fingleton agreed that all necessary waivers had been provided by the relevant customers of the bank to enable his attendance, but said that the decision not to make Mr. Tully available had been made, following discussion by the Isle of Man board of which he was a member. Having taken advice, that board had agreed to furnish documents, and if required, to make available its new chairman, but was not prepared to make Mr. Tully available. It was Mr. Fingleton's evidence that it was the policy of the building society to cooperate fully with the Tribunal, and that the building society had made its views known to the Isle of Man bank. He stated that the building society, although the proprietor of the bank, could not control or compel the decision that was taken by the bank's own board. According to Mr. Fingleton, the building society had no difficulty with the witness, Mr. Tully, attending, and could not say w h y the further cooperation sought had been refused by the Isle of Man bank, save that it may have appeared that, by dealing with the Tribunal in correspondence, and furnishing relevant documentation, the bank felt that it had dealt with the matter sufficiently and fully. Evidence of Mr. Eddie Holly: identification of a suitable property 5.37 both Mr. Holly stated that he was a brother of the late Mr. Michael Holly, of t h e m having been directors of the family building company, Cedar Building C o m p a n y Limited. At the time that Mr. Lowry had dealings with the company in 1996, Mr. Michael Holly had been Managing Director, and w a s also involved in other businesses. with his brother. Mr. Eddie Holly had run the c o m p a n y in conjunction He had met Mr. Lowry on only one occasion, w h e n introduced to him at a race meeting many years before, and he had never met Mr. Austin. He recalled having been informed in 1996, by his late brother, of discussions with Mr. Lowry in regard to the possible purchase of the property at Carysfort Avenue, Blackrock. His brother had become aware o f t h e house being auctioned, liked the premises himself, but felt that if Mr. Lowry on return from G o v e r n m e n t business REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 On Page | 109 abroad was similarly impressed, he would give him an option to purchase. that basis, solicitors were instructed, and a successful bid was made. 5.38 The property was in poor repair and required total refurbishment. Mr. Michael Holly agreed with Mr. Lowry that the company would undertake the was refurbishment under the supervision of an architect. A bill of quantities drawn up and furnished with a covering letter to Mr. Lowry, on 2 n d September, 1996. The price was the s u m of ? 9 0 , 7 2 5 . 4 5 , including VAT, which was not to include such items as kitchen and utility room units, wardrobes, tiling, carpets, wallpaper and other similar matters. Whilst Mr. Eddie Holly had no direct dealings with Mr. Lowry, he understood from his brother that the basis of the price was that it incorporated a reasonable profit margin for the company. 5.39 amount resigned Works began in or around mid-September, 1996, and a considerable had been the undertaken by the following Given the November, when of Mr. Lowry Lowry's from Government. circumstances Mr. resignation, and all the attendant publicity, both brothers were apprehensive as to whether or not Mr. Lowry wished to continue on the basis of the agreed costings, and in order to protect the company, a valuation of the works to that date in the s u m of ? 3 2 , 4 4 6 . 8 0 , including VAT, was sent to Mr. Lowry on 4 t h December, 1996. W h e n no response was received, Mr. Michael Holly made direct contact with Mr. Lowry. Mr. Michael Holly had been a friend of Mr. Lowry, and it was natural that he should have been the person to seek to make contact with Mr. Lowry at this time in connection with the matter. It was agreed between t h e m that the c o m p a n y would buy back the premises from Mr. Lowry at a price that was to reflect the costs incurred by him, and particularly so as not to penalise him by virtue of the purchase and sale back. On this basis a total price of ? 2 5 2 , 7 5 0 . 0 0 was agreed, comprising ? 2 3 7 , 8 7 5 . 0 0 in respect of the house, and works plus stamp duty of ? 1 3 , 3 8 0 . 0 0 and ? 1 , 4 9 5 . 0 0 legal costs. Mr. Eddie Holly placed the time of the agreement to buy back the premises as being just before Christmas of 1996. The deposit was paid on the following 10 th January, 1997, and the balance on 17 th January, 1997. The c o m p a n y then completed the refurbishment and undertook the necessary fitting of the premises in order to rent it out. 5.40 At no stage had Mr. Michael Holly informed Mr. Eddie Holly that he had been aware that Mr. Lowry had funds available to him from Mr. Austin to meet the refurbishment costs. In view of their joint concerns at the time, Mr. Holly felt sure that, if his late brother had been aware of the availability of any such funds for refurbishment, he would have been so informed by his brother, so as to put his mind at rest. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 co-executor of estate of Mr. David Page | 110 Evidence of Mr. Michael O'Leary: Austin 5.41 Mr. Michael O'Leary stated that he had been a neighbour and close friend of the late Mr. Austin for over 2 5 years, prior to his death in November, 1998, and he had acted as one of his four co-executors. It had been an easy estate to administer, as Mr. Austin had been a very orderly person, had known he was dying for two years, and had departed with his affairs well in order. Having been diagnosed with his final illness, and having undergone extensive treatment, Mr. O'Leary said that he felt that in October, 1996, it was clear to Mr. Austin he wouldn't be around for too long". "that 5.42 In the course of the evidence of Mr. Lowry, a handwritten d o c u m e n t was produced to the Tribunal as a m e m o r a n d u m of a c k n o w l e d g m e n t of a loan by Mr. Austin to Mr. Lowry in the s u m of ? 1 4 7 , 0 0 0 . 0 0 . From his knowledge of the deceased, it appeared to Mr. O'Leary, having been s h o w n the d o c u m e n t that, other than the date and signature thereon, the handwriting was that of Mr. Austin. However, this d o c u m e n t had not been in any of the papers made available to the executors, and none of t h e m had been aware of any such agreement. Neither had Mr. O'Leary, nor any of his co-executors, been furnished at any time with a copy of a written repayment a c k n o w l e d g e m e n t of 24 t h October, 1996, in the form of a letter f r o m Mr. Austin, a d o c u m e n t also produced to the Tribunal by Mr. Lowry. The executors had only become aware of those matters as a result of correspondence from the Tribunal and media reports. Mr. O'Leary also stated that Mr. Austin's solicitor, Mr. Walter Beatty, had informed him that no one in his firm had been made aware of any such loan agreement, of the making of any such loan, or of the repayment of any such loan, and that Mr. Beatty had also told him that Mr. Austin's w i d o w , Mrs. Maureen Austin, had told him that neither she nor Mr. Austin's accountants knew anything of any such transaction, and further that no other firm of solicitors had acted for Mr. Austin at that time. 5.43 Of course, assuming that, as was contended by Mr. Lowry, he had received a loan of ? 1 4 7 , 0 0 0 . 0 0 from Mr. Austin in October, 1996, which he repaid in February, 1997, nothing further was required of any executor by w a y of recovery of this money, w h e n Mr. Austin died in November, 1998. However, bearing in mind that Mr. Austin had known for a number of years prior to his death that he was very ill, and for a considerable period of time terminally ill, it is surprising, that being an orderly person w h o had left his estate in a condition to be readily administered, he had not deposited those documents with any of his executors, or his solicitor, between October, 1996, and February, 1997. It is also rather surprising, once again, having regard to Mr. Austin's reputation as an orderly person concerning his affairs, that the loan documentation and repayment acknowledgement should have been so carefully drafted and brought into REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 111 existence in 1996 and 1997, as was testified by Mr. Lowry, whilst at the same time he should have dealt, as will appear below, with the disposal of his Marbella holiday property in such a casual manner, as w a s suggested by Mr. O'Brien. Evidence of Mr. Denis O'Connor: out of the loop 5.44 Mr. Lowry's accountant, having already testified in relation to Mr. Lowry's affairs in 1999, confirmed that he had first met Mr. Lowry in late 1986, in connection with Tipperary hurling, following which a social relationship between t h e m had evolved. Their professional involvement first c o m m e n c e d around May, 1996, w h e n Mr. Lowry mentioned to him that his refrigeration company, Garuda Limited, was undergoing trading difficulties, and he requested Mr. O'Connor to contact his brother, who was then m a n a g i n g the company, with a view to examining the matter. On foot of this instruction, Mr. O'Connor and a colleague set up a system involving the preparation of regular m a n a g e m e n t accounts, and having examined particular areas of the business, made remedial recommendations. At the time his firm, Brophy Butler Thornton, were not auditors to the company, but this w o r k ultimately led to the appointment of his firm as auditors in July, 1997. Meanwhile in late 1996, Mr. Lowry asked Mr. O ' C o n n o r to examine his personal financial affairs, and this gave rise to his involvement with Mr. Lowry in connection with his evidence to the McCracken Tribunal, and to his own and Mr. Lowry's dealings with this Tribunal, and also entailed a contribution by Mr. O ' C o n n o r to the content of Mr. Lowry's S t a t e m e n t to the Dail on 19 th December, 1996. These latter services were provided to Mr. Lowry personally, as distinct f r o m his company. 5.45 W h e n first asked to advise in 1996, in connection with Garuda Limited, Mr. Lowry had not informed Mr. O ' C o n n o r o f t h e irregular arrangements operating between himself and Mr. Ben Dunne in relation to the c o m p a n y ' s business, and these matters were only brought to Mr. O ' C o n n o r ' s attention the following year, in preparation for the McCracken Tribunal. 5.46 Mr. O'Connor's earlier evidence to the Tribunal in June, 1999, purporting, according to Mr. Lowry, to represent an accurate and comprehensive account of his affairs has already been detailed. As to the Irish Nationwide (IOM) bank account, which was opened for Mr. Lowry by Mr. Austin, Mr. O ' C o n n o r stated that he became aware of this only in early April, 2001, w h e n Mr. Lowry advised him of the background, and queried whether or not the matter then came within the Terms of Reference of this Tribunal. Mr. O ' C o n n o r ' s response to Mr. Lowry was that it did so come within the Terms of Reference. Due to Mr. O ' C o n n o r ' s commitments out of the country, some delay was occasioned in preparing Mr. Lowry's S t a t e m e n t on the new matters, including the Isle of Man bank account. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 112 This was eventually done on or around 20 t h April, 2001, and forwarded to the Tribunal, followed by banking documentation made available by the Bank. It is of significance that, as already mentioned, not only had Mr. O ' C o n n o r ' s firm not authorised the use by Mr. Lowry of the firm's office address in the opening of the bank account; not only had they not been aware of this until 2001, but at the relevant time, that is, in October, 1996, the only services Mr. O'Connor had been providing to Mr. Lowry related to his refrigeration company, as opposed to his personal affairs, that is, those matters to which the evidence concerning his offshore account specifically related. 5.47 Mr. O'Connor stated in evidence that he understood that, in the context of his earlier dealings with the Tribunal, he had been provided by Mr. Lowry with access to all information concerning Mr. Lowry's finances, including all accounts held by him in banks either in the State or off-shore. It is notable that, in the context of the access he enjoyed to information concerning Mr. Lowry's Irish financial affairs, that he had been afforded information concerning the Nationwide Building Society mortgage account opened to fund the purchase of the Carysfort Avenue premises, but that, at the same time, no mention had been made to him by Mr. Lowry of any other funds he may have had to enable refurbishments to the property to be carried out. In particular no mention had been made of the existence of an Isle of Man bank account, although it had been opened j u s t shortly after the opening of the mortgage account with its proprietor company, Irish Nationwide Building Society in Dublin. Also, Mr. Lowry made no mention to him of any involvement on the part of Mr. Austin as the provider of a loan to fund the refurbishment works to the Carysfort premises. 5.48 It is important to recall that in late 1996, in his personal S t a t e m e n t to the Dail, having resigned from Government, Mr. Lowry drew attention to a practice of placing funds abroad for the purposes of concealment, a practice which he eschewed, and indeed implicitly decried in this Statement. Although Mr. O'Connor, along with a number of other advisers had an involvement in the preparation of this Statement, he had not been informed at the time of the Isle of Man account, notwithstanding the fact that it had been opened s o m e short period of time prior to the making of the Statement, and indeed was in existence at the very time that the S t a t e m e n t was made. 5.49 During the Mr. O ' C o n n o r ' s earlier evidence, that is, in 1999, had been subsequent to Mr. Lowry's involvement in UK property ventures at Mansfield and Cheadle. period of Mr. Lowry's involvement in the Mansfield and Cheadle ventures, however, Mr. O'Connor had likewise not been informed of any of these transactions by Mr. Lowry. These matters are mentioned at this point by reason only of the evidence, referred to in later chapters, of the involvement of Mr. Aidan REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 113 Phelan in various aspects of them, and in other aspects of Mr. Lowry's affairs at or around the same time. Mr. O'Connor had, s o m e years previously, dealt with Mr. Aidan Phelan in connection with aspects of Mr. Lowry's c o m p a n y ' s affairs, but he had not then been informed of Mr. Lowry's involvement in UK property ventures, or of his dealings with Mr. Aidan Phelan in connection with those ventures, or in connection with Mr. Lowry's own personal affairs, at that time. 5.50 It would appear therefore that, although for the purposes of presenting an account of Mr. Lowry's financial affairs to the Tribunal, Mr. O ' C o n n o r had been informed by Mr. Lowry concerning various aspects of those financial affairs, and of the affairs of his company, he had not been informed of any of those elements of Mr. Lowry's financial or property transactions connected with, or which involved dealings with, either Mr. David Austin, Mr. Aidan Phelan, or elements of which entailed connections with Mr. Denis O'Brien. Evidence of Ms. Helen Malone: backdating of transaction documents 5.51 Ms. Helen Malone w a s an associate of Mr. Aidan Phelan. She stated that her expertise was in the provision of corporate secretarial services in which she had been engaged, since 1993, and she was, at the time of her evidence, on 16 th October, 2001, a business partner of Mr. Aidan Phelan in the firm A P Consulting. She informed the Tribunal of her handling of aspects of w h a t she stated she understood to be the purchase by Mr. O'Brien of Mr. Austin's Marbella apartment. Her evidence was that in S e p t e m b e r , 1997, she was requested by Mr. Phelan to undertake a number of tasks, one of which was the transfer of shares in a company registered in Gibraltar and known as Tokey Investments. This was over a year after the sale was, according to Mr. O'Brien, said to have taken place, in August of 1996. However, although according to Ms. Malone, Mr. Phelan first mentioned the matter to her in S e p t e m b e r , 1997, as one of a list of matters that he wished her to attend to, it was not until December, 1997, that she actually received instructions, or any documentation to enable her to process the transaction. At that point, Mr. Phelan furnished her with documentation which he had prepared, and asked her to forward it to Mr. Perera of V a l m e t in Gibraltar, to w h o m he, Mr. Phelan, had already spoken. the documentation Ms. Malone was unable to do so, as necessary had not been correctly completed, and certain documents to give effect to the transaction, had been omitted. She then worked on the documentation herself, and sometime j u s t after Christmas of 1997, w e n t to Mr. Austin's apartment in Monkstown, with Mr. Phelan to have the relevant papers signed, although she herself did not actually meet Mr. Austin on that occasion, or witness his signature on the documents. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.52 5 It is helpful at this juncture to digress briefly to recap on the manner in Page | 114 which Mr. Austin's title to the property was held, and the role of Mr. Perera of Valmet in Gibraltar in relation to the Marbella property. The property was not directly owned by Mr. Austin in the conventional sense, but rather was owned by a Gibraltar registered company, by the name of Tokey Investments Limited. The shares in that c o m p a n y were in turn substantially owned by another Gibraltar company, Finsbury Holdings Limited, and a single share was held by its connected company, Finsbury Nominees Limited. Mr. Austin was entitled to the beneficial interest in the shares of Tokey Investments Limited by virtue of a Deed of Trust executed on his acquisition of the property in 1988. It was accordingly through that beneficial interest in the shares of Tokey Investments Limited which owned the property, that Mr. Austin held title to it. 5.53 In order for Mr. O'Brien to acquire title to the property, two steps had to be taken. Firstly, the beneficial interest in shares in T o k e y Investments had to be vested by the Finsbury companies in a trust c o m p a n y in the Isle of Man, W a l b r o o k Trustees (IOM) Limited, and secondly, that company, W a l b r o o k Trustees had to declare that its interest in the shares was held in trust for Mr. O'Brien. W h a t complicated matters at that juncture, in December, 1997, was that Mr. Austin had apparently mislaid the 1988 Declaration of Trust in his favour issued on his acquisition of the property. In these circumstances, w h a t Ms. Malone had to obtain from him, apart from a transfer of his beneficial interest in the shares, was a Letter of Indemnity signed by Mr. Austin in relation to his lost 1988 Declaration of Trust. Valmet was the Gibraltar based company that managed and administered the affairs of the Finsbury companies, and it was Mr. Perera of Valmet who had dealt with Mr. Austin. 5.54 Returning to Ms. Malone's evidence, she testified that she had herself 1997, and although she did not exactly spoken to Mr. Perera in December, remember the details of their conversation, it being four years prior to her giving evidence, she stated that it was her impression that Mr. Perera had told her that he had acted for Mr. Austin since the property had been purchased in 1988, and that Mr. Perera had told her that Mr. Austin had informed him in 1996, that he had sold the property to a friend. In that regard, Ms. Malone's attention w a s drawn to a file note prepared by Mr. Perera of a telephone conversation which he had had with Mr. Austin on 3 r d July, 1996, in which he had recorded that Mr. Austin had indicated to him that "he was considering" selling the property, and inquiring how that transaction might be effected. Ms. Malone confirmed that w h a t Mr. Perera had conveyed to her would have conformed with the content of that file note, and although she acknowledged that she had little recollection of their conversation, she indicated nonetheless that it was her impression that Austin had in fact told Mr. Perera that he had "sold" Mr. the property in question. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 115 Despite that aspect of her evidence, she acknowledged that the contents of Mr. Perera's note probably reflected the true situation. S h e could not recall whether Mr. O'Brien's name had been referred to by Mr. Perera as the friend to w h o m the property had been sold. 5.55 The documents she processed comprised a Deed of Transfer, and a Letter of Indemnity to account for the mislaid documentation. It was Ms. Malone who witnessed Mr. Austin's signature on both of these documents, each of which was dated 7 t h January, 1998, something which she acknowledged was technically incorrect in view of the fact that Mr. Phelan had handed her the documents soon after he had had Mr. Austin sign them, she herself not having witnessed the signing of them. She sent the documents to Mr. Perera on 7 t h January, 1998, together with a formal letter of instruction also signed by Mr. Austin, and informed Mr. Perera that the new beneficial owner was to be a trust registered in the Isle of Man and administered by W a l b r o o k Trustees (IOM) Limited, and that it w a s to Mr. Christopher T u s h i n g h a m of W a l b r o o k Trustees that Mr. Perera should refer, if he required any further information. 5.56 Mr. Perera appeared to have responded promptly, by a fax of 9 t h January, 1998, indicating the remaining procedures to be followed including the issue of new Deed of Trust in favour of W a l b r o o k Trustees Limited, and seeking instructions as to whether he should request payment of his outstanding fees from Ms. Malone, or from Mr. Tushingham. Ms. Malone replied on 21 s t January, 1998, indicating that Mr. Phelan would contact Mr. Perera to discuss the date of the Trust Deeds to be issued in favour of W a l b r o o k Trustees as, according to w h a t she stated in that letter, Mr. Austin had actually been paid for the property in July, 1996. 5.57 On 4 t h February, 1998, Mr. Perera forwarded two original Deeds of Trust in respect of the shares in T o k e y Investments Limited, held by the Finsbury companies, in favour of W a l b r o o k Trustees, to Mr. Christopher T u s h i n g h a m in the Isle of Man. Both Deeds of Trust, one of which related to 9 9 of the 100 shares of Tokey Investments, and one of which related to a single share, had been backdated to 12 th August, 1996. August, 1996, Ms. Malone As to the backdating of those Deeds to 12 th confirmed that Mr. Phelan had in her evidence informed her that he himself would make contact with Mr. Perera concerning the matter. She accordingly had not dealt with it, and had, as indicated, notified Mr. Perera to that effect. It was Mr. Phelan w h o had informed Mr. Perera that the Deeds of Trust, which had not been signed until on or shortly before 4 t h February, 1998, should be backdated to 12 th August, 1996. Although it would appear therefore that Ms. Malone had not herself taken part in the backdating of these documents, she c o m m e n t e d that an element of backdating was not particularly unusual in her work, and that several situations would arise in the company REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 up" after the Page | 116 secretarial world in which issues had to be, as she put it, "tidied event. Whatever may have been the practice in Ms. Malone's c o m p a n y secretarial work, it is obviously extremely unsatisfactory and unorthodox that a d o c u m e n t executed in 1998 should purport to have been executed s o m e one and a half years earlier, as had indeed been represented to the Tribunal by William Fry, in one of their earlier letters, relaying their client's instructions as to w h a t had transpired in relation to this matter. 5.58 In March, 1999, it s e e m s that Ms. Malone had a further occasion to contact Valmet in order to obtain copies of the Deeds of Trust executed in favour of Walbrook Trustees. These 19 th were furnished to her together with Share Certificates by Valmet on was March, 1999. Whilst Ms. Malone testified that she purpose of that request was, she thought it uncertain as to w h a t the probable that Mr. Phelan had asked her to confirm that the Deeds of Trust had been executed, and she surmised that he may have asked her to clarify the position in the context of preparing a statement of assets for Mr. O'Brien. 5.59 in the The final Declarations of Trust by Walbrook Trustees in favour of Mr. O'Brien, which would give effect to confirming Mr. O'Brien's ownership, were not, event, issued until 15 th May, 2001. In that regard, Mr. Christopher T u s h i n g h a m of Deloitte & Touche, Isle of Man, confirmed that those Declarations of Trust, stating that the shares in T o k e y Investments were held in W a l b r o o k Trustees to the order of Mr. O'Brien, were not issued until May, 2001, due to an administrative oversight. Whilst the Tribunal accepts that explanation for the further delay, it is nonetheless of some significance that the perfection of Mr. O'Brien's title was subject to such an administrative oversight, which did not it seems come to anybody's attention until the matter became material to the Tribunal's inquiries. Evidence of Mrs. Maureen Austin: no knowledge of a loan to Mr. Michael Lowry 5.60 Mrs. Maureen Austin, w i d o w of the late Mr. David Austin, was one of requested by an affected person, on had those witnesses w h o s e testimony was notification of Provisional Findings in late 2 0 0 8 . As the information she furnished to the Tribunal in the course of its private investigations in 2 0 0 1 , did not reflect adversely on affected persons, the Tribunal had in the first instance intimated its intention to accept that information, to obviate the necessity of her giving evidence at public sittings. 5.61 S h e stated that, some years prior to moving with her husband to Pueblo, London in 1993, they had purchased a Spanish townhouse at Aloha Neuva Andalucfa, Marbella, for use as a holiday home. During the four years of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 117 her husband's w o r s e n i n g health, before his death in November, 1998, she had paid little attention to matters other than his welfare. T h e y had decided to sell the property in 1996, and purchased a property in the south of France. The sale was to Mr. Denis O'Brien, w h o she understood had wished to buy it for his parents' use. As the company, Tokey Investments Limited, owned the premises, the purchase did not pass directly from the Austins to Mr. O'Brien. After the sale, they had continued to have access to it until after the Ryder Cup, in 1997. She recalled clearing personal belongings f r o m the property, either before or after the Ryder Cup, and thought this was in or around October, 1997. 5.62 Whilst aware of the New York fundraising event organised by her husband in November, 1996, she knew no details, although he may have told her that it had been successful. She thought her husband's friendship with Michael Lowry had been peripheral, in a context of racing and Fine Mr. Gael functions, although he had been a close and longstanding friend of the late Mr. Frank Conroy. His friendship with Mr. Denis O'Brien was close, and dated back many years. Mr. O'Brien would have visited her husband occasionally in his latter years, as did Mr. Lowry and Mr. Conroy. She had been aware that her husband intended to assist Mr. Lowry in regard to the acquisition of a Dublin property, at Carysfort Avenue, Blackrock, and recalled driving past the property once, w h e r e u p o n her husband had pointed it out, and said he intended to help Mr. Lowry. This she felt may have been in a context of providing s o m e form of guarantee, and she w o u l d not have thought he had intended to lend Mr. Lowry ?147,000.00. 5.63 In cross-examination on behalf of Mr. O'Brien, she stated that she recalled something of her husband having had difficulty in locating papers during his last years of illness and treatment, including the Declarations of Trust relevant to the property sale. As to whether the ? 1 5 0 , 0 0 0 . 0 0 paid was not in fact for the property purchased, she knew of no other transaction giving rise to such a payment to her husband from Mr. O'Brien, and he would not have given the property free. S h e stated that, in fact, the worsening of her husband's health had prevented t h e m going back to the premises for the Ryder Cup, as had been intended. 5.64 In re-examination by Tribunal counsel, she agreed that, at the time the sale had been raised, they were spending most of their time in the south of France, where they had purchased their property, although they may not have moved into the new premises, which was then under construction. She had had no involvement in the negotiations with Mr. O'Brien, and only recalled the reduction agreed in relation to the Ryder Cup. As to the joint account in Jersey, into which a payment of ? 1 5 0 , 0 0 0 . 0 0 was made, she acknowledged that she REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 118 had only become aware of this after her husband's death. She was unable to assist as to w h y her husband should have requested payment to be made from an off-shore account, and her husband had at that time retained an Irish bank account. She had had no contemporary awareness of any loan agreement or repayment acknowledgement, each involving her husband, and Mr. Lowry, and no such documents had been in her husband's papers after his death. As to a reference in a note of the earlier of two meetings had by her with Tribunal lawyers, to the effect that it had not been her husband, but someone else, w h o first mentioned the matter of Mr. Lowry buying the Carysfort Avenue house, she stated that it had always been the position that she knew about this from her husband. She stated that her husband had never told her that virtually all of the ? 1 5 0 , 0 0 0 . 0 0 that he had received, namely ? 1 4 7 , 0 0 0 . 0 0 , had been loaned by him to Mr. Lowry. Accordingly, she was entirely unaware that virtually all of the house sale proceeds appeared to have been loaned to Mr. Lowry. Put that the terms of loan repayment did not involve regular instalments, but provided for repayment at the end of five years with accumulated interest, she stated that her husband had been very optimistic in relation to his prospects of longer survival in the context of his illness. Evidence of Mr. Aidan Phelan: setting up covert route for transfer of funds 5.65 To put the evidence of both Mr. Aidan Phelan and Mr. Denis O'Brien in context in relation to the account that the ? 1 5 0 , 0 0 0 . 0 0 payment, by Mr. O'Brien to Mr. Austin, was for the sale of his Spanish holiday home, it is necessary to appreciate the circumstances in which inquiries were pursued with Mr. O'Brien and with Mr. Phelan in 1997, in connection with the IPO of Esat Telecom. 5.66 It will be recalled that the matters under scrutiny in 1997 pertained in the main to a statement by Mr. Denis O'Brien, made in the latter portion of 1996, to Mr. Barry Maloney, then Chief Executive of Esat Digifone, that effectively he had made a payment of ? 1 0 0 , 0 0 0 . 0 0 to Mr. Lowry. subsequently Mr. O'Brien contended, when the It will also be recalled that brought to the matter was attention of other directors and shareholders of Esat Digifone, that the remark, essentially accurate, had been made in jest and that although he had intended to make a payment to Mr. Lowry, and had earmarked funds to that effect in with an intermediary. Woodchester Bank, the funds ultimately became "stuck" The Tribunal has concluded that Mr. O'Brien's statement to Mr. Maloney in late 1996, was not made in jest and that it accurately reflected what, as he stated, he had done, that is, he had embarked upon making a payment to Mr. Lowry. 5.67 The inquiries instituted within Esat Digifone at that time included queries concerning payments made f r o m accounts of Mr. Denis O'Brien to any third parties where the amounts exceeded ? 2 5 , 0 0 0 . 0 0 . Certain queries in the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 119 course of those inquiries were addressed to Mr. Phelan, with a view to identifying any such payments, and with a view to ensuring that all of the relevant accounts had been scrutinised. The shareholders and directors of Esat Digifone, on the occasion of that scrutiny, extremely highly pressurised by reason of the imminence of the IPO, were not aware that a payment of ? 1 5 0 , 0 0 0 . 0 0 had been made by Mr. O'Brien to Mr. David Austin in July, 1996. 5.68 In his evidence Mr. Phelan dealt with many of the matters to which reference has already been made in an earlier part of this chapter concerning the instructions he received from Mr. O'Brien, to transfer the s u m of ? 4 0 7 , 0 0 0 . 0 0 from an account in Woodchester Bank in Dublin, to an account in the Isle of Man. It will be recalled that initially the money was transferred to an account in the name of Diest, and that subsequently an account in Mr. Phelan's own name was opened and the money was deposited in that account, and from that account paid to a number of different individuals and entities on the instructions of Mr. O'Brien. Mr. Phelan thought that no one but Mr. O'Brien and himself was aware that the account had been opened in Mr. Phelan's name. 5.69 According to Mr. Phelan, Mr. O'Brien had asked him to obtain a draft considering for Mr. Austin in the a m o u n t of ? 5 0 , 0 0 0 . 0 0 , stating that he was buying a house from Mr. Austin, but that the price had not been agreed and that this was a down payment. on 10 th July, 1996. On As has already been stated, this payment was made July, 1996, there was then, again on Mr. O'Brien's of ? 1 0 0 , 0 0 0 . 0 0 to Mr. Austin's Channel 19 th instructions, a telegraphic transfer Islands account. This was, according to Mr. Phelan, on foot of Mr. O'Brien telling him that he had agreed the final price at ? 1 5 0 , 0 0 0 . 0 0 , and that the balance should be sent to Mr. Austin. 5.70 This evidence would therefore 10 th suggest that at the time the first payment was made, namely on July, 1996, Mr. O'Brien had not agreed a price with Mr. Austin. Since Mr. O'Brien testified that he initially agreed a price of ? 1 6 5 , 0 0 0 . 0 0 , subsequently reduced to ? 1 5 0 , 0 0 0 . 0 0 , on the understanding that Mr. Austin should stay on in the premises until after the Ryder Cup, it must follow that the sequence of events, on the basis of Mr. O'Brien's evidence, was as follows: (i) that Mr. O'Brien indicated to Mr. Austin a desire to purchase Mr. Austin's Marbella property; (ii) that on 10 th July, 1996, the s u m of ? 5 0 , 0 0 0 . 0 0 was paid to Mr. Austin as an earnest of Mr. O'Brien's commitment; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (iii) 5 Page | 120 that no final price had been agreed; (iv) that s o m e time following 10 th July, 1996, a final price of ? 1 6 5 , 0 0 0 . 0 0 was agreed; (v) that s o m e time very shortly thereafter a price of ? 1 5 0 , 0 0 0 . 0 0 was agreed, a reduction of ? 1 5 , 0 0 0 . 0 0 in consideration of Mr. Austin being permitted to remain on in the premises until after the Ryder Cup, and that the balance of ? 1 0 0 , 0 0 0 . 0 0 on that basis was paid on 19 th July, 1996. 5.71 It does not appear or that of Mr. O'Brien basis informed which Mr. Phelan of the to ?165,000.00 ?150,000.00. 5.72 agreement, the upon it was reduced In the course of evidence, Mr. Phelan, as will be recalled from the previous chapter, was asked about the recollection of Mr. O w e n O'Connell of William Fry, that in examining the matters involving Mr. O'Brien and Mr. Barry Maloney in November, 1997, he had queried Mr. Phelan in regard to any other significant accounts of Mr. O'Brien, and that Mr. Phelan had referred to small accounts only. Mr. Phelan stated that he did not disbelieve Mr. O'Connell's evidence in that regard, but that he could not, in advance of the IPO, recall such a conversation. He did however confirm that he was aware that Mr. O'Connell was As is apparent from the inquiring into payments made in excess of ? 2 5 , 0 0 0 . 0 0 . previous chapter, it is clear that Mr. Phelan was aware of the context in which queries concerning Mr. O'Brien's accounts had arisen, namely, the suggestion that Mr. O'Brien had stated to Mr. Barry Maloney that effectively he had paid ? 1 0 0 , 0 0 0 . 0 0 to Mr. Lowry. 5.73 until 17 th It is important to recall that Mr. Phelan's Isle of Man account, from which the two payments to Mr. Austin were made in July, 1996, was not closed May, 1997, that is, a mere five and a half months prior to Mr. O'Connell's inquiries of Mr. Phelan. Mr. Phelan agreed that he did not tell Mr. O'Connell of the Radio Investments NV account, from which Mr. O'Brien had instructed him to withdraw ? 4 0 7 , 0 0 0 . 0 0 on his behalf to be held in an off-shore account in the Isle of Man in Mr. Phelan's name. At the time of Mr. O'Connell's inquiries, Mr. Phelan confirmed that he had recalled that ? 1 5 0 , 0 0 0 . 0 0 had been paid to Mr. Austin, but he did not believe that this was significant. Mr. Phelan's evidence, was that whilst he recalled the payment, he did not recall the account from which the payment was made. As to the a m o u n t being a sizeable p a y m e n t to someone with no business connection with Mr. O'Brien, and who had been a conduit in the $ 5 0 , 0 0 0 . 0 0 payment to Fine Gael, Mr. Phelan's view w a s that this payment of ? 1 5 0 , 0 0 0 . 0 0 was in respect of a house purchase, and on that basis, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 121 it had not occurred to him at the time to tell Mr. O'Connell about it. As will be clear from the previous chapter, the only accounts scrutinised, by Mr. O'Connell, by w a y of queries to Mr. O'Brien's bookkeeper, were those personal accounts of Mr. O'Brien in Woodchester, and not the RINV account which, although not a personal account, was sufficient nevertheless to an account for the over which withdrawal Mr. O'Brien from the had control, of the control arrange account substantial s u m of ? 4 0 7 , 0 0 0 . 0 0 . 5.74 As to the unusual features of the so-called property transaction, Mr. Phelan acknowledged that Mr. O'Brien had funds in other accounts f r o m which the monies to pay Mr. Austin for the purchase of the Spanish property could have been openly transmitted. He did not accept that the primary basis of the off-shore account, opened concealment, account. in his name on the instructions of Mr. O'Brien, be paid from an had been insisting that Mr. Austin wished to off-shore However he did agree that the manner in which the payment was processed did conceal the true identity of the owner of the funds in the account, and that, whilst he said it had not been a huge discussion point between them, it was reasonable to a s s u m e that Mr. O'Brien did not w a n t his name on the account in the Isle of Man. Furthermore, he acknowledged that anyone looking at the account would have regarded it as Mr. Phelan's account, and that the payments made from it to Mr. Austin were his, Mr. Phelan's, and not Mr. O'Brien's. 5.75 In this connection, it is significant that, although it was Mr. Phelan's evidence that Mr. Austin had insisted that payment be made f r o m an off-shore account, there was no evidence that it was at his suggestion, or that he had stipulated, that the payment should come from an account unconnected on its face with Mr. Denis O'Brien. In s u m m a r y , Mr. Phelan's evidence was that his reason for omitting to draw the matter to the attention of the individuals responsible for conducting the inquiry at the time of the IPO was that he viewed it merely as a house purchase. This explanation will be reviewed below. 5.76 With reference to the evidence of Ms. Malone, Mr. Phelan confirmed that it was in S e p t e m b e r of 1997 that he had first asked her to attend to the completion of the documentation necessary to effect a transfer of ownership in Mr. Austin's property to Mr. O'Brien. However, it was not until Christmas, 1997, that he met Mr. Austin for the purposes of advancing the matter. He also agreed that it was f r o m him that Mr. Perera of Valmet in Gibraltar had obtained the information to enable the Deeds to be backdated to 12 th August, 1996, notwithstanding that on any view of the manner in which the documentation was processed, the paperwork was not completed, until at the earliest, s u b s e q u e n t to 21 s t January, 1998. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.77 5 W h e n queried as to his view of Mr. O'Brien's own knowledge of his Page | 122 financial situation, Mr. Phelan said that Mr. O'Brien operated in very broad terms, rather than having a great grasp of detail, but in the context of an a m o u n t such as that of ? 4 0 7 , 0 0 0 . 0 0 , he would have been aware of the m o v e m e n t of funds. 5.78 Mr. Phelan stated that he was unaware that Mr. Austin had paid Mr. Lowry ? 1 4 7 , 0 0 0 . 0 0 out of the ? 1 5 0 , 0 0 0 . 0 0 received by him from Mr. O'Brien. Although Mr. Phelan had been asked by Mr. Austin during the last month of his life to be one of his executors, he had never discussed this matter in any context prior to Mr. Austin's death. He stated that he only became aware of these matters when they arose through the Tribunal's inquiries. 5.79 He recognised that, in the circumstances of the important matters having very significant repercussions for the IPO, which were being inquired into in late 1997, he now s a w matters very differently, and with the knowledge he now had of money being transmitted from Mr. Austin to Mr. Lowry, out of the funds transmitted by him on behalf of Mr. O'Brien to Mr. Austin, alarm bells would have rung for him in 1997, and he would have informed Mr. O'Connell. Evidence of Mr. Denis O'Brien: merely a property purchase 5.80 detail. Mr. O'Brien's evidence concerning his statement to Mr. Maloney that he had already paid ? 1 0 0 , 0 0 0 . 0 0 to Mr. Lowry has already been referred to in For this reason, as in the case of Mr. Aidan Phelan, it will not be referred to in this chapter in the same detail, but does of course form the background for much o f t h e evidence given by Mr. O'Brien concerning his dealings with Mr. Austin in 1996, in connection with w h a t Mr. O'Brien contended was the purchase by him of Mr. Austin's Spanish property. 5.81 One of the features of Mr. O'Brien's evidence concerning his dealings with Mr. Austin is that it was from Mr. O'Brien himself that the Tribunal first learned of this purchase. Whilst, needless to say, had the Tribunal's inquiries of Mr. Austin's executors concerning his bank accounts taken their normal course, as a matter of probability the relevant aspects of the money trail w o u l d in due course have come to the Tribunal's attention, the fact remains that the first the Tribunal heard of any purchase of property came from Mr. O'Brien himself. In evidence, w h e n queried by Tribunal counsel, suggesting a connection between the ? 1 5 0 , 0 0 0 . 0 0 payment to Mr. Austin, and Mr. Austin's dealings with Mr. Lowry, Mr. O'Brien responded that this was a far-fetched notion, and reflected the Tribunal's tendency to add one and one to evidence, when asked about his first make twenty. Yet earlier informed the Tribunal in his of the having transaction, he stated that it was after the RTE report of a loan from Mr. Austin to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 123 Mr. Lowry that he, as he put it, promptly wrote to the Tribunal to say that he had bought a house from Mr. Austin. W h e n asked how he connected the house purchase with the RTE broadcast in relation to the loan, Mr. O'Brien replied that the broadcast mentioned ? 1 5 0 , 0 0 0 . 0 0 , and he had bought a house for that sum, and that it was on that basis that he decided to bring the matter to the Tribunal's attention; that he was concerned that he had bought a house from Mr. Austin and that later in the same year Mr. Austin had given a loan to Mr. Lowry. He emphasised however that he, Mr. O'Brien, knew only about the former, but not the latter transaction. 5.82 As in the case o f t h e evidence of Mr. Phelan, in the examination of Mr. O'Brien, the Tribunal wished to ascertain w h y neither the RINV account, nor the payment of ? 1 5 0 , 0 0 0 . 0 0 to Mr. Austin had been brought to the attention of those charged with conducting inquiries in November, 1997, at the time of the IPO, and specifically, Mr. Owen O'Connell, who had devised a particular approach to dealing with the issues which arose in the examination of statements made by Mr. O'Brien to Mr. Maloney. 5.83 Mr. O'Brien explained his connection with Radio Investments NV, stating that the c o m p a n y had been set up in 1991, to hold overseas radio assets; that it had been bought out by some shareholders in 1994, and that at the time of giving evidence, Mr. O'Brien held the controlling interest, perhaps s o m e w h e r e between 70% and 90%, following a complex demerger. He testified that he had lent money to the company, and that w h a t was involved in the withdrawal of the ? 4 0 7 , 0 0 0 . 0 0 transferred to the Isle of Man, was the repayment of that loan. 5.84 Mr. O'Brien's evidence, in summary, was that whilst he was aware that he had bought a property, and that he had paid Mr. Austin ? 1 5 0 , 0 0 0 . 0 0 he was not aware of the details, and did not know f r o m which account the money had been paid. He stated that if he had been questioned at the time of the actual transaction, he might well have adverted to the details, but sixteen months later, that is, at the time of the IPO, he would only have remembered vague elements of it. 5.85 "special Mr. O'Brien emphasised, throughout his evidence, essentially in explanation of his inability to remember the account, that it was w h a t he called a purpose account", opened and closed within a short period of time. Whether or not he r e m e m b e r e d the account or the details of the transaction, Mr. O'Brien did not bring the fact that he had made a payment to Mr. Austin of ? 1 5 0 , 0 0 0 . 0 0 to the attention of his fellow shareholders in Esat Digifone and Esat T e l e c o m in November, 1997, even though the recipient of that payment, Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 124 Austin, was himself the focus of inquiries regarding the $ 5 0 , 0 0 0 . 0 0 donation to Fine Gael. 5.86 Mr. O'Brien however pointed out that, whatever inquiries might have been carried out at that time, had he disclosed the fact of the payment of ?150,000.00 emerged w a s having been a property made by him to Mr. Austin, all that would looking at the have in purchase, and that even matter retrospect, he did not believe that the boards would have had any problem with the transaction. It should be observed that it was of course the case at that time, November, 1997, that no documentation to effect the transfer of ownership from Mr. Austin to Mr. O'Brien had yet been executed. 5.87 Describing the circumstances of his dealings with Mr. Austin, he stated that the property purchase had been agreed in May, 1996, and implemented in the following July. His evidence was that he had had dinner with Mr. Austin in London in May, 1996, and that on that occasion Mr. Austin had raised the issue of his Spanish property. Mr. O'Brien then agreed to buy the Spanish property. He recalled Mr. Austin taking out a folder, showing him some documents, and saying that he owned the c o m p a n y that owned the property. Various stages were involved in completing the transaction: the payment of the money; Mr. Austin being allowed as part of the agreement to keep the premises until after the Ryder Cup; and the handover of possession following the Ryder Cup. Asked w h e t h e r he had ever used the property, Mr. O'Brien said that, upon getting possession after the Ryder Cup, it was rented immediately. In the event, he thought that Mr. Austin had been too ill to attend the Ryder Cup. As regards the intended use by Mr. O'Brien's parents, Mr. O'Brien said that ultimately his father did not use the property, and instead w e n t to the Algarve region of Portugal where he, Mr. O'Brien, had purchased a site at in or around the same time. Whilst it had been Mr. O'Brien's original intention to acquire the property for the use of his parents, events did not w o r k out in that way. 5.88 1998, In relation to the late execution of the trust documentation in early Mr. O'Brien stated that Mr. Austin had shown him the original documentation from his purchase of the property in 1996, at the time of their meeting in London, but that he, Mr. O'Brien, later heard that new documents were being sought. However, he had not handled the transaction, the matter having been put in the hands of Mr. Phelan and Ms. Malone. Regarding the discrepancies between the actual dates of execution of the documents, and their purported dates, namely, the fact that the documents were not executed until 1998 but had been backdated to 1996, Mr. O'Brien stated that he was satisfied that the basis for this was Mr. Austin's delay; that he had been aware of Mr. Austin's ill health; that he did not wish to s e e m to be hounding him; and that it REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 125 may have been the position that Mr. Austin kept saying that he would find the missing documents. 5.89 In this connection, the queries arising at the time o f t h e IPO concerning the $ 5 0 , 0 0 0 . 0 0 Fine Gael donation were recalled, and it was suggested to Mr. O'Brien that, whilst he had testified that by reason of Mr. Austin's ill-health, he did not wish to be hounding him in 1996, and 1997, concerning the conclusion of the purchase concerning of the the property, request to the Mr. same Austin sensitivities to provide did a not letter appear to to apply the relating $50,000.00 Fine Gael donation. Mr. O'Brien's response was that he would not have pushed too hard for that letter, unless it appeared that Mr. Austin was well enough to write it. However, w h e n it was suggested to him that Fine Gael might have been an alternative route f r o m which to obtain the information, and of course obviously the most relevant route, Mr. O'Brien's response was that this involved using hindsight. He also stated that it was the directors of Esat Digifone, who were handling the matter, and that if he himself had been there, then perhaps he might have gone to Fine Gael. This proposition is distinctly at odds with the stance taken by Mr. O'Brien in February, 1998, w h e n Telenor, once again through their Esat Digifone nominee director Mr. John Fortune, brought the matter of the $ 5 0 , 0 0 0 . 0 0 donation to a head, and it is clear from the evidence that Mr. O'Brien still had no enthusiasm for going to Fine Gael to seek clarification on the matter. 5.90 Mr. O'Brien was also queried as to his evidence that it was the hearing of the RTE report that had prompted him to inform the Tribunal of his purchase of a property from Mr. Austin, on the basis of this being relevant to the w o r k of the Tribunal. Reference has already been made to the fact that Mr. O'Brien's evidence was that he felt that this would be helpful for the Tribunal to know, by reason of the similarity between the amounts purported to have been lent by Mr. Austin to Mr. Lowry, and that paid by him to Mr. Austin for the property acquisition. However, w h e n queried as to w h y he had not informed the Tribunal of the matters arising in his conversation with Mr. Maloney, which had formed such a central feature of the final days of the IPO process, Mr. O'Brien agreed that he had only dealt with this matter after the Tribunal had raised it, by reason of his fear of "trial by media". 5.91 Whilst some aspects of the evidence of Mr. O'Brien and Mr. Phelan concerning the purchase have been c o m m e n t e d on, it s e e m s appropriate to refer to the evidence of Mr. Lowry concerning these matters before concluding those comments. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 126 Evidence of Mr. Michael Lowry: a loan for refurbishments Non-disclosure 5.92 of off-shore account in initial 1999 evidence In Mr. Lowry's evidence, the main issues which arose were the fact that the Isle of Man bank account, in which ? 1 4 7 , 0 0 0 . 0 0 had been deposited to his credit, had not been disclosed to the Tribunal at the time of Mr. Lowry's earlier evidence in 1999, that is, at a time w h e n he purported to have provided the Tribunal with access to all of his financial affairs to include all off-shore holdings. Furthermore, although the Carysfort purchase had been disclosed, the separate contract with Mr. Michael Holly for its refurbishment, said by Mr. Lowry to have been w h a t prompted the loan from Mr. Austin, had not been disclosed, nor that Mr. Lowry's source of funding for the refurbishment was a loan from Mr. Austin. In his earlier evidence, Mr. Lowry had disclosed Mr. Michael Holly's role in the purchase of the property, but not his role in its refurbishment, or any of Mr. Lowry's dealings with Mr. Austin in that regard. the fact of the loan from the In brief Mr. Lowry had disclosed Building Society to fund the Irish Nationwide purchase of the property, but not, w h a t he contended, was the related loan from Mr. Austin, the proceeds of which had been lodged to the Isle of Man bank, which was a wholly owned subsidiary of Irish Nationwide Building Society. 5.93 In his evidence to the Tribunal in 1999, Mr. Lowry had described the purchase of, and the circumstances o f t h e purchase of, the Carysfort property. In light of later evidence following the Cooper/Investec disclosures, this description proved to be markedly incomplete. W h a t he had indicated to the Tribunal, in that earlier evidence, was that prior to the purchase o f t h e property he had intimated to a number of individuals his desire to purchase a Dublin residence. One o f t h e individuals to w h o m he had mentioned this matter was Mr. Michael Holly of Cedar Building C o m p a n y Limited. According to Mr. Lowry, Mr. Holly had contacted him about this property, explaining that he felt that it was a good investment, and that he believed it could be acquired at an acceptable price. The property was due to be auctioned within a day or so of his communication to Mr. Lowry. Mr. Lowry was abroad on Government business, and so it was agreed between t h e m that Mr. Holly would proceed to endeavour to secure the property and that, if on his return, it met with Mr. Lowry's approval, he would be offered first refusal at the purchase price. This is w h a t occurred, and Mr. Lowry purchased the property, in fact through Mr. Holly's solicitor w h o had signed the contract in trust, as is frequently the case, at the auction. 5.94 In his 1999 evidence, Mr. Lowry alluded to the role of Irish Nationwide Building Society in providing loan finance for the purchase. However, once again his account of his dealings with Irish Nationwide Building Society was significantly REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Nor did Mr. Lowry make any mention of any role of Mr. Denis Page | 127 incomplete. O'Connor in connection with the property, in the course of that evidence. 2001 5.95 disclosures In 2001, Mr. Lowry provided the Tribunal with both a different and a much lengthier account of the circumstances of that transaction. W h a t he then informed the Tribunal was that he felt he needed appropriate residential accommodation in Dublin and, having learned from a fellow Minister of the available tax incentive, he sought particulars of the Dual Abode Allowance, as already outlined, and investigated through various agents the availability of suitable properties. As mentioned in his earlier account, he again stated that he had intimated his desire for a suitable property to a number of friends, and it was through Mr. Holly that he had learned of Carysfort. He informed the Tribunal that, when the property was acquired, it was in a very poor state of repair, and that Mr. Holly felt that substantial funds would be needed for renovations. Mr. Lowry stated that he had obtained loan finance f r o m Irish Nationwide Building Society on the basis of 100% of the purchase price, which necessarily implied that he would have to fund refurbishment costs himself. He had intended initially to use a s u m of approximately ? 1 4 0 , 0 0 0 . 0 0 , which he held in a Channel Island account for this purpose, and that was how matters stood at the conclusion of his discussions with Mr. Fingleton, although he had made no reference in the course of those discussions to the fact of his having ? 1 4 0 , 0 0 0 . 0 0 account earmarked for that purpose. in an off-shore 5.96 Mr. Holly had informed him that his c o m p a n y would carry out the necessary refurbishment for approximately ? 9 0 , 0 0 0 . 0 0 , recognising that there would also be substantial expenditure entailed in the fitting out, to include such items as decoration, furniture, flooring, tiling and the like. Mr. Lowry stated that he discussed the cost of refurbishment with Mr. Holly who was anxious to know that finance was in place, and he then informed Mr. Austin of the entire position, w h e r e u p o n Mr. Austin offered to make him a loan o f t h e funds required. Between them, Mr. Holly and Mr. Austin had calculated the total amount that would be involved at ? 1 4 7 , 0 0 0 . 0 0 . Mr. Lowry testified that in deciding to accept Mr. Austin's offer, he was influenced both by personal factors, and by possible tax liabilities resulting f r o m his relationship with Mr. Ben Dunne. He did not inform Messrs. Oliver Freaney & Company, his then accountants, at the time of this loan arrangement, although he had inquired of t h e m in relation to the Dual A b o d e Allowance. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.97 5 It is helpful at this juncture to recall that from the evidence of Mr. Page | 128 Eddie Holly, it would appear that consequent on the controversy surrounding Mr. Lowry's resignation as a Minister, he and his late brother, Mr. Michael Holly had become apprehensive as to whether the refurbishment would be paid for or completed. Following a certain degree of w h a t might be described as gentle pressure f r o m the Hollys, the question of payment for refurbishment works was raised with Mr. Lowry in December. On 4 t h December, 1996, a bill for ? 3 2 , 4 6 6 . 8 0 (inclusive of VAT), a valuation of the works to that date, was sent to Mr. Lowry, and w h e n no response was received, Mr. Michael Holly made direct contact with Mr. Lowry. According to Mr. Eddie Holly, it was then agreed between his brother, Mr. Michael Holly, and Mr. Lowry, that the c o m p a n y would buy back the premises from Mr. Lowry. It would appear that agreement to that effect had been reached prior to Christmas. Shortly after Christmas, the relevant contractual steps were taken, and the repurchase completed by payment of the purchase price, intended to reflect merely Mr. Lowry's costs of acquisition, which was paid by 17 th January, 1997. S o m e t i m e after that, on 5 t h February, 1997, Mr. Lowry paid to Mr. Austin the s u m of ? 1 4 8 , 8 1 6 . 9 3 . Mr. Lowry's evidence was that this represented the funds lent to him for refurbishment, and that as they were no longer required for that purpose, the a m o u n t of the loan together with the interest, which he had agreed to pay at commercial rates, was repaid to Mr. Austin. 5.98 intimated It also appeared from his later evidence that he had at the time to Mr. Denis O'Connor, who as will be recalled was engaged professionally by Mr. Lowry from mid-1996, that he would request him to oversee the refurbishment works on his behalf. He did not, however, tell Mr. O ' C o n n o r of the Isle of Man account from which, according to Mr. Lowry, this refurbishment was to be funded using a loan provided by Mr. Austin, as the issue never arose between them. Nor, as already mentioned, had he informed Mr. O ' C o n n o r that it was Mr. O ' C o n n o r ' s firm's name that he had given as his address to the Isle of Man bank. In his 2 0 0 1 evidence, Mr. Lowry relied on certain documentation in support of his testimony that the deposit of ? 1 4 7 , 0 0 0 . 0 0 , in his Isle of Man bank account, was by way of a commercial loan transaction with Mr. Austin. Of course this documentation had not been provided to the Tribunal in the course of Mr. Lowry's 1999 evidence or at any time thereafter until a point towards the conclusion of his 2 0 0 1 evidence. 5.99 One of the obvious questions which arose concerning Mr. Lowry's evidence of his relationship with Mr. Austin in connection with this money, was w h y Mr. Austin had not simply written Mr. Lowry a cheque for ? 1 4 7 , 0 0 0 . 0 0 . Mr. Lowry's response w a s that it was in fact Mr. Austin "as a non-resident" who suggested how the funds should be transferred; that he decided how it should be done; and that he had facilitated the opening of Mr. Lowry's account in the Isle of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 129 Man; and that Mr. Lowry could only assume that it suited Mr. Austin to arrange matters in this way. It was Mr. Austin who had obtained the necessary papers for opening the account, and it was Mr. Austin w h o requested Mr. Lowry to complete the documents, and to return t h e m to Mr. Karl Tully, the official in the Isle of Man bank. 5.100 Mr. Lowry explained that he had a very close relationship with Mr. Austin particularly in Mr. Austin's latter years, and that the two would have stayed in touch, by telephone or otherwise, virtually on a daily basis. This element of Mr. Lowry's evidence was at variance with the evidence of Mrs. Maureen Austin w h o described her late husband's relationship with Mr. Lowry as being peripheral. Whilst Mr. Austin had stipulated how the funds should be provided, he had not discussed with Mr. Lowry any aspect of the origin, or source of the funds. Regarding the banking documentation and, in particular, the fact that the address given by him was neither his Dublin nor Tipperary addresses, but the address of Mr. Denis O ' C o n n o r ' s firm, Brophy Butler Thornton, Mr. Lowry accepted that he did not seek their consent, but that this was because he did not think it was necessary. In explanation for his use of that address w h e n that firm had not yet undertaken all of his affairs, and w h e n in fact Oliver Freaneys were still formally the accountants to his refrigeration company, he stated that he had started doing some business with Mr. Denis O'Connor, and that he had intended to move all of his affairs to Mr. O'Connor. 5.101 Dealing with the form signed for the opening of the account, Mr. Lowry except on request" was normal. stated that the reference to " n o correspondence As to describing himself as a company director, he stated that he had been a Minister for less than two years, and that although he had resigned from the refrigeration company, as was required of him, "in his mind" he still remained a company director. It w a s not his practice, he stated, to promote himself on the basis of being a G o v e r n m e n t Minister, and in any event, the Isle of Man bank knew who he was. 5.102 Mr. Lowry's failure to inform the Tribunal of his off-shore account in the Irish Nationwide Building Society in the Isle of Man was not due to any excusable omission. From his evidence, there was no question of his having failed to recall either the account in the Isle of Man bank, or his dealings with either Mr. Austin as to the opening of the account, and the processing of payments to and from it, or his dealings with Mr. Michael Holly as to the refurbishment of the Carysfort property. His stated reason for non-disclosure w a s that he felt that the off-shore Isle of Man account w a s outside the Tribunal's Terms of Reference. W h e n he mentioned the matter to his advisers in 2001, in the context of disclosures being made concerning the Mansfield and Cheadle properties, they t o o k the view that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 130 he should disclose it. He sought to place special emphasis on the fact, as he put it, that this transaction w a s a loan for a specific purpose, which transpired not to be needed, and was thereupon repaid. He also suggested that as he had provided a world-wide waiver this should have enabled the Tribunal to access the account. He w e n t further and stated that he felt that his waiver to Irish Nationwide Building Society in Dublin would have embraced the off-shore Isle of Man bank as well. 5.103 Whilst this evidence of Mr. Lowry, purporting to excuse his non- disclosure of the account and/or the loan will be returned to again, at this stage it should be observed that Mr. Lowry's initial e n g a g e m e n t with the Tribunal was on the basis that, through his agent Mr. O'Connor, the Tribunal would be provided with all information concerning his financial affairs and details of all bank accounts held by him, not merely that information which he, or his adviser, deemed to be relevant. Mr. Lowry had stated that he wished to afford the Tribunal full cooperation, and the early evidence of Mr. O'Connor in June, 1999, was on the footing that he had been instructed by Mr. Lowry to provide the Tribunal with every assistance; that he had been informed by Mr. Lowry that he had been provided with information concerning all of Mr. Lowry's financial affairs, and all of his accounts, on-shore and off-shore. 5.104 The suggestion that because this account was opened and indeed closed within a short period of time, it did not warrant being brought to the attention of the Tribunal, is preposterous, w h e n it is borne in mind that the related account, that is, the account in Irish Nationwide Building Society in Dublin, was an account of almost equally short duration, and furthermore was an account set up, according to Mr. Lowry, for a similarly specific purpose, which transpired ultimately not to be needed and was on that score, repaid. Furthermore, Mr. Lowry s a w fit to bring to the attention of the Tribunal accounts of even shorter duration than the account in the Isle of Man off-shore bank. 5.105 The suggestion that the fact that the Tribunal was in possession of a waiver constituted disclosure is an equally unmeritorious excuse. The mere fact that the Tribunal had a waiver simply afforded it the opportunity of procuring documentation, including bank accounts f r o m individuals or entities thought to have relevant material if they were prepared to act on foot of such a waiver which, in the case of financial institutions in off-shore locations, did not always prove to be the case. The fact that a world-wide waiver was in place did not entail an obligation on any bank in any part of the world to provide information to the Tribunal, and it is hardly realistic or rational to suggest that the Tribunal was under an obligation to communicate with every financial institution on earth. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.106 5 Mr. Lowry also made much of the fact that as this transaction was not Page | 131 a payment, but, as he contended, a loan, that is, a commercial transaction, it did not merit disclosure. Of course the fact is that however Mr. Lowry came to acquire the funds, they were placed in a deposit account in his name. This attitude on Mr. Lowry's part is to be contrasted with the various transactions brought to the Tribunal's attention by him in the course of his earlier evidence with a view to establishing that those transactions, apparently payments to Mr. Lowry, were ordinary commercial arms length transactions, notwithstanding that on the face of it, there appeared to be in some cases, only limited documentary material to support those propositions. 5.107 As to Mr. Lowry's contention that his waiver to Irish Nationwide Building Society in Ireland would have embraced the Irish Nationwide Bank in the Isle of Man, this proposition is at variance with Mr. Lowry's official utterances. In the course of his personal S t a t e m e n t in the Dail in December, 1996, following his resignation from the Government, he asserted that: "Ifsomeone were trying to hide income, account?" would he or she not be more likely to put it in an off-shore thereby Lowry's demonstrating view as with a his clear of understanding that w h a t frequently, the conduct of in Mr. matter probability, is the prompts desire banking Dail was transactions Statement off-shore banks, for concealment. That made by Mr. Lowry, including the extract referred to above, McCracken quoted and considered in some depth in the Report. Whilst that Tribunal concluded that it was not part of its functions to determine w h e t h e r Mr. Lowry had deliberately misled the Dail, it nonetheless regarded itself as entitled to take into account, in making its findings, Mr. Lowry's apparent lack of candour on that occasion. 5.108 who Lastly, Mr. Lowry in his evidence made much of the fact that it was he details of his dealings with Mr. Austin in connection with brought the Carysfort, the refurbishment of the premises, and the opening of the Isle of Man account, to the attention of the Tribunal. This is true, but occurred belatedly, and only in 2001, at a time w h e n the Tribunal was in the process of examining all of Mr. Austin's accounts and when, as a matter of probability, it was only a question of time before movements from Mr. Austin's account, however covert, to an offshore account of Mr. Lowry would have been discovered by the Tribunal. Production 5.109 of documentation In support of in support of a loan from Mr. David his evidence that his Austin with Mr. Austin arrangement amounted to no more than a loan to assist with the refurbishment of the Carysfort REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter property, 5 Mr. Lowry very belatedly provided 24 t h the Tribunal with certain Page | 132 documentation. Firstly, a d o c u m e n t dated October, 1996, w h e r e b y Mr. Lowry is stated to have acknowledged to Mr. Austin that on 18 th October, 1996, he had received the s u m of ? 1 4 7 , 0 0 0 . 0 0 by w a y of loan, bearing interest at the lending rate of the Irish Permanent Building Society, the interest to accrue annually, and to be repaid on the date of repayment of the loan, which was to be not later than 18 th October, 2001, or upon the earlier sale of 4 3 Carysfort Avenue, Blackrock. Secondly, a d o c u m e n t dated 27 t h February, 1997, which was in the form of a letter from Mr. Austin to Mr. Lowry acknowledging the repayment of ? 1 4 7 , 0 0 0 . 0 0 and interest as promised, following the sale of the Carysfort Avenue property. These two documents were in manuscript form, and both of them, according to Mr. Lowry, in Mr. Austin's handwriting, save for the dating of the first document, the loan agreement, and the signature of Mr. Michael Lowry on that document. A copy of both documents referred to above can be found in the A p p e n d i x to this chapter. 5.110 Mr. Lowry testified that the loan agreement, properly a loan acknowledgement, was a h o m e m a d e d o c u m e n t produced by Mr. Austin, and signed by Mr. Lowry at Mr. Austin's Monkstown apartment on the occasion of his having been in the area attending at the official launch of a commercial premises in Blackrock. The second d o c u m e n t was dated 27 t h February, 1997, some twenty days after the repayment on 7 t h February, 1997. The repayment was arranged, not by Mr. Lowry, but by Mr. Austin, who contacted the Isle of Man bank, with the result that subsequently the necessary banking documents to effect that repayment were sent to Mr. Lowry. After the return of the money, Mr. Austin left the original a c k n o w l e d g e m e n t of debt in an envelope at the offices of Mr. Denis O'Connor, w h o on the evidence heard by the Tribunal knew nothing at that time of the financial dealings between Mr. Lowry and Mr. Austin, having already sent Mr. Lowry the letter of a c k n o w l e d g e m e n t of repayment. 5.111 It will be noted that, although Mr. Austin's letter of 27 t h February, 1997, purports to t h a n k Mr. Lowry for the repayment and furthermore, to t h a n k him for the "prompt return of all funds", the fact is that the return of the funds was organised by Mr. Austin, and not by Mr. Lowry. A n o t h e r f e a t u r e o f t h e letter is that Mr. Austin expresses the hope that Mr. Lowry did not lose out in the buying and selling, a surprising remark in view of Mr. Lowry's evidence that they were in regular if not daily contact, and that the initial arrangement with Mr. Michael Holly was one in which Mr. Austin was intimately involved, from which it s e e m s curious that he would not have been aware of the nature of the final arrangement, w h e r e b y Mr. Holly t o o k over the property on terms which caused no financial loss to Mr. Lowry. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.112 5 Notwithstanding that one of these documents w a s actually delivered to Page | 133 the offices of Mr. O'Connor, and probably during the currency of the McCracken Tribunal, Mr. O ' C o n n o r was never informed o f t h e matter, according to Mr. Lowry. 5.113 W h e n queried as to w h y it appeared that this arrangement between Mr. Lowry and Mr. Austin had not come to the attention of Mr. Austin's wife, his executors or his solicitor, Mr. Lowry's response was that it was an arrangement between trusted friends which he would have honoured, so that there was no need to inform any of those parties. If it is accepted for a m o m e n t that Mr. Lowry and Mr. Austin ordered their relationship as lender and borrower on a basis of honour, then these documents served no purpose. The only purpose documentation of this kind could have served, in the context of a relationship of this nature, was to evidence the arrangement in the event o f t h e passing away or the incapacity of the parties. Where however neither the executors nor the solicitor to the lender, nor his wife, had been informed of these arrangements, there was every reason to believe that Mr. Austin had actually exposed his wife, or other estate, to the loss of a substantial asset. That this prospect could have been accepted by a man in Mr. Austin's position, both in terms of his business experience and the fact that he was suffering from a terminal illness, s e e m s highly implausible. 5.114 Mr. Lowry's evidence was that he was unaware that the ? 1 4 7 , 0 0 0 . 0 0 , paid by Mr. David Austin into the deposit account in his name in the Isle of Man bank, represented the bulk of the ? 1 5 0 , 0 0 0 . 0 0 transferred by Mr. Denis O'Brien to Mr. Austin some months earlier. Likewise, Mr. O'Brien's evidence was that he was unaware that the ? 1 5 0 , 0 0 0 . 0 0 he transferred, in two parts comprising a ? 5 0 , 0 0 0 . 0 0 cheque, and a direct transfer to the Channel Islands account of Mr. Austin, was used to fund the deposit in Mr. Lowry's account. 5.115 Although Mr. Austin had died by the time of the Cooper/Investec disclosure, and therefore his evidence was unavailable to the Tribunal, it is clear that, on any view of the evidence, he was the one person who must have been aware that these monies transferred to him by Mr. O'Brien were subsequently transmitted by him to Mr. Lowry's Isle of Man account. As an individual w h o must have been politically aware, it is reasonable to suppose that Mr. Austin was conscious of the political sensitivities entailed by financial transactions linking two such individuals at that time. Not long before, in the latter part of 1995, he had reason to enhance his consciousness of these matters in as much as the leader of Fine Gael, the then Taoiseach, Mr. John Bruton, had rejected the $50,000.00 party political contribution by Esat Digifone. He betrayed an even sharper consciousness of the implications of any such connections w h e n , in early REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 134 May, 1997, he arranged for that contribution to be routed to Fine Gael by a covert path, disguised as a contribution of his own. 5.116 relevance It is also appropriate at this juncture to mention a characteristic, strikingly evident in the testimony o f t h e principal witnesses, which has particular with regard to the role of Mr. Austin in the various transactions examined in the course of the Tribunal's inquiries. This relates to w h a t might be termed an informal variant of the "Chinese Wall Policy". This is a comparatively recent practice in certain professional organisations for dealing with sensitive information, and its intent has been described as insuring that people are only allowed access to information which is not held in conflict with any other information which they already possess, and its objective has been described as preventing individuals. information flows which might cause a conflict of interest for Evidence has been recounted in this chapter and elsewhere as to the degree of personal friendship that existed between Mr. Austin on the one hand, and each of Mr. O'Brien, Mr. Lowry and Mr. Phelan, on the other, in the case of the latter, less extensive and of short duration but in the case of Mr. O'Brien, both extensive and intimate. This continued until Mr. Austin's death. 5.117 Despite such associations, and recollections of Mr. Austin as a convivial and entertaining person even during his last illness, and the extent to which there was frequent contact between him and both Mr. Lowry and Mr. O'Brien, the evidence given, sought to suggest that he evinced a remarkable degree of reticence and non-disclosure in his dealings. According to Mr. O'Brien, as has already been mentioned, he was never informed by Mr. Austin that, of the ? 1 5 0 , 0 0 0 . 0 0 received by him from Mr. O'Brien for, so Mr. O'Brien contends, the Spanish property, virtually its entirety had been advanced, as a loan to Mr. Lowry. Mr. Phelan was similarly never informed by Mr. Austin to such effect. According to Mr. Lowry, neither had he learned anything from Mr. Austin in relation to the source of the funds proposed to be made available to him, as he contended, on loan. It is of significance, although on a related matter, according to their evidence, that neither Mr. Lowry, Mr. Phelan nor Mr. O'Brien were ever informed by Mr. Austin of all that transpired in relation to the $50,000.00 donation to Fine Gael and specifically, the fact that it had been rejected by the party, and subsequently routed to the party in a disguised format. 5.118 If Mr. Austin's letter of 27 t h February, 1997, is to be viewed as genuine, it would appear that Mr. Lowry never brought him within his confidence in relation to the arrangements he made with Mr. Michael Holly for the ultimate disposal of the Carysfort property, and the arrangements he made with Mr. Holly which already absolved him of any obligation to pay for any of the refurbishments carried out, and which effectively meant that he made no loss on the transaction. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 TWO TRANSACTIONS O R ONE TRANSACTION Page | 135 A purchase by Mr. Denis O'Brien: a loan to Mr. Michael Lowry 5.119 In the course of the evidence, it was suggested to both Mr. Lowry and Mr. O'Brien, suggestions with which they disagreed, that there were not in fact two transactions here but one, namely, a payment to Mr. Lowry by Mr. O'Brien, and that this was the payment alluded to in the course of his conversation with Mr. Barry Maloney. In other words, the question which ultimately arises is whether the evidence supports there having been two separate transactions, coincidentally associated by the use of the s a m e money, or whether there was in essence a payment to Mr. Lowry by Mr. O'Brien, that was hurriedly reversed upon the establishment of the McCracken Tribunal, and later elaborately concealed both from the IPO inquiry in November of 1997, and thereafter from this Tribunal. 5.120 If the versions of events advanced by Mr. O'Brien and Mr. Lowry were in July, 1996, Mr. Aidan Phelan, on the instructions of Mr. accepted, then, O'Brien, transferred ? 4 0 7 , 0 0 0 . 0 0 of the latter's money to an off-shore account in the Isle of Man. The funds were initially lodged in an account of a c o m p a n y associated with Mr. Phelan, and thereafter placed in a new account in Mr. Phelan's name, in terms which did not disclose Mr. O'Brien's ownership of the funds. by way From that account, firstly, the s u m of ? 5 0 , 0 0 0 . 0 0 was debited, and paid of cheque to Mr. David Austin. Subsequently, ?100,000.00 was transferred to an off-shore account of Mr. Austin in the Channel Islands on Mr. Austin's direction that it be transmitted from another off-shore account. That s u m of money was due to Mr. Austin on the purchase of his Spanish property. Those two sums were aggregated by Mr. Austin in a newly designated Irish currency account in the Isle of Man. The sale transaction was documented by an instrument backdated to 12 th August, 1996, but not actually either prepared or executed until early 1998. 5.121 until 16 th The ? 1 5 0 , 0 0 0 . 0 0 remained in Mr. Austin's Channel Islands account October, 1998, w h e n ? 1 4 7 , 0 0 0 . 0 0 was debited from the account and transmitted to an off-shore account in the Isle of Man in the name of Mr. Michael Lowry. This s u m of money represented a loan of that amount to Mr. Lowry f r o m Mr. Austin, to pay for the refurbishment of his newly acquired Carysfort property. W h e n the refurbishments, and indeed the entire project at Carysfort Avenue, were abandoned, that s u m of money was repaid to Mr. Austin, in February, 1997. 5.122 Mr. Austin's arrangement with Mr. Lowry was supported by a h o m e m a d e , but comprehensive, loan a c k n o w l e d g m e n t drawn up by Mr. Austin REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 136 himself, and signed by Mr. Lowry, together with a letter acknowledging receipt of the repayment of the money in 1997. 5.123 In essence, w h a t the Tribunal was told was that there was merely a purchase on Mr. O'Brien's side, and a loan on Mr. Lowry's side, although in each case involving the same money. Covert operations 5.124 Dealing with these two different explanations, of a number of features made to carry c o m m o n to much of the evidence concerning the arrangements through the transactions, the first is the markedly clandestine and covert manner in which the relevant money was moved in the several stages entailed between the withdrawal from Mr. O'Brien's account, payment to Mr. Phelan's Isle of Man Diest account, thereafter to Mr. Phelan's new account in the Isle of Man, from there to the Channel Islands to Mr. Austin, and finally from Mr. Austin to Mr. Lowry's account in the Isle of Man. The m o v e m e n t between the funds of these accounts is traced in the diagram which appears earlier in this chapter. 5.125 W h e n Mr. Phelan, at Mr. O'Brien's direction, paid ? 1 5 0 , 0 0 0 . 0 0 to Mr. Austin, this was not done, as one would have expected, by w a y of a transfer from one of Mr. O'Brien's accounts in Dublin, or by w a y of a cheque drawn on one of his accounts, but rather from an account in the Isle of Man, and even then an account not in the name of Mr. O'Brien, but in the name of Mr. Aidan Phelan. This type of arrangement was probably unique in all of Mr. Phelan's time acting for or on behalf of Mr. O'Brien. "special its only, purpose account", in the The account was described by Mr. O'Brien as a but from the evidence it is clear that its primary, if not case of the transfers to Mr. Austin, was one of purpose concealment. Mr. O'Brien's explanation, that the transfer was effected from one off-shore account to another off-shore account, at the direction of Mr. Austin, whilst far-fetched from any fiscal or ordinary commercial point of view, does not explain Mr. O'Brien's conduct of the account through the agency and name of Mr. Aidan Phelan. 5.126 As to Mr. Lowry, the manner in which he came to be in receipt of ? 1 4 7 , 0 0 0 . 0 0 in a newly opened off-shore bank account in Isle of Man, to which Mr. Austin sent a draft for ? 1 4 7 , 0 0 0 . 0 0 , more than matched the reticence shown by Mr. Phelan, Mr. O'Brien and Mr. Austin in relation to the transfers mentioned in the last paragraph. Although, on the evidence of Mr. Lowry, this s u m was calculated, as far as can be judged, from the evidence, to the pound, to refurbish the Carysfort property, he could offer no satisfactory explanation as to w h y Mr. Austin did not simply write a cheque for that amount, to be lodged to an account REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 137 of Mr. Lowry in Ireland. Furthermore, although the account was set up for the express purpose of refurbishing this property, and calculated as has already been indicated to the pound for that purpose, the person, namely Mr. Denis O'Connor, charged with overseeing the works and their payment, was left completely oblivious to the existence of the fund, notwithstanding the fact that the address given on the account in which this s u m w a s placed was that of Mr. O ' C o n n o r ' s firm, although without its consent or knowledge. 5.127 Once again, and recognising that any bank customer is entitled to confidentiality in his dealings, it seems surprising, for w h a t was ostensibly an arrangement which it w a s asserted involved no Revenue irregularities, and was envisaged as enabling tax allowances to be claimed under the Dual Abode Allowance, and was intended to be administered from Dublin for the purposes of completing refurbishments to a property in Dublin, that it was necessary to apply the designation "no correspondence 5.128 except on request". A further feature of Mr. Lowry's dealings with the Isle of Man bank, is Director" at a time w h e n , as a serving his description of himself as a "Company Cabinet Minister, he was required to and had resigned his directorship in the refrigeration company, Garuda Limited. Mr. Lowry's response w h e n queried on this, to the effect that he remained a c o m p a n y director "in my mind", carries minimal conviction, and can only be realistically viewed as indicating a wish to remain as inconspicuous as possible. Non-attendance by Irish Nationwide (IOM) witness 5.129 any of The Tribunal is not in a position to provide any fully informed view as to the extent, if any, to w h i c h the Isle of Man bank may knowingly have facilitated these covert arrangements, apart altogether from the extent, acknowledged by Mr. Lowry, to which off-shore banks have been used or made themselves available for covert arrangements of this kind. The Tribunal is not entitled to infer from the unwillingness of the Irish owned Isle of Man bank, to make available the evidence of the senior official involved, Mr. Karl Tully, that his evidence would have confirmed or added to a wish for secrecy on the part of the individuals involved in the transaction, but his absence is nevertheless unsatisfactory. Indeed, given the degree of assistance afforded on other matters by a number of financial institutions outside Ireland, the Tribunal views it as reprehensible Fingleton's and not readily or satisfactorily explained by Mr. Michael not remarks in evidence, that Irish Nationwide (IOM) Limited did accede to the request from the Tribunal that Mr. Tully attend. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 5 Page | 138 Non-disclosure 5.130 The second disquieting element, and ultimately one of the most telling elements, in the evidence concerning the transactions examined by the Tribunal in this chapter, is the complete absence of any disclosure of them: in the case of Mr. O'Brien, initially to the board of Esat Digifone prior to the IPO, notwithstanding the inquiries directed into potentially relevant payments, and thereafter to the Tribunal, until they were belatedly notified to it in the aftermath of the Cooper/Investec disclosures; in the case of Mr. Lowry, in failing to disclose to the Tribunal or even his own advisers, whilst representing to the Tribunal that he had afforded access to all relevant information concerning his financial affairs. As already mentioned, it is a matter of high probability that these transactions, would have been discovered by the Tribunal in the course of the examination of Mr. Austin's accounts. 5.131 In consequence of the non-disclosure, the Tribunal was deprived of any opportunity of making inquiry of Mr. David Austin, who died on 1 s t November, 1998, and who, as the person who received f r o m Mr. O'Brien ? 1 5 0 , 0 0 0 . 0 0 , and then provided the bulk of it to Mr. Lowry, was obviously an important witness. This is particularly so, as both Mr. O'Brien and Mr. Lowry were a d a m a n t in their evidence that it was Mr. Austin w h o directed that off-shore locations were to be utilised in his dealings with each of them; in the case of Mr. O'Brien, that it was from an off-shore account that Mr. Austin was to be paid for his Spanish property; and in the case of Mr. Lowry, that it was in an off-shore account that the loan proceeds of ? 1 4 7 , 0 0 0 . 0 0 were to be Where Mr. O'Brien is concerned, it lodged, in a deposit account in his favour. is also of relevance that Mr. Phelan, responsible for m a n a g i n g significant elements of his affairs, did not disclose the relevant elements of the payment to the IPO. In c o m m e n t i n g on the extent of non-disclosure, it is proposed to deal firstly with Mr. Phelan's evidence, then Mr. O'Brien's and lastly, that of Mr. Lowry. Mr. Aidan Phelan: failure to disclose a relatively unique transaction 5.132 Mr. Phelan's evidence concerning his response to queries at the time of the IPO, that whilst he may have r e m e m b e r e d the transaction, that is, as he put it, as a purchase of a property from Mr. Austin, and the payment of ? 1 5 0 , 0 0 0 . 0 0 to that end, he did not remember the account opened in his name in the Isle of Man, is not acceptable in light of the many unique aspects both of the account, and indeed of the payments made from it. most memorable, are as follows: Of those constituent aspects, the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (i) 5 Page | 139 this was probably the only time that Mr. Phelan had ever used his own name on an account set up for the benefit of Mr. O'Brien; (ii) Mr. Phelan, in endeavouring to set up an account for Mr. O'Brien, had firstly to use another account of his own, Diest, in which to shelter the monies temporarily; (iii) this ?150,000.00 was the largest of the payments out of the ? 4 0 7 , 0 0 0 . 0 0 lodged to the account for the purposes of making a number of payments, only one of which is relevant to the Tribunal's inquiries; (iv) the account had been closed by Mr. Phelan a mere matter of months before the inquiries were made; (v) furthermore, in S e p t e m b e r of 1997, if Mr. Phelan's evidence is to be accepted, he had asked Ms. Helen Malone to "tidy which means that both the transaction and the up" the transaction, account must have featured in his consciousness, at least twice, if not more than that in the period of a f e w months prior to the queries raised at the IPO. 5.133 It is of particular significance that the 1997 IPO inquiries concerning accounts of Mr. O'Brien were responded to by reference to a number of small accounts within this jurisdiction, but without reference to a substantial account which, whilst not in his name, was clearly under his dominion, and directly known to be so by Mr. Phelan, w h o controlled the account. Mr. Denis O'Brien: could not remember any of the details 5.134 Mr. O'Brien, w h e n queried regarding inquiries made at the time of the IPO concerning accounts, effectively responded that he could not remember any of the details. His evidence that he did not recall telling Mr. O w e n O'Connell, solicitor, that he should look at the Radio Investments NV account, from which the bulk of the money w a s debited, and that this was a matter that he left to Mr. Phelan, is not so much an answer, but a wholly unsatisfactory excuse. If, as he testified in evidence, this was a simple property transaction agreed in July, 1996, and not in fact concluded until after the Ryder Cup in 1997, it is hard to credit that he could have forgotten even an outline of the relevant details. 5.135 Had inquiries been made of Mr. O'Brien at the time of the IPO regarding this matter, he stated that all that would have emerged was that he had purchased a house. This of course, as appears from the Tribunal's examination of the transaction, is not the case, for at that time there was no documentary REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 140 evidence in existence f r o m which it could have been demonstrated that he had purchased a house from Mr. Austin. Although the primary d o c u m e n t vesting title in Mr. O'Brien w a s backdated to 12 th August, 1996, this was not executed until the early months of 1998, some three months after the IPO inquiry. The absence of any such documentation would no doubt have put those responsible for conducting inquiries, at the time of the IPO, on even further inquiry. Inquiries to Mr. Austin, assuming t h e y were answered in accordance with the evidence heard at the Tribunal's proceedings, might have led to the examination of his accounts, or to queries concerning his accounts, from which truthful answers w o u l d have elicited the information that ? 1 5 0 , 0 0 0 . 0 0 , a s u m well in excess of the threshold of ? 2 5 , 0 0 0 . 0 0 set by Mr. O'Connell, had been covertly transmitted from an offshore account in the Isle of Man under the control of, but not in the name of, Mr. O'Brien to Mr. Austin, and that the bulk of those funds were transmitted by Mr. Austin to an off-shore account of Mr. Lowry in the Isle of Man. Needless to say, had information f r o m Mr. Austin been available to the effect that ? 1 4 8 , 8 1 6 . 9 3 had been repaid by Mr. Lowry to Mr. Austin in February, 1997, this would have given those conducting the inquiry pause for thought, w h e n addressing Mr. O'Brien's explanation that his intended payment to Mr. Lowry had become: "stuck with an intermediary." It seems difficult to doubt that, retransmission in that context, that expression money by Mr. Lowry to must have in referred to the of the Mr. Austin February, 1997, at the time of the establishment of the McCracken Tribunal; that Mr. Austin was in fact the "intermediary" money only got "stuck" 5.136 Austin. referred to by Mr. O'Brien and that the with him, after retransmission to him by Mr. Lowry. If Mr. O'Brien's evidence to the Tribunal is to be accepted, he should have had no reason to omit informing the IPO inquiry of the payments to Mr. Not only did they, according to his evidence, merely represent the purchase price of a holiday home in Spain, they in no w a y connected him with Mr. Lowry. It will be recalled in this regard, that it was Mr. O'Brien's evidence that he knew nothing of the fact that these funds were transmitted by Mr. Austin to a deposit account of Mr. Lowry in the Isle of Man. T h o u g h a large payment, well in excess of the threshold set by Mr. O'Connell, this s u m would have been readily explicable on the basis of the account furnished to the Tribunal by Mr. O'Brien of w h a t he maintains was the situation, and on the basis of w h a t he understood to be the w h e r e a b o u t s of the funds at the time of the IPO. Indeed, he would have been gratified on any ordinary assessment of the situation to have been able to explain such a large payment by what, on the face of it, was in his contention a perfectly simple transaction. The fact remains that no such explanation was provided to the IPO inquiry, and any of the hard facts which might have focused the minds of those conducting the inquiry, were carefully excluded from view. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 141 Mr. Michael Lowry: did not regard the transaction as relevant to the Tribunal's inquiries 5.137 Mr. Lowry's reason for failure to disclose, as part of his initial e n g a g e m e n t with the Tribunal, his dealings with Mr. Austin and his Isle of Man account, was that he did not regard w h a t he considered was the underlying transaction as relevant. He stressed that w h a t w a s ultimately disclosed w a s not a payment to him of possible impropriety, but merely an advance and repayment over a short period of months of a loan for an intended house refurbishment. At the time of his initial e n g a g e m e n t with the Tribunal, there ought to have been no impediment to his disclosing this transaction, which was not only relevant, but within the ambit of his professed willingness to make available to the Tribunal, either personally or through his agent, Mr. Denis O'Connor, full details of all his financial affairs, including all his accounts, whether within the jurisdiction or offshore. 5.138 According to his later evidence, not only was this merely a loan from in his view w a s amply v o u c h e d by supporting clear, Mr. Austin, it was one which documentary material, in the form of a h o m e m a d e , but nevertheless a c k n o w l e d g e m e n t of debt on his part, coupled with w h a t was effectively a receipt for the return of the money in the form of a letter from Mr. Austin in 1997. Indeed, the receipt for the return of the money in the form of that letter must have been relayed to him, either some time in 1997, during the currency of the McCracken Tribunal, or if not then, during the currency of the initial phase of this Tribunal, up to the date of death of Mr. Austin in November, 1998. Furthermore, mirroring the state of affairs related by Mr. O'Brien, Mr. Lowry, on his own evidence, could have had no reason to suspect that the disclosure of this s u m of money might have entailed any embarrassment, since he professed to have no knowledge whatsoever that the money, used to fund w h a t he considered was a loan to him, had in fact been received by Mr. Austin from Mr. Denis O'Brien. There was, if his evidence is accepted, to his mind, no connection between the money transmitted by Mr. O'Brien to Mr. Austin, and the money transmitted by Mr. Austin to him. Neither would it s e e m on the basis of his evidence that Mr. Lowry should have had any concern in identifying Mr. Austin as the source of this loan as, Mr. Lowry had professed himself entirely unaware of Mr. Austin's role in the $50,000.00 donation made on behalf of Esat Digifone to Fine Gael. 5.139 The true position, in the Tribunal's view, is that there was real sensitivity on Mr. Lowry's part, arising from the involvement of Mr. Austin in connection with his Isle of Man account. This was mirrored by, as the Tribunal finds, Mr. O'Brien's parallel sensitivity to the involvement of Mr. Austin in the transmission of money from Mr. O'Brien's covert Isle of Man account to Mr. Austin's Channel Island account. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.140 5 A further feature of the so-called loan arrangement concerns the One Page | 142 retention by Mr. Lowry of w h a t would appear to be relevant documentation. of the distinguishing features of all aspects of Mr. Lowry's testimony was the extent to which he had failed, over a considerable period of time, during which he was the subject of scrutiny his by a Tribunal of Inquiry, to retain relevant documentation concerning involvement in any of the other transactions inquired into by the Tribunal. 2001, those transactions, Notwithstanding that at the time of his evidence in which on any view of the evidence, entailed an involvement on his part, and were therefore live transactions, Mr. Lowry appears to have adopted a policy of non-retention of relevant documentation. Yet the Tribunal is asked to accept that between February, 1997 and April, 2001, he had retained documentation concerning a loan arrangement which was long discharged, and which in any case, reflected an obligation of honour resting on friendship, rather than on any commercial basis. 5.141 that be It was Mr. Lowry's evidence that in acquiring the Carysfort property, he intended to avail of his entitlement, as a Minister, to the Dual A b o d e Allowance. If so, Mr. Lowry would have been obliged to produce all material documentation to Revenue in order to qualify for that Allowance. It is hardly likely that Mr. Lowry, w h o already recognised the necessity of engaging with Revenue on outstanding taxation due on payments received from Mr. Ben Dunne, would have regarded the production to Revenue of documentation relating to his Isle of Man account as a palatable prospect. Was there a sale of a holiday home to Mr. Denis O'Brien? 5.142 It is true that some limited measure of evidence did emerge of an intention on the part of the late Mr. Austin to sell his Spanish holiday home. This appeared from the evidence of Mr. O'Brien in terms of his account of his conversation with Mr. Austin in the latter's London apartment, where Mr. Austin explained his desire to dispose of properties in contemplation of w h a t he felt could be his relatively imminent death. It also appeared from the evidence of the late Mr. Austin's wife, Mrs. Maureen Austin, and further appeared from a d o c u m e n t in the form of a note prepared by Mr. Perera of Valmet, although the latter d o c u m e n t referred to a contemplated disposal to a friend rather than specifically to Mr. O'Brien, and made no reference to a price. 5.143 However, such sale as was mentioned in evidence appears to have degree in circumstances of secrecy, delay, been shrouded to a remarkable ambivalence and w a n t of coherent rationale in the transaction itself. It is stated to have taken to place have in July, 1996, been which was supported in the by a document month. No backdated purportedly executed following d o c u m e n t of any sort w a s executed at that time. It was not until shortly before 4 t h REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 143 February, 1998, that the relevant d o c u m e n t to carry through the purchase was in fact executed. 5.144 The Tribunal is asked to accept that a purchase did take place in July, If the 1996, although nothing concrete was done about it until January, 1998. evidence of Mr. O'Brien, Mr. Aidan Phelan, Ms. Helen Malone and Mr. Michael Lowry was accepted, it would have to be concluded that Mr. Austin, having received ? 1 5 0 , 0 0 0 . 0 0 from Mr. O'Brien, in fulfilling his obligations under his agreement to sell, had behaved in an uncharacteristically inefficient, if not cavalier fashion, in omitting to take any steps to carry through the transaction, either in failing himself to take any such steps, or in failing to instruct Mr. Perera to take any steps. He had thereby allowed his affairs to lapse into a state of disarray which was wholly at odds with the manner in which, if Mr. Lowry's evidence was accepted, he had transacted his loan arrangement. If Mr. Lowry's evidence was accepted then whilst, either by reason of ill-health or an uncharacteristic neglect of his business affairs, Mr. Austin had failed to process the purchase transaction, or instruct his agent so to do, notwithstanding the fact that he was retaining ? 1 5 0 , 0 0 0 . 0 0 of Mr. O'Brien's money, at the same time he took the most careful precautions to d o c u m e n t a loan arrangement, described as resting on a footing of honour, as between himself and Mr. Lowry. 5.145 Mr. O'Brien asks the Tribunal to accept that the 1996 sale was not processed until February, 1998, by reason of delays, for which Mr. Austin was primarily responsible, although due, according to Mr. O'Brien, to his health status. This proposition is utterly at variance with the facts that in late 1996, Mr. Austin was able to put in place all of the arrangements to secure the opening of a deposit account for Mr. Lowry in an Isle of Man bank, and further, to arrange for the lodging to that account of ? 1 4 7 , 0 0 0 . 0 0 , of Mr. O'Brien's money. Some months later, notwithstanding his health status, suggested as being responsible for his failure to attend to paperwork, he was able to put in place further banking arrangements necessary to ensure the retransmission of that money from Mr. Lowry's Isle of Man bank to his own bank in the Channel Islands. The Tribunal is asked to accept that Mr. Austin, by reason of his health status, delayed in attending to the processing of the sale of his holiday home whilst, having received the money in payment for the property, he w e n t to considerable trouble to arrange to transfer it to, and subsequently retransfer it from, an Isle of Man bank account which he himself set up for Mr. Lowry. 5.146 dealings During the same period, Mr. O'Brien's behaviour in failing to take any is markedly at odds with the by so resourceful and manner of an steps to complete this transaction s h o w n with other transactions energetic entrepreneur. It is also at odds with the manner in which, during part of the same REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 144 period, Mr. O'Brien had seen fit to arrange for his agents to make contact with Mr. Austin in France so as to secure a letter purporting to confirm that the $50,000.00 Esat Digifone donation had actually been transmitted to Fine Gael. 5.147 Whilst, in light of the evidence of Mrs. Austin and the contents of Mr. Perera's file note, it s e e m s reasonable to conclude that Mr. Austin had intended to sell his Spanish holiday home, and indeed sold it to Mr. O'Brien, there is no rational basis upon which it could be concluded that this sale was accounted for by the transmission in July, 1996, of ? 1 5 0 , 0 0 0 . 0 0 from Mr. O'Brien's account in the Isle of Man to Mr. Austin's Channel Island account. covert Neither possession of, nor title to, the property passed f r o m Mr. Austin to Mr. O'Brien at that time, and further, there was not even the skimpiest recorded a c k n o w l e d g e m e n t that full payment in advance had been made for the property. There is no level of intimate friendship or attachment that could have supported such a haphazard arrangement in the case of a terminally ill v e n d o r who continued in possession o f t h e property until October, 1997. 5.148 Once the funds had been returned by Mr. Lowry to Mr. Austin in February, 1997, they remained in Mr. Austin's Channel Island account, and were applied by him for other purposes in April, 1997, and in July, 1997. On 28 t h April, 1997, ?33,000.00 was debited to the account in connection with the transmission to Fine Gael, via the late Mr. Frank Conroy, of the $50,000.00 The final the Esat/Telenor donation, disguised as a donation by Mr. Austin himself. balance of the funds, 3rd amounting to ? 1 1 4 , 5 1 8 . 6 9 , was withdrawn f r o m account on July, 1997, and transmitted to A C C Bank in repayment of a loan held by Mr. Austin. As title to the Spanish property was transferred by Mr. Austin to Mr. O'Brien in early February, 1998, it is reasonable to conclude that, at some point after the funds were retransmitted by Mr. Lowry to Mr. Austin in February, 1997, they were appropriated to the agreement for the sale of that property. 5.149 Although it might appear that such appropriation must have occurred sometime before 3 r d July, 1997, w h e n the final balance o f t h e funds were applied by Mr. Austin for his own purposes, that does not necessarily follow. Mr. Austin had a multiplicity of accounts with Bank of Ireland, Jersey, including the dollar account in which he held the $ 5 0 , 0 0 0 . 0 0 donation to Fine Gael. Instead of utilising those funds for the transmission of the donation to Fine Gael in April, 1997, he instead withdrew sufficient from the Irish pound account in which he held only the funds retransmitted from Mr. Lowry in February, 1997. Mr. Austin may also have utilised those Irish pound funds, instead of funds in accounts held by him in other currencies in July, 1997, to facilitate the repayment of his Irish pound loan to A C C Bank. In Mr. Austin's absence, it is not possible for the Tribunal to determine precisely w h e n that appropriation occurred, save that it was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 145 at some point over the twelve month period from February, 1997, to February, 1998. CONCLUSIONS One transaction: a payment to Mr. Michael Lowry that got stuck with an intermediary 5.150 purchase unrelated If, notwithstanding the concealment of these two transactions by both on the one transactions hand, and the loan arrangement on the other, which coincidentally involved the same money, were it is Mr. O'Brien and Mr. Lowry, the Tribunal was to accept the proposition that the impossible to accept that the late Mr. Austin, who was privy to and fully aware of all that was involved in each instance, and a friend to both Mr. O'Brien and Mr. Lowry, and was an able business executive with an acute political sensitivity, would contemplate engineering, or even countenance a connection between the two transactions that could compromise his two close friends, unless he felt that his entire actions reflected what was requested of him. 5.151 On any reasonable analysis of the evidence, there was a deliberate on the part of both Mr. O'Brien and Mr. Lowry of the two concealment transactions on every occasion when it would have been relevant to disclose them: in Mr. O'Brien's case, to the IPO in the first instance, and latterly to this Tribunal: in Mr. Lowry's case, to his advisers, and also to this Tribunal. The suggestion that in one case there was merely a purchase of property, and in the other, a friendly loan arrangement, was a belated attempt retrospectively to clothe those transactions with some commercial reality, in circumstances Not prompted by a realisation that at some point they might be uncovered. O'Brien or Mr. Michael Lowry in these explanations to make surprisingly there was insufficient confidence on the part of either Mr. Denis appropriate disclosure either to the IPO, or to this Tribunal. 5.152 The evidence discloses the making of a carefully planned and covert payment of ?147,000.00 by Mr. O'Brien to Mr. Lowry through the agency of Mr. Aidan Phelan and the late Mr. Austin, that was hastily repaid out of fear of possible disclosure at the time that the McCracken Tribunal was established. The objective reality of the covert and contrived elements of the money trail, whereby ?147,000.00 o f t h e ?150,000.00, transmitted by Mr. O'Brien to Mr. Austin, and within a short time transmitted by Mr. Austin to Mr. Lowry, was consistent with Mr. O'Brien's own evidence. 5.153 It is supported by his evidence that he had intended to make a Mr. Lowry; that and that he had earmarked funds had funds for that become "stuck purpose with in an Bank those payment to Woodchester REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 The proposition that in that context, W o o d c h e s t e r Bank, from Page | 146 intermediary". which the ? 4 0 7 , 0 0 0 . 0 0 , of which the ? 1 5 0 , 0 0 0 . 0 0 was a part, was debited, " w a s an intermediary", is wholly unconvincing, having regard to the fact of Woodchester's wholly passive role as merely the bank from which the monies were transmitted. From the evidence, it is clear that it was through the intermediation of Mr. Aidan Phelan, and the covert use of two of his accounts in the Isle of Man, that the ? 1 5 0 , 0 0 0 . 0 0 was transmitted to Mr. Austin's Channel Island account. Subsequently, it was through the intermediation of Mr. Austin that those funds were transmitted to an account of Mr. Lowry in the Isle of Man. W h e n the funds were retransmitted by Mr. Lowry to Mr. Austin in February of 1997, at the time of the establishment of the McCracken Tribunal, it w a s with Mr. Austin that the funds, as Mr. O'Brien had stated, became "stuck". 5.154 The Tribunal accordingly finds that a payment of ? 1 4 7 , 0 0 0 . 0 0 was made by Mr. Denis O'Brien to Mr. Michael Lowry, indirectly, through the conduit of Mr. Aidan Phelan, and the late Mr. David Austin, during a period w h e n Mr. Lowry held public office, in circumstances giving rise to a reasonable inference that the motive for making the payment was connected with the public office then held by him, namely the office of Minister for Transport, Energy & Communications, and which payment was accordingly a payment within the meaning of paragraph (e) of the Terms of Reference of the Tribunal. 5.155 The circumstances which give rise to that inference are as follows: (i) the covert and secretive manner in which the payment was made; (ii) the absence of any commercial purpose for the payment; (iii) the non-disclosure by Mr. Denis O'Brien and Mr. Aidan Phelan of the payment of ? 1 5 0 , 0 0 0 . 0 0 made by Mr. Denis O'Brien to the late Mr. David Austin in July, 1996, to the Esat Digifone inquiry held in advance of the Esat T e l e c o m IPO, in November, 1997; (iv) the non-disclosure by Mr. Michael Lowry of the Irish Nationwide (IOM) account opened in his name on 21 s t October, 1996, and the provision of ?147,000.00 to him by Mr. David Austin which was lodged to that account, to the Tribunal in 1999, and his belated disclosure in 2 0 0 1 , w h e n it was likely that the Tribunal would discover it; (v) the statement made by Mr. Denis O'Brien to Mr. Barry Maloney that he had made a payment to Mr. Michael Lowry in circumstances immediately referable to the public office then held by him. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5.156 5 The source o f t h e s u m of ? 1 4 7 , 0 0 0 . 0 0 lodged on 21 s t October, 1996, Page | 147 to account number 0 2 3 / 0 1 / 0 1 5 0 5 with Irish Nationwide (IOM) Limited, being an account held in the name of and for the benefit of Mr. Michael Lowry, was the proceeds of the payment made by Mr. Denis O'Brien to Mr. Michael Lowry, through the conduit of off-shore accounts in the name of Mr. Aidan Phelan, and the late Mr. David Austin. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 6 P a g e | 148 T H E MANSFIELD TRANSACTION INTRODUCTION 6.01 At the time w h e n Mr. Michael Lowry first gave evidence to the Tribunal, in June, 1999, he was actively involved in a property venture in the north of England, at Mansfield, in Derbyshire. The acquisition of that property, in Mr. Lowry's name, had completed j u s t three months earlier in March, 1999, with funds transmitted from a London bank account of Mr. Denis O'Brien with Credit Suisse First Boston to Mr. Lowry's UK solicitor for that purpose. This was the second occasion on which funds, which originated in an account of Mr. O'Brien, terminated in an account where they were held for the benefit of Mr. Lowry. Approximately three months after his evidence, further such property acquisition in the Mr. Lowry embarked upon a and UK, involving similar personnel associations, in this instance at Cheadle, near Manchester. This chapter will examine the context of, and the course of, the Mansfield transaction, leaving the final conclusions to be set out at the end of the next chapter, which deals with the Cheadle transaction. Those conclusions will be found at Chapter 7. 6.02 In subsequent evidence, Mr. Lowry was to state that he did not in Like other 1999, consider that Mansfield transaction relevant to the Tribunal. matters dealt with in this Volume, each came to Tribunal attention only in 2001, the Cheadle transaction being reported to the Central Bank, and thence to the Tribunal, by Investec Bank, concerned over aspects of its lending arrangements that had come to light, and the Mansfield transaction being notified by Mr. Aidan Phelan, after the imminent notification to the Tribunal o f t h e Cheadle transaction, became apparent. 6.03 funding Public sittings in relation to both transactions duly followed, after the Tribunal had determined that their circumstances, in particular, the respective arrangements, and the persons with w h o m Mr. Lowry was in each instance associated, fell within its Terms of Reference. A s u m m a r y of the main matters to emerge in that evidence in 2 0 0 1 will now be set forth in chronological sequence, together with some further evidence relative to each transaction, which e m e r g e d in later sittings in 2002, and again in 2009, w h e n Mr. Christopher Vaughan, the solicitor w h o acted on behalf of Mr. Lowry, belatedly attended to give evidence. In due course it will be necessary to determine whether or not the enablement of these transactions wholly or partially constituted payments or gifts to Mr. Lowry within the T e r m s of Reference. 6.04 Because the Mansfield transaction was the earlier in time, and is in some ways the more readily susceptible to analysis, it is appropriate to set forth the evidence heard relating to it first. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 6.05 5 However, before approaching either transaction, it is necessary to refer Page | 149 to some initial dealings had by Mr. Lowry with persons who were associated with them. These relate to the provision of a mobile telephone facility for him, not long after he resigned from office as a Government Minister in November, 1996, followed by some inconclusive dealings with a view to a possible realignment of his business, Garuda Limited trading as Streamline Enterprises, that on any appraisal seem to have had some relevance to the circumstances of his subsequent involvement in the UK property ventures. THE MOBILE 6.06 TELEPHONE Mr. Lowry On his traumatic withdrawal from office as a Minister, experienced the abrupt withdrawal of all the communications and other support systems that had gone with his position. He was also affected by the intense media scrutiny into his affairs at the time, and raised with Mr. Denis O'Connor, not at that time his accountant, but an associate and friend since 1986, the possibility of obtaining a mobile telephone facility with the greatest possible privacy. Although Mr. O'Connor had himself a client who dealt in mobile phones, he reckoned the desired objective would better be served by obtaining the assistance of Mr. Aidan Phelan, who was known to him, and acted for a major distributor. To this end he telephoned Mr. Phelan, and asked him to arrange a mobile phone for Mr. Lowry. Obviously Mr. Lowry could have taken out the facility himself, but would have been required to disclose and to prove his identity. Accordingly, to ensure the required confidentiality, Mr. Phelan obtained a phone and account directly from his client, on a basis that he was effectively the subscriber. The initial accounting arrangement was that calls were billed to Mr. Phelan, but the account was then passed by him to Mr. O'Connor to deal with, and it was contemplated between them that the account would subsequently be listed in some other person's name, so that the facility was not traceable to Mr. Phelan. This was in or around February, 1997, and in Mr. Phelan's recollection was probably the only occasion on which he had obtained a mobile telephone in this manner. 6.07 However, it seems that Mr. Lowry lost his PIN number, unwisely contacted Eircell directly in that regard, and an internal "leak" to the Press led to an article appearing in the Sunday World newspaper, identifying Mr. Phelan as being the donor of the phone to Mr. Lowry, and referring to him as being O'Brien having money man", been a low profile Upon person, the the publication becoming caused public, him "Denis some or words similar. Mr. Phelan commented in evidence that, embarrassment, but he expressed relief that the article had not appeared in a broadsheet newspaper. matter Mr. O'Connor cancelled the number of the account, and named himself through his firm as subscriber, since which time he had paid the bills, and had been recouped by Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Lowry. 5 Recalling the incident and its surrounding circumstances, Mr. Lowry was Page | 150 not inclined to attach much importance to it. REALIGNMENT 6.08 TALKS Not long after the article in The Sunday World appeared, either in late February, 1997, or soon thereafter, it appears that a brief informal meeting took place in Mr. Denis O'Connor's office in Foxrock, attended by Mr. O'Connor, Mr. Lowry and Mr. Phelan, in which the mobile telephone incident was discussed, in a context of sorting out what had happened. This was identified as the first Whilst nothing further occasion upon which Mr. Lowry and Mr. Phelan had met. was then discussed, Mr. Phelan did indicate interest to Mr. O'Connor as to how Mr. Lowry and his business were then faring. On foot of this, Mr. O'Connor conveyed to Mr. Phelan that the position of Garuda was such that some form of strategic alliance would merit consideration. Mr. Phelan had a business relationship with a Mr. David O'Keeffe, Managing Director of Masser Hammond, which he thought might be of interest in this regard, and a series of perhaps seven or eight meetings between Mr. Phelan and Mr. Lowry then ensued over the summer of 1997, and into 1998, enquiring into this and other possible business associations. Although matters progressed to the stage of Mr. O'Keeffe visiting Mr. Lowry's Thurles premises, no successful conclusions to any of these discussions resulted. For all the consultancy services undertaken by Mr. Phelan, he furnished Mr. Lowry, in 1999, with a fee note for ?4,840.00 being ?4,000.00 plus VAT, which was duly paid. rise to any concrete agreement. Mr. Phelan indicated in evidence that he would probably have charged Mr. Lowry a higher fee if the various discussions had given 6.09 Over this period, Mr. Lowry and Mr. Phelan socialised together from together: many to time to time, and as Mr. Lowry put it, went on one or two "tears" Ben Dunne, and the basis upon which Mr. Lowry was topics were discussed between them, including Mr. Lowry's relationship with Mr. being subjected considerable "flak" over the GSM issue, both having been matters which then received extensive media attention. Regarding the latter matter, Mr. Lowry stated that he made it clear to Mr. Phelan that his conduct had been above reproach, and that he had neither interfered in nor influenced, the outcome of the GSM competition; whilst Mr. Lowry accepted that he would have inquired of Mr. Phelan as to how Esat Digifone was faring, he was insistent that Mr. Phelan had not communicated to him the nature of the two controversies that were raging within Esat Digifone in the weeks immediately preceding the flotation of Esat Telecom, or Mr. Phelan's role in events relating to those matters. Neither did the late Mr. David Austin relate any such matters to Mr. Lowry, and Mr. Lowry accordingly stated that he was then aware only in the most general terms of some degree of internal friction within the two Esat companies, as was then reported upon in the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 151 business pages of various publications, and he learned of the matters giving rise to the two controversies only when they were brought to his attention by the Tribunal in 2001. Accordingly, the Tribunal was asked to accept that, despite Mr. Lowry having involved, been the focus of controversy within Esat Telecom made and Esat Digifone concerning matters in which Mr. Phelan and Mr. David Austin were no mention of any aspect of these matters were by either individual to Mr. Lowry, even though in Mr. Phelan's case there was a close acquaintanceship, and in Mr. Austin's case, at least according to Mr. Lowry, a longstanding and close friendship. THE MANSFIELD ACQUISITION Dealings between Mr. Michael Lowry and Mr. Kevin Phelan 6.10 In October or November, 1997, through a mutual friend from the Holycross area of County Tipperary, it was Mr. Lowry's evidence that he was made aware that a person named Kevin Phelan was anxious to make contact with him. Mr. Kevin Phelan is a property development consultant, who carries on business in England, and resides in Northern Ireland. Although no relation to Mr. Aidan Phelan, Mr. Kevin Phelan had subsequent to his initial meeting with Mr. Lowry, become associated with Mr. Aidan Phelan, and also Mr. Denis O'Brien, in connection with two English property ventures. Mr. Lowry stated that he agreed that Mr. Kevin Phelan might contact him, but without knowing the nature of the intended business. He received a short phone call from Mr. Kevin Phelan, and it was arranged that the two would meet in Monaghan. In the course of that meeting, Mr. Kevin Phelan explained the nature of his business, indicating that he was actively involved in the UK property market, and had facilitated a number of Irish investors satisfactorily, in identifying properties and arranging transactions there; he gave Mr. Lowry to understand that he felt he would be a good prospect, and enquired whether or not Mr. Lowry would be interested in a venture of that sort. Indeed, it appeared to Mr. Lowry that Mr. Kevin Phelan seemed to feel that there were extensive funds at Mr. Lowry's disposal, or as Mr. Lowry put it in evidence that, "[he] could buy London". if Mr. Phelan identified an appropriate Mr. Lowry sought to let financial Mr. Phelan down gradually in that regard, and the meeting ended on a basis that, property, then, subject to constraints, Mr. Lowry would be interested in getting involved. 6.11 They parted, and it was not until about June or July, 1998, that Mr. He then stated that he had a Lowry recalled Mr. Kevin Phelan renewing contact. small development opportunity in Mansfield, that he thought merited exploration on Mr. Lowry's part. They again met in September, 1998, and on this occasion Mr. Phelan also introduced Mr. Lowry to Mr. Christopher Vaughan, a Northampton solicitor who had acted in previous transactions initiated by Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Phelan, who it was proposed would 5 undertake the legal aspects of any Page | 152 transaction in relation to the Mansfield property on Mr. Lowry's behalf. From his own assessment o f t h e property, allied to Mr. Kevin Phelan's positive advice, Mr. Lowry resolved to take an interest, but explained that an outright purchase was not financially feasible, w h e r e u p o n Mr. Kevin Phelan indicated he was skilled at putting combinations of investors together, that it was feasible for Mr. Lowry to take a part interest, and then have Mr. Phelan seek to secure some one or more other investors to take up the balance of the investment. 6.12 dealings At the time of that renewed contact, Mr. Kevin Phelan had also had in the meantime with Mr. Aidan Phelan, and Mr. Denis O'Brien, in connection with two substantial UK property ventures. Mr. Lowry testified in 2 0 0 1 that he had been entirely unaware of that association, which related to a transaction at Luton, in which Mr. Aidan Phelan and Mr. O'Brien had been joint investors, and a s u b s e q u e n t transaction relating to the Doncaster Rovers Football Club ground, in relation to which Mr. O'Brien w a s stated to be the sole investor, assisted by Mr. Aidan Phelan as his adviser. Matters that subsequently came to light were to make the latter transaction the subject of extensive examination by the Tribunal. 6.13 T h a t initial introduction of Mr. Lowry to Mr. V a u g h a n in S e p t e m b e r , 1998, as outlined in evidence by Mr. Lowry in 2001, and as conveyed to the Tribunal by Mr. V a u g h a n in correspondence and at a private meeting, was a relatively brief encounter, which entailed a single meeting between Mr. Lowry and Mr. V a u g h a n at the latter's office in Northampton, at which discussion was confined to the prospective Mansfield purchase. W h a t the Tribunal was not told in 2001, either by Mr. Lowry in evidence, or by Mr. V a u g h a n in correspondence, or at that private meeting, was that the interaction between t h e m in S e p t e m b e r , 1998, was considerably more extensive. It later emerged that their dealings on that occasion c o m m e n c e d on the evening of 23 r d S e p t e m b e r , 1998, w h e n Mr. Lowry, Mr. Kevin Phelan and Mr. Christopher V a u g h a n met outside Mr. V a u g h a n ' s office, primarily in relation to the Doncaster Rovers transaction, and extended beyond the meeting in Mr. V a u g h a n ' s office on 24 t h S e p t e m b e r , 1998, w h e n Mr. V a u g h a n drove Mr. Lowry to an appointment, a car journey of in excess of one hour's duration. In the course of w h a t occurred during the previous evening, and during the car journey, Mr. V a u g h a n formed the impression that Mr. Lowry also had a "total involvement" 25 t h in the Doncaster Rovers transaction, and wrote to him in those terms on those September, 1998. The Tribunal however knew nothing of it was conducting its investigations into the Mansfield matters w h e n purchase in 2001. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 6.14 5 On foot of w h a t was agreed between Mr. Kevin Phelan and Mr. Lowry, negotiated a price of S t g . ? 2 5 0 , 0 0 0 . 0 0 with the vendors of the Page | 153 Mr. Phelan property, and it was agreed that Mr. Lowry would pay a deposit of 10% of that amount, in order to procure a 10% share of the property ownership, leaving Mr. Phelan to obtain investors for the 9 0 % balance. would be able to do. This, he assured Mr. Lowry, he Mr. Michael Lowry enters a contract to purchase for Stg.?250,000.00 6.15 In pursuance of this arrangement, in or around December, 1998, Mr. Lowry put Mr. V a u g h a n in funds to the extent of the S t g . ? 2 5 , 0 0 0 . 0 0 deposit, using funds that he had earlier withdrawn from one of his Irish bank accounts at Thurles, County Tipperary. But the signing of the contract, referred to in England as the exchange of contracts, was significantly delayed, and this did not proceed until February, 1999, at which time the deposit was paid over by Mr. Vaughan. No further funds had by then been arranged, although the date of completion was fixed for 18 th March, 1999, on the basis of Mr. Kevin Phelan procuring suitable investors. Given the element of risk to his deposit, Mr. Lowry stated that he would not have become involved, unless convinced by Mr. Phelan that those investors would be obtained. However, having fully assessed the site and all proposed arrangements, including certain possibilities in relation to planning permission, Mr. Lowry in all the circumstances felt content to undertake any element of risk involved in committing himself to the contract. It must be borne in mind that, if Mr. Phelan had not obtained such an investor or investors, Mr. Lowry would have been liable not only to forfeiture of his S t g . ? 2 5 , 0 0 0 . 0 0 deposit, but to an order for payment of the balance. In other words, although standing to gain no more than 10% of any potential profit, he was placing himself at risk for 100% of the liability. 6.16 Mr. Kevin Phelan gave Mr. Lowry to believe that a number of approaches to prospective investors were made by him, although he did not learn the identity of any such persons, and he himself had made no approaches to any investors. transpired In his evidence to the Tribunal, Mr. Lowry testified that w h a t in fact was that Mr. Aidan Phelan, w h o s e previous association with his namesake was at that stage, according to Mr. Lowry, unknown to him, was introduced to the project. Mr. Lowry said that he inquired from Mr. Kevin Phelan if Mr. Aidan Phelan was aware of the identity of his intended partner, and was content to proceed, and Mr. Kevin Phelan reassured him to that effect. Mr. Lowry also expressed some surprise at discovering that Mr. Kevin Phelan had already undertaken previous UK property ventures, in which Mr. Aidan Phelan had an involvement. However, Mr. Lowry's evidence to the Tribunal in this regard, given Rovers at a time w h e n the Tribunal was not yet inquiring into the Doncaster REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 154 transaction, was subsequently s h o w n to be incorrect, as, in the course of later evidence concerning Doncaster Rovers, Mr. Lowry himself testified that he had been aware of Mr. Aidan Phelan's dealings with Mr. Kevin Phelan in relation to Doncaster Rovers from at least as early as S e p t e m b e r , 1998. 6.17 According to Mr. Lowry, it was in the immediate aftermath of Mr. Kevin Phelan receiving a letter, by w a y of completion statement from Mr. V a u g h a n , dated 10 th March, 1999, requiring a total balance of S t g . ? 2 3 0 , 5 4 6 . 4 2 to be paid to enable the Mansfield sale to be completed by 18 th March, 1999, that Mr. Kevin Phelan informed Mr. Lowry, for the first time, that he had approached Mr. Aidan Phelan as a prospective partner. Mr. Lowry and Mr. Aidan Phelan met, and the 15 th March, 1999, from Mr. Aidan Tribunal was provided with a letter dated Phelan to Mr. Lowry, referring to that meeting, and to discussions had with Mr. Kevin Phelan. In that letter, Mr. Aidan Phelan confirmed a general interest in the Mansfield project, and other possible property opportunities in the UK, referred to a suggestion by Mr. Lowry of a 7 5 / 2 5 partnership arrangement between t h e m in Mr. Aidan Phelan's favour, but indicated a preference for a 9 0 / 1 0 division, with some provision for Mr. Lowry and Mr. Kevin Phelan being "rewarded disproportionately on the upside". As to the s u m of S t g . ? 2 3 0 , 5 4 6 . 4 2 exceeding reflected the purchase price less the deposit, this w a s because that balance provision for such matters as stamp duty, Land Registry fees, and Mr. V a u g h a n ' s fees. Accordingly, Mr. Lowry's S t g . ? 2 5 , 0 0 0 . 0 0 deposit represented somewhat less than the 10% of the full amount of the cost of the transaction. The money moves 6.18 Following receipt of Mr. Aidan Phelan's letter of 15 th March, 1999, Mr. Lowry recalled having further discussions with Mr. Aidan Phelan, on foot of which he stated that the Mansfield transaction was concluded on the 9 0 / 1 0 basis proposed by Mr. Aidan Phelan. Given that the vendor's solicitors were invoking completion procedures in this regard, there w a s obviously a high degree of urgency in making available the balance o f t h e purchase price. Before resuming the further dealings had between Mr. Lowry and Mr. Aidan Phelan, it is therefore necessary to note the manner in which the requisite money was made available to Mr. Christopher V a u g h a n , to enable such completion. 6.19 By the time of these events, and indeed until about mid-1999, Mr. Aidan Phelan had established a very close business and financial association with Mr. Denis O'Brien, as an adviser and associate, and his involvement in a wide range of matters relating to Esat Digifone and otherwise has already been noted. Mr. Aidan Phelan was in addition much immersed in other corporate ventures pursued by Mr. O'Brien, two in particular having been the acquisition of the Quinta Da Lago resort in the Portuguese Algarve, and of a shareholding in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Versatel T e l e c o m NV. 5 Both Mr. O'Brien and Mr. Aidan Phelan testified that the Page | 155 latter had carried out substantial w o r k on both projects, and that, in or around December, 1998, discussions t o o k place between the two, in relation to a payment of fees on account to Mr. Aidan Phelan. These were alluded to in two m e m o r a n d a that were produced to the Tribunal in 2001, the first of which was from Mr. Aidan Phelan to Mr. O'Brien, and dated 22 n d December, 1998. It referred to discussions earlier that day, regarding Mr. Aidan Phelan's w o r k on both projects, to little or no fees having to that date been drawn by him, and alluded to agreement that, w h e n there was liquidity in Mr. O'Brien's stock in Versatel T e l e c o m NV in particular, a percentage fee should be payable. This, it Mr. was stated, should be at a rate of 3%, up to a m a x i m u m of $1.5 million. O'Brien had added a brief handwritten entry to the m e m o r a n d u m , indicating that he was in agreement with its contents. 6.20 this Both Mr. O'Brien and Mr. Aidan Phelan also referred to a second m e m o r a n d u m from the latter to the former, dated 25 t h March, 1999, relating to proposed advance payment of fees, which referred to a telephone conversation between t h e m on that day, and stated that Mr. Aidan Phelan was proceeding to make a drawing in the amount of Stg.?300,000.00, on w h a t was described as the Credit Suisse First Boston account, as an advance on Versatel fees. There was again a brief manuscript indication of agreement to this from Mr. O'Brien on the m e m o r a n d u m . The account there referred to was a substantial one held by Mr. O'Brien in the London branch of the Credit Suisse First Boston Bank, over which Mr. Aidan Phelan had drawing authority, and was used by Mr. O'Brien as a facility to enable the discharge of significant amounts owed by him. 6.21 by On 29 t h March, 1999, S t g . ? 3 0 0 , 0 0 0 . 0 0 was debited from this account Phelan, and transmitted directly to the client account of Mr. Mr. Aidan Christopher V a u g h a n , at his Northampton practice address, where it w a s credited to Mr. Lowry. Mr. V a u g h a n forthwith applied the preponderance of that amount, to discharge the balance of the price of the Mansfield property, to the vendor's solicitors in completion o f t h e sale, in respect of which a w e e k had elapsed since the agreed completion date. 6.22 Mr. O'Brien stated that he had neither inquired of Mr. Aidan Phelan, nor been informed by him, of this intended application o f t h e fees payment made, and that he became aware of any alleged connection on his part with UK property ventures involving Mr. Lowry, only w h e n matters pertaining to Investec Bank, and the latter of the two UK transactions, Cheadle, were brought to his attention, in March, 2001. Had he known in March, 1999, that the money from his account was primarily to be applied to complete a purchase in respect of which Mr. Lowry was to be the registered owner, he stated that it would not necessarily have REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 156 caused him concern, as Mr. Aidan Phelan was entitled both to the money, and to do business with w h o m s o e v e r he wished, but the question did not in any event arise. 6.23 As to liquidity in Mr. O'Brien's Versatel shareholding, which according to the m e m o r a n d u m of December, 1998, was to trigger Mr. Phelan's entitlement to an advance payment of his fees, Mr. O'Brien testified that he sold a small amount of his holding, in the following June or July, 1999. He a c k n o w l e d g e d that potential no s u b s e q u e n t payment to Mr. Aidan Phelan in respect of the full balance of his entitlement to fees, as referred to in the m e m o r a n d u m , had since been made. He further accepted that no documentation relating to this S t g . ? 3 0 0 , 0 0 0 . 0 0 payment, other than the two rather basic m e m o r a n d a , was available, whether by w a y of invoice, receipt, accounting entry, V A T or other taxrelated entry. It is noteworthy that, although in respect of a much smaller sum, namely the payment of ? 4 , 8 4 0 . 0 0 by Mr. Lowry to Mr. Aidan Phelan in 1999, Mr. Phelan was in that instance able to produce a full VAT invoice, in contrast to the utter absence of any accountancy documentation for the immeasurably transaction payment. which, according to the evidence heard, also related to larger a fee Joint Venture Agreement 6.24 It was the evidence of Mr. Lowry and Mr. Aidan Phelan in 2 0 0 1 that, at the time of concluding the Mansfield transaction, they decided that a more formal basis of agreement between them, governing their respective interests in that transaction, and possible future ventures, should be reduced to writing. It was further agreed that Mr. Christopher V a u g h a n should prepare such an agreement. According to their evidence, Mr. V a u g h a n sent a proposed basic draft of a joint venture agreement to Mr. Aidan Phelan in Dublin by disc, that Mr. Aidan Phelan informed Mr. Lowry that this d o c u m e n t was ready for signing as soon as w a s convenient for him, and that in consequence Mr. Lowry attended at Mr. Aidan Phelan's purpose. Clonskeagh offices, on the evening of 29 t h March, 1999, for that Having read the document, Mr. Lowry signed, as did Mr. Aidan Phelan, Ms. Helen Malone witnessing both signatures. 6.25 on the The d o c u m e n t was set forth as a j o i n t venture agreement between Mr. Lowry and Mr. Aidan Phelan, as promoters, and recorded an agreement to carry business of property development together, as had already been c o m m e n c e d . Following a number of standard provisions, it then recited that the profits and losses of the venture should belong to the promoters in shares of 9 0 % for Mr. Aidan Phelan and 10% for Mr. Lowry, subject to a performance-related incentive payable to Mr. Lowry, as should from time to time be agreed between them. A copy of the joint venture agreement referred to above together with REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 Page | 157 copies of the m e m o r a n d a of 22 n d December, 1998, and 25 t h March, 1999, can be found in the Appendix to this chapter. 6.26 At this point it is material to note that, in addressing the circumstances of the Mansfield transaction at public sittings, the Tribunal had available to it as of 2001, w h e n its inquiries were being undertaken, only the evidence of Mr. Lowry and Mr. Aidan Phelan. As has been stated, Mr. Denis O'Brien referred in evidence to the basis upon which the funds used to complete the purchase were debited to his Credit Suisse First Boston account, but denied any knowledge at the time of any intended use of those funds on the part of Mr. Aidan Phelan. Regarding Mr. Kevin Phelan and Mr. Christopher Vaughan, although both t o o k some part in the preliminary enquiries into the transaction pursued by the Tribunal, and Mr. V a u g h a n attended a meeting in Dublin Castle with Tribunal lawyers, both in the ultimate then declined to attend to testify on request. Since both individuals reside and have their places of business beyond the jurisdiction of the Tribunal, neither could legally be compelled to attend, despite the clearly expressed wishes of the Tribunal and their mutual clients in that regard. Mr. V a u g h a n did belatedly attend to testify in 2009, after the Tribunal's Provisional Findings had been notified to him. 6.27 In the course of their involvements in the Tribunal's preliminary enquiries, both Mr. Kevin Phelan and Mr. Christopher V a u g h a n made available to the Tribunal a considerable a m o u n t of documentation, s o m e of which has already been alluded to. In addition, Mr. Kevin Phelan wrote to Mr. Lowry on a number of occasions in the latter part of 1998, initially on 30 t h S e p t e m b e r , setting forth details as to the Mansfield property and its development possibilities. He wrote again to Mr. Lowry on 9 t h October, 1998, indicating an intention to enter into an acceptable purchase agreement for the property, and to retain Mr. V a u g h a n as solicitor, and requesting instructions as to whether the purchase was to be made in the name of a limited company, or in Mr. Lowry's own name. letter of 23 r d A further such October, 1998, referred to a recent meeting with Mr. Lowry in Dublin, and confirmed certain terms of agreement on costs and fees that had then been discussed. It transpired that Mr. Lowry had noted "no profit, no fee" in manuscript on that letter, as an indication of his understanding of those terms. 6.28 Mr. Kevin Phelan again wrote to Mr. Lowry on 2 n d December, 1998. It appears that the v e n d o r ' s solicitors were exerting s o m e pressure to proceed with the proposed purchase, and he requested that Mr. Lowry forward a 10% deposit to him. With that letter was enclosed a letter f r o m the vendor's solicitor, which recited the proposed purchaser as being A b b e y Green Consulting Limited. Mr. Lowry in evidence confirmed that this was a c o m p a n y established by him a short time previously, and that his initial intention had been to use it as a purchase REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 5 possible Page | 158 vehicle for the Mansfield property, but that, on taking advice as to Capital Gains Tax repercussions, he had decided to proceed in his own name. Each of these letters, written by Mr. Kevin Phelan, referred to Mr. Lowry as an intending purchaser without qualification, and in none of t h e m is there any reference to any possible involvement or procurement of other potential investors as purchasers. The sale completes 6.29 Reverting to the actual completion on 26 t h March, 1999, Mr. V a u g h a n wrote to Mr. Lowry to inform him that completion of the purchase of the Mansfield site had been effected earlier that day, enabled by the balance o f t h e price having been furnished by Mr. Aidan Phelan. He stated that the interest acquired was in Mr. Lowry's sole name, but subject to his agreement with Mr. Aidan Phelan, and with this in mind indicated that he would advise Mr. Aidan Phelan to enter a caution on the register, to provide against Mr. Lowry dealing with the property without Mr. Aidan Phelan's consent, in which regard Mr. Lowry was encouraged to discuss the position with Mr. Aidan Phelan. The legal procedure relating to a caution in property transactions applies s o m e w h a t similarly in both English and Irish law, and in essence a caution is a d o c u m e n t lodged at the Land Registry, to prevent land or property being sold without notice to the cautioner. 6.30 Mr. Lowry stated that he and Mr. Aidan Phelan had duly discussed the possible adoption of this course, but both felt that the joint venture agreement sufficiently defined their respective interests, and saw no necessity to proceed on that basis. Accordingly the Mansfield property w a s registered in the sole name of Mr. Lowry, a position that remained in place for approximately three years. 6.31 W h e n Mr. Lowry gave further testimony to the Tribunal on 30 t h July, 2002, he indicated that, whilst he still retained a 10% interest in the Mansfield property, he had, some three or four months previously, transferred its registered ownership to Mr. Aidan Phelan, at the latter's request. It appeared that Mr. Aidan Phelan had telephoned Mr. Lowry, made this request on grounds of efficiency, and thereafter sent documents for execution to Mr. Lowry. These had been prepared by a new firm of solicitors in Manchester retained by Mr. Aidan Phelan, whose identity was not then known to Mr. Lowry, but who had replaced Mr. Christopher V a u g h a n as solicitors acting in the matter. Mr. Lowry then stated that he had had no contact whatsoever in recent months with Mr. V a u g h a n , and was content that the new Manchester firm should act. As to Mr. V a u g h a n ' s continuing involvement prior to this change, more particularly in regard to the Cheadle transaction, it will be necessary to return to this matter in more detail in a succeeding chapter. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 6.32 5 Regarding the Capital Gains Taxation aspect referred to earlier, Mr. Page | 159 Lowry stated that he had made inquiry only in general terms, rather than in the specific context of the Mansfield transaction, of Mr. Denis O'Connor, and had surmised from his response that it was preferable that the property be acquired in his own name, rather than in that of A b b e y Green Consulting Limited. In his initial evidence relative to this matter, Mr. O ' C o n n o r did not recall such an inquiry being addressed to him, but, following that evidence, Mr. Lowry reiterated to him that he had discussed with him in general terms the tax implications of any UK property disposals. located On checking the from position within colleague, his office, Ms. Mr. O'Connor in a memorandum his former Patricia Quigley, response to a request from him relating to UK property disposals. Although Mr. O'Connor still had no direct recollection of the exchange, he accepted the matter had been discussed. On contacting Ms. Quigley, w h o was no longer employed by Messrs. Brophy Butler Thornton, she indicated to him that she may have discussed the matter generally with Mr. Lowry. Ms. Quigley made available a m e m o r a n d u m from her to Mr. O ' C o n n o r of 30 t h August, 1999, part of which related to other aspects of Mr. Lowry's finances of no relevance, and which otherwise indicated that she had been asked to advise Mr. Lowry on the issue of tax arising from UK property disposals, but was unable to find the Capital Gains Tax workings she had undertaken for this purpose. This would seem to indicate that she had been furnished with some information with a view to calculating w h a t chargeable gain might arise on a particular transaction, including some information as to estimated sale proceeds, whether actual or hypothetical. 6.33 At the time of Ms. Quigley's m e m o r a n d u m , the only UK property in Mr. O ' C o n n o r which Mr. Lowry acknowledged an interest was that at Mansfield. agreed with Tribunal counsel in evidence that the making of such a request for advice would probably be on the basis of anticipation of some relatively substantial Capital Gains Tax liability, and that it would scarcely be worth the trouble of consulting an accountant as to such liability in the context of a mere 10% interest in the property in question. Of course no Capital Gains Tax liability could attach to Mr. Lowry unless and until such time as a beneficial disposal of the property had been effected, which would not appear to apply to the 2 0 0 2 transfer to Mr. Aidan Phelan that was described by Mr. Lowry. W h a t the Tribunal was unaware of in 2001, and w h a t did not emerge until 2009, was that around the time that Mr. Lowry was seeking Capital Gains Tax liability advice, it was contemplated that the Mansfield property, together with the subsequently acquired property at Cheadle would be sold together in a single transaction, and that the substantial part of the net proceeds w o u l d accrue to the benefit of Mr. Lowry. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 5 CONCLUDING REMARKS Page | 160 6.34 As the course and principal focus of dealings relating to UK property ventures on the part of the persons primarily involved quickly shifted from the Mansfield transaction to that relating to the property in Cheadle, it is proposed to defer any expression of conclusions relative to Mansfield until after the related but more complicated facts of and surrounding the Cheadle transaction have been set forth in the next succeeding chapter. 6.35 In closing this short chapter, it must be observed that the version of events tendered in evidence in 2001 by Mr. Lowry and Mr. Aidan Phelan, and the documentation submitted in support of that version, was wholly at odds with documentation that came to light in 2009, and the evidence then available to the Tribunal, primarily represented by the belated attendance of Mr. Vaughan. What became apparent at that late stage was a contemplated sale of the Mansfield and subsequently acquired Cheadle properties in 1999, on terms which were inconsistent with a partnership agreement on the footing of Mr. Lowry holding a 10% interest, and were consistent only with an intention that the substantial net proceeds would accrue for Mr. Lowry's sole benefit. What also emerged initially in 2002, and latterly in 2009, was the falsification of Mr. Vaughan's files as produced to the Tribunal by him in 2001, consistent only with an intention that its contents should support the version of ownership with which the Tribunal was furnished in 2001, namely that of Mr. Lowry holding the registered title of the Mansfield property as a nominee on behalf of a partnership in which he had a mere 10% interest. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 P a g e | 161 T H E CHEADLE TRANSACTION INTRODUCTION 7.01 In early s u m m e r of 1999, Mr. Michael Lowry, through Mr. Kevin Phelan, with w h o m he had already dealt in connection with Mansfield, and an associate of Mr. Phelan, Mr. John Eastham, w a s introduced to a further property in the UK at Cheadle, near Handforth, Cheshire. By an agreement of 14 th September, vehicle for 1999, a UK registered c o m p a n y Mr. Lowry, contracted to known as Catclause the Limited, a sum of purchase property for the Stg.?445,000.00. Prior to March, 2001, the Tribunal was unaware of the Cheadle transaction or the source of monies used to fund it, or of any connection between the transaction and Mr. Lowry. The transaction came dramatically to light in early 2001, w h e n Investec Bank, having previously drawn the matter to the attention of the Central Bank, conveyed information it had acquired to the Tribunal. a multinational entity, had which in 2000 took over the banking Investec, of the business Woodchester Bank, provided a loan of S t g . ? 4 2 0 , 0 0 0 . 0 0 to enable property to be purchased. 7.02 The Investec action in notifying the Tribunal w a s prompted by the result of internal inquiries, from which it appeared that Mr. Michael Lowry's name was connected with that of Mr. Denis O'Brien in relation to the transaction; specifically, that the transaction was one which initially had been represented to two officials of Investec, by another official, as a Denis O'Brien transaction; that the company, Catclause Limited, used to purchase the property, although O'Brien's appearing to the bank to be the vehicle of Mr. Aidan Phelan, Mr. accountant and representative, was in fact the vehicle of Mr. Michael Lowry. 7.03 As has already been mentioned, at the time of the Investec disclosures, roughly coterminous with the disclosures in The S u n d a y Tribune by Mr. Matt Cooper, further information was conveyed to the Tribunal, initially by Mr. Aidan Phelan, and subsequently by Mr. Michael Lowry, concerning their earlier involvement in the Mansfield transaction, the circumstances of which Matt have already been set forth in Chapter 6. It was also following the Cooper disclosures that the Tribunal was informed of the Carysfort transaction. It will also be recalled that Mr. Aidan Phelan played a significant role in the transmission of money to Mr. Lowry, via Mr. David Austin, in connection with aspects of that transaction. At this point, it is necessary to repeat that, whilst the deposit for the Mansfield purchase, amounting to some Stg.?25,000.00, was provided by Mr. Lowry from his own resources, the balance o f t h e purchase monies, together with other related funds required in connection with the purchase, was provided from a s u m of S t g . ? 3 0 0 , 0 0 0 . 0 0 , directly transferred from Mr. Denis O'Brien's bank account at Credit Suisse First Boston, London, to Mr. Lowry's client account with REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 162 Mr. Christopher V a u g h a n , the solicitor handling both transactions. The deposit which enabled Mr. Lowry to proceed with the Cheadle contract came f r o m w h a t remained of the S t g . ? 3 0 0 , 0 0 0 . 0 0 in Mr. Lowry's client account with Mr. V a u g h a n . Course of the evidence 7.04 Evidence was heard in relation to the Mansfield, Cheadle and Carysfort properties in the latter months of 2001. To a significant degree, the Tribunal's private inquiries and its public hearings concerning the Mansfield and Cheadle properties were informed by documents provided by Mr. Christopher V a u g h a n , solicitor. As the solicitor retained by Mr. Lowry in respect of each of these transactions, Mr. V a u g h a n furnished the Tribunal with w h a t were represented to the Tribunal as copies of all of the relevant material relating to the acquisition and ongoing dealings of Mr. V a u g h a n in relation to these transactions. 7.05 The Tribunal's initial impression of the transactions was based on these documents, and on the evidence given by Mr. Lowry, Mr. Aidan Phelan, Mr. Denis O'Brien, Ms. Helen Malone, several officials of Investec, and by Mr. Michael Tunney, a former official of W o o d c h e s t e r Bank, incorporating their responses to queries arising from Mr. Vaughan's files, and to queries resulting from information provided, and evidence given, by the Investec witnesses. 7.06 matter, it On first examining the documentation and evidence concerning this then appeared that few if any more ambivalent or confusing transactions had come to the attention of the Tribunal. The solicitor w h o had carried out the transaction, and therefore the person acting merely under instructions, was unwilling to give evidence. From Investec, it was learned that the relevant bank loan file had gone missing and was unavailable, although the bank had satisfied itself that such a file had been created, and was in existence prior to its own internal inquiries. Investec endeavoured, insofar as it could, to recreate its original loan file, and this included a copy of one of the early letters made available to the bank regarding the loan, from Mr. John Eastham, Mr. Kevin Phelan's associate, describing the property and its prospects. been truncated by the deletion of those portions But this letter had identified the of it which addressee, who was Mr. Lowry. 7.07 Curiously, none of these features s e e m e d in any w a y intended or calculated to conceal the existence or extent of a liability to repay the facility to the bank, but rather appeared directed to conceal the identity o f t h e individual or entity who was actually the borrower. Initially, that central element of ambivalence persisted in much of the lengthy and detailed evidence that was adduced. However, as a result of information which came to the Tribunal in or REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 163 around March 2002, it was possible, in the course of subsequent evidence, to discern a pattern of concealment or obfuscation. 7.08 On 21 s t March, 2002, an Irish Times journalist, Mr. Colm Keena, by Mr. furnished the Tribunal with purported versions of two letters, written Christopher Vaughan, that markedly and significantly diverged in content from the forms of those letters that had been made available to the Tribunal a year earlier, as part of Mr. V a u g h a n ' s files, and which formed part of its initial investigations at its public hearings. The divergence between the two forms, called the forms" and "long forms", of the relevant letters, was directed to "short removing references to Mr. Michael Lowry's involvement or continued involvement in the Cheadle property, at a time w h e n it had been represented to the Tribunal that he had ceased to have any beneficial interest in it. 7.09 From evidence given and documentation provided, in the course of Mr. Christopher V a u g h a n ' s belated appearance as a witness in 2009, it became ever more clear that the documents made available to the Tribunal, that is, the form" "short letters, constituted merely one part of a wholesale effort to recreate Mr. beneficial V a u g h a n ' s files, so as to conceal Mr. Lowry's continuing role and interest in the Cheadle transaction, and also the full extent of his role and interest in the Mansfield transaction. It had become evident by that time that other letters had been entirely removed from the files. These other letters cast further light on w h a t had, as mentioned, initially appeared to be s o m e w h a t confusing elements of the original files, as produced to the Tribunal, and enabled the Tribunal to view the falsely generated "short just wholesale falsification form" of the letters in a wider perspective, indicating not files, but the true extent of Mr. Lowry's involvement in the two properties. 7.10 By the time of the Investec disclosures in 2001, very little remained to be done to dispose of the Tribunal's remit, so far as the Terms of Reference regarding Mr. Lowry were concerned. been given in 1999. Most of the relevant evidence had already By that time, the Tribunal's impression was that it had Mr. Denis O'Connor, all obtained from Mr. Lowry, and from his accountant, available information concerning his financial affairs. Whilst Mr. O ' C o n n o r was represented to the Tribunal as Mr. Lowry's accountant, and as the individual to w h o m he had confided information concerning his financial affairs, it appears that he was wholly unaware of the Mansfield and Cheadle transactions, and indeed, unaware that Mr. Lowry was engaged in t h e m in the period in which he, Mr. O'Connor, and Mr. Lowry were dealing with the Tribunal in relation to Mr. Lowry's financial affairs. Mr. Aidan Phelan's involvement with Mr. Lowry, in connection with these properties, was not conveyed to the Tribunal, or apparently to Mr. O'Connor. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 HOW THE CHEADLE TRANSACTION CAME ABOUT Page | 164 Mr. Michael Lowry operates through Catclause, a limited company 7.11 According to Mr. Michael Lowry, he was contacted in April or May of 1999, by Mr. John Eastham, in relation to the possible acquisition from a religious organisation of an approximately two acre site, including a church, at Cheadle in Cheshire. Having inspected and assessed the property, Mr. Lowry was very enthusiastic after discussing about its investment the projected potential. price Mr. Eastham with Mr. entered Phelan into in negotiations with the vendor over succeeding months, and it appears that it was purchase Aidan September, 1999, that Mr. Lowry agreed to purchase the property, for a price of Stg.?445,000.00. 7.12 The negotiation of the contract for this purchase was of a fairly lengthy It is of significance that in the middle of this period, then focused, namely, those Terms of gestation, from the time of the initial contact in April or May of 1999, up to the middle of September, 1999. which the Tribunal's Mr. Lowry gave his first evidence to the Tribunal concerning the matters upon inquiries were Reference relating to the sources of funds kept by or on behalf of Mr. Lowry. The first witness to give evidence in connection with Mr. Lowry's affairs was not Mr. Lowry himself, but his accountant, Mr. Denis O'Connor, who gave evidence on 22 n d June, 1999. Mr. Lowry also gave evidence on that day and on the following preliminary day. At no point in the course of his evidence, nor in the course of the evidence of Mr. O'Connor, nor at any point in the course of the Tribunal's private investigatory discussions with Mr. O'Connor and Mr. Lowry in that year, was any reference made to this transaction. Needless to say, no reference had been made to the earlier transaction, namely, the Mansfield transaction, which by this point had already been concluded. 7.13 Mr. Lowry stated that,following the Mansfield transaction, he had been advised by Mr. Aidan Phelan that, if further UK property ventures were to be entered into by them, it would be preferable, contrary to the advice he had apparently followed in relation to the earlier transaction, that a special purpose company be used as a purchase vehicle, on grounds both of facilitating the obtaining of loan facilities from a bank, and of reducing Capital Gains liabilities that might arise. It transpired that 1 st Mr. Christopher Vaughan available as a vehicle a UK "she/f" company called Catclause Limited. and his adult daughter, were, on Tax had Mr. Lowry, June, 1999, appointed directors of this company, with Mr. Lowry also being appointed its secretary. Mr. Lowry stated that, when asked whether he wished to become a director of any such company, Mr. Aidan Phelan declined. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7.14 context 7 W h e n Mr. Lowry came to discuss the probable purchase of the Cheadle Page | 165 property with Mr. Aidan Phelan in the s u m m e r of 1999, it was initially in the of an investment on the basis of their joint venture agreement, Mr. purportedly entered into shortly after the Mansfield purchase. However, Phelan was much less enthusiastic than Mr. Lowry about the Cheadle property, feeling that there could be planning difficulties in having a change of use approved, and that procuring a profitable outcome on the investment could be long and difficult. Mr. Lowry was undeterred, and anxious to proceed on his own. Eventually, the result of their discussions was that Mr. Phelan indicated that he would make available, as a loan to Mr. Lowry, the balance o f t h e funds lodged in Mr. Lowry's client account with Mr. V a u g h a n after the Mansfield purchase, so as to enable a deposit to be paid to the vendors. Meeting with Mr. Radisson Hotel 7.15 Michael Tunney of Woodchester/Gandon in the Prior to any agreement being concluded in relation to the Cheadle Radisson property, a meeting, organised by Mr. Aidan Phelan, was held in the Hotel in Dublin, at which Mr. Lowry was introduced by Mr. Phelan to a friend and associate of his, a Mr. Michael Tunney, w h o was then a senior executive with Gandon Capital Markets, effectively the corporate banking arm of w h a t was then Woodchester Bank, and a person who, in c o m m o n with Mr. Phelan, had had prior associations in business ventures involving Mr. Denis O'Brien. The meeting was also attended by Mr. Phelan's business partner, Ms. Helen Malone. Mr. T u n n e y was subsequently to play a pivotal role in arranging and obtaining bank finance for the Cheadle transaction, which was at that time under consideration by Mr. Lowry. It s e e m s beyond doubt, on the evidence heard by the Tribunal, that this meeting at the Radisson Hotel occurred sometime after Mr. Lowry had brought the Cheadle transaction to the attention of Mr. Phelan. 7.16 There were marked divergences in the evidence of the four persons present as to w h a t transpired at this meeting, but it is likely that it was, a m o n g s t other matters, connected with the provision of loan finance to Mr. Lowry, to enable him to purchase the Cheadle property, the negotiations for which were then in train. 7.17 According to Mr. Aidan Phelan, it was understood by him that the balance of the purchase price to complete the Cheadle transaction would be funded by Mr. Lowry himself, either through another investment partner, or by w a y of loan finance. Mr. Lowry's evidence in relation to this matter was not entirely clear, but he suggested that, having discussed the matter with Mr. Aidan Phelan, and having obtained a loan of a deposit, which he claimed not to need, Mr. Phelan also informed him that he would assist him in any w a y that he could. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 166 Although inconsistent with the evidence of Mr. Phelan, this may explain the behaviour of Mr. Lowry in the period between the exchange of contracts and the looming closing date of 30 t h November, 1999. Mr. Michael Lowry's tentative efforts to obtain loan finance 7.18 Mr. Lowry's exertions, in that period, to obtain loan finance were at He acknowledged in evidence that he had done nothing at all to best tentative. obtain finance in S e p t e m b e r , and very little in October, 1999. Evidence in relation to the efforts he made w a s very limited, in as much as he was able to proffer no satisfactory explanation as to why, having signed a contract binding himself to pay a balance of over Stg.?400,000.00, by the agreed closing date of endIn evidence, he November, his attempts to obtain finance had been minimal. stated that he had mentioned the entire proposition to a Mr. John Daly in October, 1999, with a view to ascertaining how he would go about funding the transaction. This however was inconsistent with other evidence he gave concerning his meetings with Mr. John Daly, and the content of them, the question of finance not having then been mentioned. He suggested that he had discussed finances with both his local bank manager in Thurles, and in the Cork office of the Irish Permanent Building Society, but had to concede that at no point in the course of those discussions had he specifically sought finance to complete the Cheadle purchase. His evidence was also that he never w e n t to his own accountant for assistance, w h e n it proved impracticable for him to get loan finance, although at the time Mr. O'Connor w a s helping him in all matters relating to the Tribunal, and indeed had provided him with critical assistance in relation to the McCracken Tribunal, and his taxation affairs. He explained his omission to tell Mr. O'Connor on the basis that one did not have to tell one's accountant everything, stating also that he had an accountant in the person of Mr. Aidan Phelan to deal with the matter. Subsequently he resiled from this position, suggesting that he had in fact mentioned the matter to Mr. O'Connor, and that Mr. O'Connor w a s aware in general terms. This proved to be inconsistent with Mr. O ' C o n n o r ' s evidence, as will later be addressed. 7.19 The fact that Mr. Lowry had made no efforts to put any finance in himself to considerable risk by place, notwithstanding that he had exposed agreeing to a completion date of 30 t h November, 1999, contrasts markedly with w h a t was property. stated by Mr. Lowry in other evidence, concerning the Carysfort In relation to that purchase, he was at pains to indicate that he was not prepared to c o m m i t himself to a substantial expenditure, until such time as he had secured borrowings from Irish Nationwide Building Society, and that this was testimony to his prudence in such matters. Whilst, at the time of the Carysfort purchase, he was in receipt of a Ministerial salary, and was entitled, and REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 167 according to his own evidence, intended, to claim ample tax relief in relation to the property, the Cheadle transaction in contrast was entered into at a time w h e n he no longer held Ministerial Office, w h e n his business affairs were challenging, and where no arrangements had apparently been made by him to secure the balance of a purchase price then in excess of Stg.?400,000.00. Therefore, it appears for the second time, over a period of a year in dealing with UK property purchases, he had exposed himself to a liability to pay a substantial s u m of money, in the event of his being forced to complete a sale without having funds available, and had also exposed deposit and payment of damages. himself, potentially, to the forfeiture of his Mr. Aidan Phelan again provides assistance 7.20 obtained. Again, as in the case of the Mansfield transaction, it transpired that it Mr. Aidan Phelan that the balance of the purchase price was was through On Mr. Lowry's own evidence, his rather tentative efforts to obtain finance having failed, he turned to Mr. Phelan for assistance. Mr. Lowry stated that he thought that his approach to Mr. Phelan was made in mid-November, 1999. Mr. Phelan's recollection was that, by the time he was approached, the become closing date of 30 t h November, 1999, had passed, and matters had urgent. From Mr. V a u g h a n ' s file, insofar as it can be relied upon, it appears that pressure was being applied by the vendor in early November. considerable Having been approached by Mr. Lowry, Mr. Aidan Phelan made contact with Mr. Michael T u n n e y in W o o d c h e s t e r with a view to obtaining a loan. As will appear below, the documents to enable this transaction to be processed in W o o d c h e s t e r were not sent to Mr. T u n n e y until in or around 17 th December, 1999. It s e e m s therefore, that the approach to Mr. Phelan by Mr. Lowry must have been initiated sometime in or around the second w e e k of December, 1999, as opposed to midNovember, 1999. THE GRANTING O FTHE LOAN Loan proposal made to Woodchester by Mr. Aidan Phelan 7.21 At the time the loan w a s granted, W o o d c h e s t e r Bank, including an associated company, was in the process of being acquired by Investec Bank, a circumstance which, to some extent, compounded the ambivalence and confusion that developed in the bank in relation to the transaction. The takeover was a lengthy process, lasting from some time in 1999, prior to the application for funds, to complete the Cheadle transaction, until in or around April, 2 0 0 0 . REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7.22 7 The officials of the bank w h o dealt with the application were Mr. Mr. Page | 168 Michael Tunney, Mr. Michael Cullen, Mr. T o n y Morland and Mr. Ian W o h l m a n . Michael T u n n e y was, at the time of the introduction of the application for the loan, a senior figure in the bank. He had been engaged in banking for thirty years, twenty years with Allied Irish Banks, and from 1995 was a director of G a n d o n Capital Markets, an associated company which was also taken over by Investec. Mr. Cullen was a senior executive of the Irish operation, with previous senior banking experience, also in Allied Irish Banks. Mr. Tony Morland's prior associations were with Investec in the UK. He w a s charged with responsibility for establishing a Risk M a n a g e m e n t Division in the newly acquired Irish entity, and was the senior Investec official sent from the UK to work in Dublin during the time of these events, although his involvement w a s complicated course by study leave, College relating to a Master of Business Administration in University Dublin. Mr. Ian W o h l m a n was a UK-based director of Investec, charged with Group Credit and Risk M a n a g e m e n t , and exercised certain supervisory functions relation to loans advanced by Woodchester during the changeover period. in 7.23 The arrangements in place during this period entailed that all new credit applications were to be submitted to the credit department of Investec in the UK for approval. There were a number of individuals authorised as signatories to sign off on any loans proposed by Woodchester, including Mr. Morland in Dublin, and Mr. W o h l m a n in the UK. 7.24 A further feature of the m a n a g e m e n t configuration of the entity, in the interregnum period, w a s that Mr. T u n n e y w a s unwinding his relationship with the bank in advance of his intended retirement. From 31 s t December, 1999, he had reduced his activities with the bank to a three day week, and ceased day-to-day activities altogether f r o m March, 2000, though he remained a non-executive director o f w h a t had become Investec Gandon. Although he later became involved in the difficulties concerning this loan, which ultimately led to its referral to the Central Bank and to the Tribunal in March, 2001, he had in fact already established a business on his own account outside banking by that time. As mentioned, during his time in Woodchester, he had formed an association with Mr. Denis O'Brien, as a client, both corporate and private, and also with Mr. Aidan Phelan, as a client on his own behalf, and also as an agent for Mr. Denis O'Brien. From the time he left the bank, he had continuing business involvements with both Mr. O'Brien and Mr. Phelan, as an investor in the former's venture capital arm, and as an investor with the latter in a property venture. 7.25 The request for a loan to complete the Cheadle transaction was apparently initiated by w a y of a telephone approach from Mr. Aidan Phelan to Mr. Michael Tunney, in or around the second w e e k of December, 1999. Mr. Phelan REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 169 indicated to Mr. T u n n e y that the property would be acquired by a special purpose company, Catclause Limited. It was intended that the company would make the purchase, get planning permission and then dispose of the property. The bank, in the person of Mr. Tunney, was provided with details concerning the property, including the letter from Mr. Eastham, already mentioned, outlining details of the property. Mr. Tunney testified that Mr. Phelan had stated to him that the money was needed urgently to prevent the site being lost to another potential purchaser, that such situations had previously arisen with Mr. Phelan, and that the dealings had always been resolved to the satisfaction o f t h e bank. None o f t h e foregoing, in connection with the immediate need for funds, if stated by Mr. Phelan, was correct. There was no question of the loss of an opportunity to buy this site. A contract for the purchase of the site had already been signed. The deposit was at risk, and Mr. Lowry's company, Catclause, was also at risk of an action for specific performance to complete the sale, and was exposed to a potential liability for damages. 7.26 Mr. Michael Cullen testified that Mr. T u n n e y brought the transaction to him, Mr. Cullen having previously handled many of Mr. Aidan Phelan's dealings with the bank. According to Mr. Cullen, w h a t w a s sought was S t g . ? 4 2 0 , 0 0 0 . 0 0 for the purchase of a property in the Manchester area, the borrower to be a company, Catclause, and the bank to be given a first charge over the property, as well as a guarantee from a high net worth individual, a Mr. John Daly. Mr. Cullen was informed that Mr. Daly, w h o was from Cork, was not known to the bank, and that independent confirmation as to his means was to be sought. He viewed Catclause as a special purpose vehicle, and believed that it was Mr. Phelan's company, although acknowledging in this connection that it was slightly surprising in the circumstances that an apparently unconnected third party such as Mr. Daly was proposed as a guarantor, rather than Mr. Phelan himself. Mr. Denis O'Brien's support invoked at inception of loan proposal The transaction 7.27 "wouldn't be allowed to get into difficulties" Mr. Cullen testified that Mr. T u n n e y had told him that Mr. Denis O'Brien of the transaction, which to Mr. Cullen, was unsurprising, as Mr. Mr. " w a s aware" Phelan had regularly represented Mr. O'Brien in dealings with the bank. Cullen's understanding, not unexpectedly, was that Mr. O'Brien might or might not have had some interest in the transaction. He did not, however, view Mr. O'Brien Nonetheless, as being behind the transaction in terms of the credit application. Mr. O'Brien had been a valued customer o f t h e bank for a considerable time, and from that association Mr. Cullen obtained certain comfort. He felt that this degree of comfort concerning Mr. O'Brien's involvement or association might never come into play, but he would have regarded it as an additional factor, making it less REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 170 likely that the bank w o u l d suffer loss, if the transaction got into difficulties. Mr. Cullen testified that he understood the information relayed to him by Mr. Tunney to mean that the transaction "wouldn't be allowed to get into difficulties". However, he testified that, as the association with Mr. O'Brien was something which gave comfort merely to the bank, the credit approval being independently secured, he did not contact Mr. O'Brien to check this aspect of the matter directly with him. 7.28 Pursuant to the arrangement w h e r e b y all new credit applications were to be submitted to the UK credit department of Investec for approval, it was the responsibility of Mr. T u n n e y to ensure that the conditions for this loan were satisfied, and further to ensure that Investec's approval was forthcoming. To that end, Mr. T u n n e y dealt with Mr. Ian W o h l m a n . some queries He informed Mr. Cullen that, though he w a s confident that the had been raised by Mr. W o h l m a n , requisite approval w o u l d be obtained. The minute of a credit committee meeting of 19 th December, 1999, in relation to the transaction, had been signed by Mr. Cullen and by Mr. Tunney, and faxed to Mr. W o h l m a n in the UK, along with certain other documentation. This included a m e m o r a n d u m of 22 n d December, from Mr. Tunney, indicating that he and Mr. Cullen had "signed off' 1999, on the proposal, but that Mr. T o n y Morland in Dublin had not yet done so, pending the obtaining of more detail on the means of Mr. J o h n Daly, the proposed guarantor, but stating that this had since been provided, and that Mr. Morland would be adding his signature on his return to the office. It should be stated that Mr. Morland testified that he approval. Mr. Wohlman, had never signified receipt of any such actual, Mr. Tunney's or intended, following memorandum, considered the proposal, and, having discussed it with a colleague, Mr. Tapnack, Chief Executive Officer of Investec, took the view that, in all of the circumstances, including the level of finance sought for a transaction to an apparently new customer, the loan could only be granted on the basis of enhanced terms and security. Mr. W o h l m a n distinctly wrote: "no way!" on the m e m o r a n d u m , and on 23 r d December, 1999, sent a fax to Mr. Tunney, conveying his rejection o f t h e facility as proposed. 7.29 However, as Mr. Cullen acknowledged 23 r d in evidence, Mr. Wohlman's indication on December, 1999, of his unwillingness to grant the facility on the terms proposed was academic, since by that time loan approval had already been notified to the borrower's solicitor, Mr. Christopher Vaughan, and indeed the funds, Stg.?420,000.00, had already been transferred to Mr. V a u g h a n ' s client account on 21 s t December, 1999. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 171 A proposed Denis O'Brien transaction 7.30 Mr. T o n y Morland's evidence was that his first knowledge of the Catclause loan for the Cheadle transaction was in December, 1999, w h e n he was contacted by Mr. Michael Tunney. as: Mr. T u n n e y informed him of w h a t he described "A proposed 'Denis O'Brien transaction'" introduced by Mr. Aidan Phelan, involving the purchase of a property in the Manchester area. Mr. T u n n e y had informed him about the security being sought, namely a charge on the property, and the guarantee of Mr. John Daly, but he was not furnished with precise details of the site, the amount required, and similar information. However, he did inform Mr. T u n n e y of Investec's requirements, including independent verification of the means of the proposed guarantor, Mr. Daly. He t o o k no further part in the credit process, as he was away on study leave over Christmas. He did however confirm that he had not signed off on the loan, and that, had he been requested to approve the transaction, he would not have reviewed it piecemeal, but only on the basis of the facts in their totality, and rejected the notion that he had signified any conditional approval. 7.31 Mr. Morland in evidence also testified that he had thought that Mr. Tunney had informed him that the purchase involved buying property f r o m a UK religious order, but that Mr. Denis O'Brien did not w a n t his name associated with the transaction. This had been stated by Mr. Tunney, not because the sale was from a religious order, but merely that the nature of the transaction was that it involved a purchase f r o m a religious order, and that it was Mr. O'Brien's wish that his name would not be connected with it. Mr. Morland knew of Mr. O'Brien, w h o m he had once met with Mr. T u n n e y at a lunch. However, he did not know of Mr. O'Brien's net worth, or standing in the Irish business community, other than from having dealt with due diligence exercises, in relation to certain of his companies. At that time Mr. Morland would have regarded Mr. O'Brien as the effective beneficiary of Catclause, but this would not have meant a great deal to him, as he would not have in been aware of any details of the company. Although, Mr. Morland was certain that he had when been less pressed cross-examination, informed that the transaction was a Denis O'Brien transaction, he was certain of his evidence that this was a transaction with which Mr. O'Brien did not w a n t his name associated, and it s e e m s that this may have been an inference on his part from w h a t was stated by Mr. Tunney, but as to the actual information relayed by Mr. Tunney, it was only as to it being a Denis O'Brien transaction that he could be certain. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 172 Mr. Denis O'Brien's name would naturally never be far away 7.32 Mr. T u n n e y ' s evidence w a s that, regardless of the fact that a corporate He stated that he vehicle was used, he was making a loan to Mr. Aidan Phelan. had no recollection of having informed Mr. Cullen that Mr. Denis O'Brien was aware of the transaction. However, he acknowledged that, if Mr. Cullen had so testified, this must have been correct. He testified that he should not have made such a statement but, acknowledging that it had been made, found it extremely difficult to explain w h y he would have asserted what, as he stated, he contended to be false. He did however point out that, whilst untrue, it was a statement Asked w h y he would which would not have done any harm to the transaction. have said something which was untrue, he replied that much of Mr. Aidan Phelan's strength in the bank was his link with Mr. O'Brien, that the bank had done a lot of business with both, and that both were seen as "good news". 7.33 Whilst acknowledging that he must have mentioned Mr. O'Brien's name to Mr. Cullen, Mr. Tunney stated that this was not as a result of anything that Mr. Phelan had conveyed to him. It was simply that he had given this indication, although having no authority to do so, and no basis upon which to misrepresent the position; further, he did not accept that Mr. O'Brien had anything whatsoever to do with the transaction. put my hands His evidence was that he had "to up" for having made such a statement but, bizarrely, went on to contend that he did not believe that he had misled Mr. Cullen. In an even more curious twist, he stated, by w a y of further explanation, that where Mr. Aidan Phelan was concerned: "Mr. O'Brien's name would naturally never be far away." Involvement of Mr. Michael Lowry 7.34 Mr. Aidan Phelan's evidence was that, w h e n approached by Mr. Lowry, he offered to assist and, having a good relationship with W o o d c h e s t e r through Mr. Tunney, agreed to approach him. He further testified that he was aware that Mr. Lowry had failed to secure either a partner in the project, or loan finance. His evidence was that, having been present at the Radisson Hotel meeting, he had formed the impression, from w h a t had transpired at the meeting, that Mr. Lowry did not have access to ready money. S o m e w h a t contradictorily however, he testified that, in December of 1999, he believed that Mr. Lowry was capable of servicing repayments on a loan sufficient to purchase the Cheadle property, from his own resources. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter Catclause 7.35 was the 5 purchaser Page | 173 Mr. Phelan was aware that Catclause was the purchaser, as a vehicle for Mr. Lowry. According to Mr. Phelan's evidence, he discussed the matter with Mr. Tunney, and referred specifically to the involvement of Mr. Lowry, and of his daughter. His evidence was that he was told by Mr. T u n n e y that a suitable It appears that Mr. Lowry did guarantor would be necessary to support the loan. not offer himself as guarantor but provided Mr. John Daly in this regard, and documents, purporting to satisfy the requirement for a guarantor, were faxed to Woodchester by Mr. Phelan on 17 th December, 1999. In order to finalise the transmission of funds, it was necessary to furnish to the bank a resolution of the company, authorising the opening of a loan account, and related details. The resolution, however, w a s signed, not by Mr. Lowry or his daughter, but rather by Mr. Phelan and his associate, Ms. Helen Malone. In explaining this, Mr. Phelan stated that neither Mr. Lowry nor his daughter w a s available to sign the necessary resolution, and that they therefore, on Phelan and Ms. Malone to sign Ms. Malone's Whilst advice, authorised it was intended Mr. Mr. that as directors. ultimately the position would shortly thereafter be formalised, Phelan's evidence was that regrettably this was not done, by reason of the fact that by the time the appropriate official forms were ready, it had been decided to Catclause" "drop as the vehicle for the purchase of the property. Therefore, the formal documentation presented to the bank gave the impression that the directors of the c o m p a n y were daughter. Mr. Phelan and Ms. Malone, and not Mr. Lowry and his No indication of involvement 7.36 documents of Mr. Michael Lowry on the face of bank documentation In bringing the transaction to Mr. Tunney, Mr. Phelan faxed him several pertaining to the matter, including the letter from the agent, Mr. Eastham, by w h o m the transaction had been introduced to Mr. Lowry. Mr. Phelan agreed in evidence that the name of the addressee, that is, Mr. Lowry, appeared to have been removed from that letter. Mr. Phelan's evidence was that he had Lowry's obtained the letter from Mr. Lowry by fax in that form, although Mr. evidence was that he had not altered the letter. Mr. Phelan insisted that he did not think it was possible that he forgot to mention Mr. Lowry to Mr. Tunney, or that Mr. T u n n e y did not hear him allude to Mr. Lowry's involvement, stating also that he knew that Mr. Lowry and Mr. Tunney had had telephone conversations regarding the transaction, and that Mr. T u n n e y had so informed him over Christmas, 1999. Mr. Lowry had been badgering Mr. T u n n e y to complete matters, telling him that Mr. Christopher V a u g h a n was holding off the vendors. Mr. Phelan acknowledged that, on the face of the documentation presented to the bank, there appeared to be no indication of Mr. Lowry as a party to the transaction. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7.37 7 Mr. Cullen, Mr. Morland and Mr. W o h l m a n testified that, at the time of Page | 174 the processing of the loan, that is, effectively at the time of the transmission of the funds in December, 1999, they had no knowledge of any involvement or association of Mr. Michael Lowry, or of his daughter, with the transaction, and that it was not until the early part of 2001, that they became aware of the role of Mr. Lowry in the company, Catclause. 7.38 No Companies Office search appeared to have been carried out in become relation to Catclause prior to February, 2001, w h e n the matter had problematic. Mr. Cullen, whilst acknowledging that the actual registered details regarding the company were publicly discoverable at all times, stated that the omission to search w a s because the individual the bank had dealt with, Mr. Phelan, was well regarded, and because Mr. Phelan and Ms. Malone had represented that they were the directors. Mr. T u n n e y ' s evidence was that, from his experience of banking, he was unable to recall an occasion on which a bank, who knew a customer well, ran a check on the registration of particulars behind a corporate vehicle. His evidence was that it was assumed that the person who brought the corporate vehicle to the bank was associated with it. 7.39 Mr. T u n n e y did not agree that Mr. Phelan had disclosed to him the Nor did he agree that it was from Mr. Lowry that he involvement of Mr. Lowry. had obtained information to enable him to make contact with Mr. John Daly, to ascertain his financial details. His understanding was that Catclause w a s by Mr. Phelan. a company owned or controlled Mr. T u n n e y stated that at the meeting at the Radisson Hotel some months earlier, there was no question of Mr. Lowry having sought a loan, or indicated a request for financial assistance, in relation to the Cheadle or indeed any UK property. Mr. Tunney testified that the guarantee was not a requirement stipulated by the bank, but that it was offered, unsolicited, by Mr. Phelan. Although it had not been a regular feature of the bank's requirements in dealings with Mr. Phelan, Mr. T u n n e y ' s evidence was that no banker would refuse an offer of additional security. A guarantor procured by Mr. Michael Lowry 7.40 Mr. Daly was a businessman, w h o had been friendly with Mr. Lowry for He recalled having met Mr. Lowry socially in November, 1999, over a decade. toward the end of the month, and that Mr. Lowry had informed him of a UK property deal, and sought his advice. Mr. Daly regarded the project as an attractive one. Quite w h e n he agreed to become a guarantor is unclear, as indeed was most of Mr. Daly's evidence. He testified that, whilst he formed a favourable view of the transaction, he stated that he would need to see relevant d o c u m e n t s before he made up his mind. Certain d o c u m e n t s were then produced to him, either toward the end of November, 1999, or the beginning of December, and at REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 175 that point he s e e m s to have either agreed, or confirmed an earlier agreement, to provide a personal guarantee, stating that he felt that Mr. Lowry would have done the same for him, although dealings. 7.41 in fact they had never had any prior business Mr. Daly was unsure of the status of the transaction at the time it was first raised with him by Mr. Lowry, but he thought that Mr. Lowry had stated that he was interested, as opposed to already committed, although it is clear that by that time, in November, 1999, Mr. Lowry, through Catclause, was already bound to the transaction, having executed a contract the previous September. 7.42 appear Certain documents were then sent to Mr. Daly including, it would from his evidence, a form of guarantee to which his unwitnessed signature w a s eventually applied. Mr. Daly's evidence was that this guarantee was sent to him, together with other d o c u m e n t s relating to the transaction. The guarantee form was expressed in terms of a guarantee to W o o d c h e s t e r of the liabilities of Catclause, and could therefore presumably only have come into existence after Mr. Phelan had introduced the application to Mr. T u n n e y , which the Tribunal is satisfied was in mid-December, 1999. 7.43 Mr. Daly's evidence lacked coherence in terms of the sequence of events, the timing of the various events leading up to his ineffective execution of the guarantee, and the events leading subsequently to his apparent refusal to execute an enforceable guarantee. However, leaving aside the dating of events, the Tribunal was told that some time after receiving the documentation, Mr. Lowry telephoned him on his mobile phone requesting that he sign the guarantee as a matter of urgency, Mr. Lowry having stated that he was under pressure. Mr. Daly agreed. As he was then travelling by car between Enniscorthy and Dungarvan, he signed the guarantee, and faxed it from an auctioneer's office in Dungarvan to the fax number he was given. At that point, which Mr. Daly believed was close to Christmas, he understood that he had fulfilled his c o m m i t m e n t to Mr. Lowry, and had bound himself as a guarantor for the indebtedness that Mr. Lowry incurred in respect of the Cheadle transaction. had 7.44 Mr. Daly's evidence of his direct dealings with W o o d c h e s t e r was that he received a telephone call, again on his mobile phone, at least once, if not twice, from Mr. Michael Tunney; further, that Mr. T u n n e y had stated that Mr. Daly's mobile number had been furnished to him by Mr. Lowry, that he explained who he was, and that he made some general inquiries of Mr. Daly, indicating that some certification of his financial resources from his accountant w o u l d be necessary, for purposes of his guarantee. Mr. Daly testified that he thought he had given Mr. T u n n e y his accountant's phone number, and in addition, the name REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 As the certificates of his accountant and banker appear to Woodchester on 17 th December, 1999, it seems Page | 176 of his principal banker. to have been faxed reasonable to conclude that the conversation between Mr. Daly and Mr. Tunney was some time shortly prior to that date. 7.45 There was some confusion apparent from those references for Mr. Daly, ultimately received by Woodchester, in that, on one view, the letter from his accountants, and on any view, the letter from his bankers, are indicative of Mr. Daly being an intending purchaser or investor in the project. Mr. Daly's evidence was that he had never seen the letter from his bankers, and it may be that this degree of confusion stemmed from the undoubted urgency of the situation at that time. Mr. Daly was in no doubt that Mr. Tunney had stated to him that he had received his mobile phone number from Mr. Lowry, which is in conflict with Mr. Tunney's evidence that, as he contended, he had no knowledge of Mr. Lowry's involvement in the transaction. 7.46 company Mr. Tunney rejected the suggestion that the involvement of Mr. Daly Catclause, was the borrower. Through his counsel, Mr. Phelan could only have flowed from the fact that Mr. Lowry, through the vehicle of his suggested that it was because of the involvement of Mr. Lowry, a disclosed involvement, that the bank, in the person of Mr. Tunney, required a guarantee, going on to suggest that it was as a favour to Mr. Phelan that the facility was being put in place, which the bank would not have otherwise granted. All of these suggestions, that Mr. Lowry's name was mentioned, were rejected by Mr. Tunney, who persisted in his evidence that Mr. Lowry's name had not been disclosed, and that he regarded the facility as having been extended to Mr. Phelan notwithstanding involvement of firstly, an the requirement guarantor, of a guarantee, Daly from and Cork, unknown Mr. whose alone, the only secondly, association with the transaction was through Mr. Lowry. FUNDS A R ETRANSMITTED T O M R .C H R I S T O P H E R V A U G H A N AND THE SALE COMPLETES 7.47 It seems that it was in mid-December, 1999, some two weeks after the passing of the completion date of 30 th November, 1999, that Mr. Christopher Vaughan was informed that loan finance was being arranged through Mr. Aidan Phelan with Woodchester to enable the sale to complete. According to Vaughan's file, it appears that he wrote to Mr. Phelan on 14 th Mr. December, 1999, indicating, firstly, that he had not appreciated Mr. Phelan's involvement in the matter at all, and secondly, pointing out that he was in desperate need of funds to meet the completion deadline. In passing, it should be noted that, whilst that 1999, letter suggests that Mr. Vaughan was unaware of Mr. Phelan's involvement in the matter, that is not consistent with an earlier note of 8 th September, REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 177 appearing on his file, recording Mr. Phelan's consent to the use of the balance of the Mansfield money to pay the deposit on Cheadle. Three days after writing to Mr. Phelan, on Friday, 17 th December, 1999, Mr. V a u g h a n received a telephone call directly from Mr. Tunney, who promised that the balance of the S t g . ? 4 2 0 , 0 0 0 . 0 0 required to complete the sale would be provided by the bank. 7.48 Mr. On the following Monday, 20 t h December, 1999, Mr. V a u g h a n wrote to Tunney confirming his understanding, furnishing his bank details and confirming that on completion Catclause would have a good and marketable title to the property, and that he would deal with stamping and registration. He concluded by inquiring whether the bank wished to register a charge against the property, and if so, he asked that the bank forward a completed charge form to him, and that he would then arrange for it to be filed at Companies House in the UK, and registered simultaneously with the transfer of the property. were then transmitted to Mr. Christopher Vaughan's The funds on the client account following day, 21 s t December, 1999, by Mr. Tunney, in advance of any approval having been secured f r o m Mr. Ian W o h l m a n of Investec Bank, in accordance with the protocol in being during the months immediately preceding the formal takeover of Woodchester by Investec. The receipt of these funds enabled the completion of the sale by Mr. V a u g h a n . Despite the loan having been made to Catclause, the property was not registered in its name. Mr. V a u g h a n testified that he t o o k a decision, in the absence of instructions, to register the property in his own and his wife's name on the basis that they w o u l d hold it as trustees. 7.49 At the time of the completion of the sale, the bank's loan file, insofar as can be ascertained, the original having disappeared during the year 2000, contained the following documents: (i) a copy of a letter dated 3 r d December, 1999, from Mr. John Eastham, Mr. Lowry's property consultant, known to have been addressed to Mr. Lowry and outlining the elements of the transaction, from which Mr. Lowry's name and address had been deleted; (ii) a facility letter dated 20 t h December, c/o John 1999, addressed House to "the Directors, 27/29 Catclause Limited, Street, Daly, Court Chambers, Washington Cork", that is, at the address of Mr. Daly, the putative guarantor; (iii) a resolution of Catclause, signed by Mr. Aidan Phelan and Ms. Helen Malone, respectively designated as chairman and secretary, purporting to be a resolution of the directors of Catclause, authorising the acceptance of the facility letter; REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 (iv) a letter of application for the opening of accounts by Catclause dated 20 t h December, 1999, showing the Washington Street, Cork, address as the address of the company, and signed by Ms. Malone, designated as secretary, to which was appended a further resolution by w a y of a mandate to the bank also signed by Mr. Phelan, designated as Page | 178 chairman, and Ms. Malone, designated as secretary, and also dated 20 t h December, 1999; (v) a faxed copy of an unwitnessed and undated guarantee signed by Mr. John Daly, together with references from Mr. Daly's accountant and from his bank. Therefore, on the basis of the loan file as reconstructed, the bank documentation, although referring to Catclause, did not identify Mr. Michael Lowry in any capacity. 7.50 As already outlined, according to Mr. Phelan, the reason that the resolution and facility letter required to be signed by Catclause were signed, not by Mr. Lowry and his daughter, as directors, but by Mr. Phelan and Ms. Malone, was that it became necessary to take this step due to the non-availability of Mr. Lowry or his daughter at the relevant time, even though it appears that there were a number of other days during which Mr. Lowry and his daughter could have signed the documents. Mr. Phelan and Ms. Malone signed as directors, having been technically appointed as alternate directors of Catclause for that purpose, with the intention that the matter would be formalised shortly afterwards, although it seems that no such formal steps to regularise the matter were ever taken. 7.51 mandate. Mr. Lowry was unable to say w h y Mr. Daly's address was used for the purposes of the facility letter to Catclause, as it had also been used in the bank As to the letter f r o m Mr. Eastham, f r o m which Mr. Lowry's name and address had been removed, Mr. Lowry confirmed that he had received that letter, having sought it himself from Mr. Eastham, in response to queries about the property from the bank. As to w h y his name and address were removed, Mr. Lowry's response was that he himself had not removed those details. Put that the documentation furnished to the bank had no reference to him, his daughter, or his address, Mr. Lowry reiterated that Catclause w a s the named borrower, and that it was a matter of public record, that he and his daughter were directors of the company. As to w h y the facility letter was signed by Mr. Phelan and Ms. Malone, Mr. Lowry stated that w h e n contacted concerning this matter, he was in a remote part of his constituency and inquired as to the feasibility of any alternative course, and that thereupon Mr. Phelan informed him that he, Mr. Phelan, could be designated as an interim director for this purpose. Notwithstanding the absence of any reference to Mr. Lowry on the bank file, and REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 179 in fact the contrary references to Mr. Aidan Phelan and Ms. Helen Malone as directors of Catclause, Mr. Lowry insisted that there was no doubt that the bank, in the person of Mr. Tunney, was aware that it was dealing with him, and he referred also to the evidence that Mr. Phelan had given that he had informed Mr. Tunney in like terms. 7.52 The evidence of Mr. Tunney and Mr. Phelan in that regard has already been recounted, but it does seem significant that, according to Mr. Lowry, he had personal contact with Mr. Tunney during the course of the processing of the loan, and that it was he who had furnished Mr. Tunney with Mr. Daly's details, to enable Mr. Tunney make contact with him. That matter was confirmed by Mr. Daly, who testified that, upon contact being made with him, Mr. Tunney informed him that Mr. Lowry had been the source of his contact details. MR. JOHN DALY APPARENTLY DECLINES T O PERFECT HIS GUARANTEE AND THE CONSEQUENCES 7.53 him prior Mr. Lowry informed the Tribunal that early in the New Year of 2000, he to Christmas, which was both undated and unwitnessed, was again contacted Mr. Daly, indicating to him that the faxed guarantee, furnished by inadequate, and that it would be necessary for Mr. Daly to re-execute the original guarantee documentation, and to have it duly dated and witnessed. Mr. Daly's evidence was that, at this point, he had changed his mind, needing all his resources for a project of his own, that was coming on stream more quickly than expected, and that he indicated this to Mr. Lowry. This aspect of his evidence is difficult to reconcile with his earlier evidence that he believed, on signing the faxed guarantee before Christmas, that he had already committed himself, unless, as an experienced businessman, he did not actually believe that the faxed document sent to Woodchester created any binding obligation on his behalf. Further inconsistencies arose from his testimony that, in the following month, February, 2000, he yet again spoke to Mr. Lowry and inquired whether he was free o f t h e guarantee, to which Mr. Lowry responded that he was, and that in fact a Mr. Phelan had taken it over. Likewise inconsistent was Mr. Daly's evidence that he was unaware that the loan sought by Mr. Lowry had in fact been drawn down, since Mr. Lowry had not told him that he had received the money. With reference to the impact of his post-Christmas refusal, Mr. Daly's evidence was that, whilst Mr. Lowry was annoyed with him at first, he "saw the best of friends. my point", by reference to his own investment priorities, and that thereafter the two remained 7.54 Mr. Phelan's evidence was that it was the refusal of Mr. Daly to perfect required his guarantee that left him in an embarrassing position, in that the security had not been provided to the bank. He stated that he made the position REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 180 clear to Mr. Lowry, but that as Mr. Lowry had no alternative proposals, he was obliged to take the view that morally he had no option but to become responsible to the bank for the loan. This, he testified, was in the light of his long relationship, both business and personal, with Mr. Tunney. Accordingly, it was agreed that Mr. Lowry would cease to have any beneficial interest in Cheadle, and that the entire beneficial interest would pass to Mr. Phelan, as would the obligations of Catclause to the bank. Mr. V a u g h a n was accordingly instructed to hold the property in trust for Mr. Phelan. 7.55 In the belated evidence of Mr. Christopher Vaughan, there was no suggestion that it was on this basis that he was prompted to register the property in his own name and that of his wife. Mr. V a u g h a n ' s evidence was that he was so instructed by Mr. Tunney, but not by reason of any reference to the failure of the guarantee, rather because it had been decided to restructure the transaction. That element of Mr. V a u g h a n ' s evidence was also inconsistent with Mr. T u n n e y ' s evidence that, in response to Mr. V a u g h a n ' s inquiry of 20 t h December, 1999, he had instructed him to register the property in the name of Catclause, with a charge against Catclause in favour of the bank, and he had made no mention in his evidence of having subsequently directed Mr. Vaughan to ignore that instruction, and instead to hold the property in trust. 7.56 Whatever Mr. Phelan's views may have been as to his personal responsibilities, it s e e m s that he took no action to inform Mr. Tunney, or the bank, that he had a s s u m e d either a primary or a secondary obligation to repay the loan, and there is no evidence of any contact in that regard between Mr. Phelan and the bank. Furthermore, it was Mr. T u n n e y ' s evidence that he had not heard at all of the difficulties encountered in relation to Mr. Daly's guarantee, until Tribunal statements had come to hand, in the period shortly before his evidence. He had heard that an initial attempt to secure the guarantee had been ineffective, and was aware that Mr. Phelan had been contacted with a view to obtaining an original guarantee properly completed. He made no reference to any approach from Mr. Phelan to him, driven by embarrassment, or a moral obligation to assume responsibility for the loan, and of course, to have testified to that effect would have been contrary to his own evidence that Mr. Phelan was in any case, as far as he was concerned, the person primarily responsible to the bank. It was Mr. Phelan's evidence that he had drawn these matters to the attention of Mr. Tunney, but that Mr. Tunney was indifferent to them. 7.57 Whilst therefore, on Mr. Phelan's side there w a s a crisis, purportedly precipitated by Mr. Daly's default, compelling him to take over a substantial loan from Mr. Lowry's company, there was no evidence of any such drama, or any notification to the bank that the borrower, Catclause, had been supplanted, and REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 181 that security was now being provided by the new owner of the property which was to be Mr. Aidan Phelan. It appears that the bank, even assuming that it had some, even the vaguest, knowledge of these events at the time, was disinterested or at best indifferent. As Mr. Cullen put it, the guarantee had "fallen 7.58 offthe page". The evidence of communications with Mr. V a u g h a n at this time w a s Mr. Phelan informed the Tribunal that having, as perplexing, if not implausible. he contended, taken over the borrowing from Mr. Lowry, Mr. V a u g h a n was then instructed that the property should be held by him as trustee for Mr. Phelan, and in that regard, Mr. V a u g h a n was prepared to act on Mr. Phelan's instructions. In other words, Mr. V a u g h a n was prepared to take Mr. Phelan's instructions to hold a property, one acquired by Mr. Lowry through his company, Catclause, in trust for Mr. Phelan. This, as was acknowledged by Mr. Phelan, was most unusual, in that it appeared that a solicitor was prepared to take instructions concerning a client's property from another individual, the effect of which was to transfer the property from the solicitor's client to that individual. 7.59 In that regard, Mr. Lowry's testimony was contrary to that of Mr. Phelan in that he stated that he was present w h e n a telephone conversation to this effect took place between Mr. Phelan and Mr. V a u g h a n , and that he reinforced or endorsed those instructions. Whilst a letter, as will appear below, s e e m s to have been written by Mr. V a u g h a n to Mr. Phelan, around this time, reflecting to some degree certain changes in the transaction, though not to the effect contended for by Mr. Phelan, there appears to have been no letter to Mr. Lowry seeking his confirmation that he had ceased to have any interest in the property. 7.60 The letter in question w a s from Mr. V a u g h a n to Mr. Phelan, of 11 th January, 2000, where he states: "Further completion to our telephone conversation Church took I am place writing to confirm the of St. Columba's on the 21st the December handwritten 1999 and I enclose a copy of the completion statement, notes at the end are my workings out of the interest that had to be paid. Following vehicle the decision that Catclause Limited is no longer the purchasing my wife the property is to be registered as 'bare in the names of myselfand (who is also a solicitor) trustees. I have spoken to Michael Tunney in respect of the transaction and I would like to meet you when I come to Dublin for the Notaries Conference..." REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 letter does reflect w h a t might be termed a restructuring of the vehicle", Page | 182 Whilst this transaction, that is, that Catclause was no longer to be the "purchasing it does not reflect the proposition that Mr. Lowry had exited from the transaction, to be replaced by Mr. Phelan. 7.61 It was Mr. Phelan's further account of w h a t transpired at this time that, although having taken over the property and the loan, he nevertheless held Mr. Lowry, with Mr. Lowry's agreement, morally responsible to find a buyer for the property. He also testified, s o m e w h a t intriguingly, that he regarded Mr. Kevin Phelan as bound by the selfsame moral obligation. W h e n queried by counsel, he pointed out that Mr. Lowry had got him into this difficulty, but was unable to explain quite w h y he should have felt able to expect a similar moral obligation from Mr. Kevin Phelan. 7.62 In support of his evidence that he had assumed ownership of the transaction on the failure of the guarantee, and that Mr. Lowry had thereupon ceased to have any interest, other than a moral obligation, Mr. Aidan Phelan pointed to a letter, dated 26 t h January, 2000, that he wrote to Mr. Lowry, in which he stated as follows: "It is now clear that you are not able to obtain a replacement Mr. John Daly. Mick Tunney, This places me in an extremely embarrassing guarantor position for with in as I have given my word that this loan which he arranged out. a hurry would be sorted As you know Christopher he is holding the property has been instructed that Catclause is gone, and in trust for me until the loan is repaid. Although I am prepared to 'backstop' the loan you have full responsibility to move the property as soon as possible." Mr. Phelan did not agree with Tribunal counsel that the term "backstop" was consistent only with his assuming liability as a guarantor, or on s o m e secondary basis, as opposed to the assumption of ownership of the property, and the primary obligation under the loan. A s s u m i n g that the letter reflected the true situation, it can only m e a n that Mr. Phelan w a s , if anything, standing behind the borrower or supporting the loan, having regard to his relationship with Mr. Lowry, but not that he had a s s u m e d direct responsibility for it, or ownership of the property purchased with its proceeds. Whatever interpretation is placed on the wording of the letter, the fact remains that, despite the rather dramatic language used by Mr. Phelan in recounting the impact of Mr. Daly's resiling f r o m his guarantee obligations, no similar letter, nor any letter of any kind, was sent to the bank reflecting any of the content, however interpreted, of the letter to Mr. Lowry. REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7.63 7 Furthermore, if, as has been contended, the bank, in the person of Mr. Page | 183 Tunney, was alerted to a change in the legal liability under the loan, and in the ownership of the property intended as security for the loan, no new facility letter was issued, naming Mr. Phelan personally as the borrower, nor any attempt made to obtain a security from Mr. Phelan over a property now asserted to be in his ownership. T H E T H I S T L E W O O D A N D B E R W O O D S A L E S A N DT H E INTENDED BENEFICIARY O F THE PROCEEDS 7.64 The issue concerning the ownership of the Cheadle property arose at In the course of its first various times in the course of the Tribunal's sittings. sittings touching on the Cheadle transaction, w h e n it had been testified by Mr. Phelan and Mr. Lowry that from January, 2000, after Mr. Daly's refusal to execute a completed guarantee, Mr. Phelan had a s s u m e d ownership of the property and direct responsibility to the bank for the borrowings, reference w a s made to a letter from Mr. Aidan Phelan to Mr. Lowry, dated 2 n d November, 2000, which, noting that the "Thist/ewood dea/", which would have yielded Stg.?1.1 million, had fallen through, stated that Mr. Aidan Phelan wanted Mr. Kevin Phelan and Mr. Lowry to move the site at once. Mr. Aidan Phelan insisted that this letter did in the sense that he still had a not mean that Mr. Lowry was still "in the frame" tangible interest, but rather that he continued to have a moral obligation to assist in disposing of the property. In fact, the circumstances surrounding this sale, sometimes referred to as the Thistlewood sale, did not fully emerge until Mr. V a u g h a n finally gave evidence in 2009. W h a t had actually transpired in 2 0 0 0 began to become clear in 2002, w h e n further documentation made available to the Tribunal indicated that Mr. Christopher V a u g h a n ' s files provided to the Tribunal had been falsified by the substitution of altered forms of letters for the original letters contained on the file. In 2009, it emerged that this substitution of altered forms of letters was accompanied by the removal of other letters altogether from the files. UK property ML 7.65 The Thistlewood sale was referred to at the meeting in Jury's Hotel, Dublin on 17 th August, 2000, to which reference has already been made in the previous chapter. The meeting was attended by Mr. Lowry, Mr. V a u g h a n , Ms. Helen Malone and Mr. Aidan Phelan. Ms. Malone prepared a note, indicative either of w h a t transpired at the meeting, or of the agenda envisaged for the meeting. This note referred to the Mansfield and Cheadle properties, and the then state of affairs as regards their development or sale. headed: The d o c u m e n t was REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 7 " U K Property ML", Page | 184 and appears to suggest a continuing interest on the part of Mr. Lowry in both the Mansfield and Cheadle properties. In evidence, it was contended by Mr. Aidan Phelan and Mr. Lowry that any suggestion that the wording of this note indicated a continuing involvement on the part of Mr. Lowry was incorrect, and both insisted that his interest was then limited to a 10% equity in Mansfield, he having ceased to have any interest since January, 2000, in Cheadle. A copy of Ms. Malone's note can be found within the Appendix to this chapter. Long form, short form letters 7.66 At this point, it is appropriate to mention two letters written by Mr. V a u g h a n to Mr. Kevin Phelan, and dated respectively 9 t h August, 2 0 0 0 , and 5 t h September, 2000, although the latter preceded the former in coming to the Tribunal's attention, being one of w h a t was referred to in evidence as the two "long form" and "short form" letters produced by Mr. Colm Keena, of The Irish Times. The circumstances of these letters will be addressed more fully in the next chapter, entitled "Falsification of Mr. Christopher Vaughan's Files". For present purposes, it will suffice to state that the Tribunal has concluded that the form of the 5 t h September, 2 0 0 0 letter, which was conveyed as part of Mr. V a u g h a n ' s correspondence file, was a deliberately truncated and altered version of the actual letter then written and sent, a course taken to suppress and withhold from the Tribunal a true account of Mr. Lowry's subsisting beneficial interest in the Cheadle property, and to furnish a false version, in accordance with which information and evidence were then given. September, 2000, are now reproduced. Both versions of the letter dated 5 t h REPORT O F T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h apt e r 7 Short Form Page | 185 S O L I C I T O R Old ChiizcH Chambers Sandhill Road. North.mpton N N 5 SU-j D* 1(20 NomuMrroN 3 TeL 0l< - i the flunduct f > I ti vt si nicfic f REPORT OF THE TRIBUNAL ON PAYMENTS TO POLITICIANS AND RELATED MATTERS - PART II VOLUME 1 Chapter 7 C H R I S T O P H E R S O L I C I T O R & Page "\/^.UGHAN P U B L I C N . N S SL!-( 751060 | 226 N O T A R Y O l d Church C h a m b e r s SindKiU R o i d . N o r t h a m p t o n Teb 01604 758908 D* L5620 NORTHAMPTON 3 Fax: 01604 K e v i n Phelan Esq 106 G i l i y g o o l e y Road O M A G H Co Tyrone, L BT72 5 Q A ' J 5 September 2000 Dear Kevin I f a x e d t h r o u g h t o y o u o n t h e 4 l h S e p t e m b e r t h e Setter f r o m T h i s t l e w o o d E s t a t e s that w a s w a i t i n g f o r m e w h e n I returned f r o m holiday. This looks to be excellent n e w s depending o n w h e t h e r the conditions c a n be satisfied. W h a t X w o u l d l i k e t o d o is t o s e t u p a t i m e t a b l e , b e a r i n g i n m i n d t h a t T h i s t l e w o o d Estates. C o u l d y o u therefore let m e k n o w :1. W h a t t h e c u r r e n t s i t u a t i o n is w i t h r e g a r d to t h e g r a n t o f p l a n n i n g c o n s e n t f o r t h e p r o p o s e d r e s i d e n t i a l scheme. W h o is g o i n g t o s u b m i t a n d p a y f o r t h e p l a n n i n g a p p l i c a t i o n a n d w h e n w i l l it b e d o n e . P r e s u m a b l y t h e a c c e s s w i l l b e d e a l t w i t h a t t h e s a m e t i m e as t h e p l a n n i n g a p p l i c a t i o n is s u b m i t t e d . A r e T h i s t l e w o o d u n d e r t a k i n g a soil s u r v e y at the present t i m e ? Michaei w a n t s t o o w n the property i n h i s o w n n a m e f o r a m o n t h p r i o r to the sale to 2. 3. D o y o u k n o w the identity o f T h i s t l e w o o d Estates clients. I have d o n e a c o m p a n y s e a r c h a g a i n s t T h i s t e l w o o d , a n d I e n c l o s e a c o p y h e r e w i t h w h i c h says v e r y little. D o w e k n o w w h o t h e i r a c t u a l c l i e n t s are? I have n o t w r i t t e n to M i c h a e l about this as I get concerned about c o r r e s p o n d e n c e g o i n g to h i m , b u t a c o p y has been sent t o A i d e n as h e needs t o k e e p t h e m o r t g a g e l e n d e r h a p p y as t o t h e l o a n t h a t M i c h a e l t o o k o u t . K i n d regards. Yours sincerely C J VAUGHAN VV s n O i m r o p h e r V i u g h i n ii by t h e Ljv* S o c e r y in t h e C o n d u c t o f I n v e s t m e n t B u s i n e s s A l s o . e T H << O l d R e c t o r y . H . v i n l t i m , SGlrcm K e y n e s : . ( K 1 9 " D T T e l : 0 1 9 0 3 22GSS1. By A p p o i n t m e n t oniy. 8.11 The convenience of referring to these documents as the "short form" form" and "long form" of the relevant letters will be obvious from a comparison of the main discrepancies between them. The "long 2000, contains a second paragraph as follows: "You will recall that this property Trustee for our client. schedule the conditions was purchased I [sic] my name as policy unoccupied." of the letter of 12 th July, I have only appreciated as to the property upon reading the whilst it is R E P O R T O F T H E T R I B U N A L O N P A Y M E N T S T O P O L I T I C I A N S A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter In the "short 7 form" of that letter, the equivalent passage is as follows: Page | 227 "You will recall that this property was purchased I [sic] my upon reading name, the as Trustee schedule for Aidan Phelan. the conditions I have only appreciated as to the property policy whilst it is unoccupied." In the "long form", the final paragraph reads as follows: "I seem lender to recall when the lending was going to require process was being completed report on the marketing that the a six monthly of the I property. Can you please let me have details as well." so I can deal with this? think the same will apply to Mansfield In the "short form" of the same letter, there is no such paragraph. 8.12 Proceeding to the two versions of the letter of 5 t h September, 2000, the "long form" of this letter contains a second paragraph as follows: "What Michael I would wants like to do is to set up a timetable, to own the property Estates." in his own name bearing in mind prior that to for a month the sale to Thistlewood The "long form" of this letter concludes as follows: "I have not written going to Michael about this as I get concerned about as he took correspondence to him, but a copy has been sent to Aiden lender happy as to the loan that Michael needs to keep the mortgage out." Neither of those paragraphs is contained in the "short "long form" form" of that letter. The also contains an asterix against the penultimate paragraph. This relates to a manuscript addition at the bottom, which signified that the c o m p a n y search mentioned in that paragraph was, "to 8.13 have follow". In the Appendix to this chapter, the two versions of each of the letters been set out in immediate succession to each other. From a visual inspection o f t h e s e , it can readily be ascertained that: (i) the additional content of each of the "long" w h a t in any event are short letters; forms significantly extends (ii) as regards the substance c o m m o n to each form, broad similarities are apparent as to both content and form, these extending, in the case of the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 228 12 th July, 2000, letters, even to an apparent typographical error in the first line of the second paragraph, ("/" instead of "in") forms; being c o m m o n to both (iii) on any more careful comparison of the "long" and "short" forms, a significant incidence of differences as to wording, spelling, punctuation and formatting is apparent, a list of which differences can also be found in the Appendix to this chapter. 8.14 Save for a brief form" reference to the Mansfield transaction at the conclusion of the "long of the 12 t h July, 2 0 0 0 letter, the content of the " l o n g form" versions of both letters relates exclusively to the Cheadle property. Mr. Christopher Vaughan's non-attendance prior to 2009 8.15 Following the Investec disclosures, Mr. V a u g h a n provided the Tribunal with certain assistance, both by responding to queries in correspondence, and at a private meeting with members of the Tribunal legal team, on 19 th June, 2001. In correspondence, he provided the Tribunal with copies of his files relating to the Mansfield and Cheadle transactions, d o c u m e n t s which purported to contain the full account of his dealings on behalf of his clients with these properties. 8.16 As was made clear in Opening Statements, the Tribunal had always proceeded, as it would s e e m reasonable to do in any matter involving the actions of solicitors carried out on behalf of their clients, on the basis that a solicitor performing a professional duty, where any obligation of confidentiality had been waived by his clients, would readily make himself available as a witness, to testify in relation to matters connected with his file. However, Mr. V a u g h a n would not attend at any of the Tribunal's sittings concerning these properties at the time of either its initial inquiries, following the Investec "long disclosures, or in the course of its s u b s e q u e n t inquiries concerning the form" and "short form" letters, that is, in 2 0 0 2 , or w h e n the Tribunal proceeded with inquiries in relation to the Doncaster transaction in 2004, and again in 2007. As Mr. Vaughan resided beyond the jurisdiction, he could not be compelled to attend to testify at public sittings, nor could he be compelled to attend for examination on oath in England. Unless Mr. V a u g h a n was prepared to attend voluntarily, he could only be s u m m o n e d to testify if his presence in Ireland enabled the Tribunal to arrange for him to be served with a process to enforce his presence at its public sittings. Ultimately, it was not until 2 0 0 9 that, in response to notification of the Tribunal's Provisional Findings, Mr. V a u g h a n made himself available to accept service of a witness summons, and subsequently attended to testify. For non-legal readers, it is important to bear in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 in Page | 229 mind that, although the Tribunal conducted a meeting with Mr. V a u g h a n England, this was conducted on a voluntary basis, and the contents of that meeting did not constitute, and indeed could not constitute, evidence for the purpose of the Tribunal's proceedings. 8.17 The Tribunal's efforts to secure Mr. V a u g h a n ' s attendance as a witness c o m m e n c e d in 2 0 0 1 when, by letter dated 19 th June, 2001, he was requested to attend the Tribunal's then forthcoming public sittings to testify in connection with the Mansfield and Cheadle transactions, its very first sittings held in connection with those transactions. Mr. V a u g h a n responded in the negative stating that, as a practising solicitor and notary in England, he was unfamiliar with the laws of Ireland, especially with regard to Tribunals, and felt that, from a professional viewpoint, he could not expose himself to public testimony relating to his past professional representation of his clients since, as he contended, to do so would place him in an impossible position. The Tribunal regarded this rationalisation as untenable, and sought to reassure Mr. V a u g h a n as to the broad similarities relating to Tribunal law and practice in both jurisdictions. This however was to no avail. The Tribunal's initial hearings concerning the Mansfield and Cheadle transactions were therefore conducted without the attendance of Mr. V a u g h a n but, as already mentioned, on the basis of the documentation made available by him, documentation which was represented by Mr. V a u g h a n , and indeed by both Mr. Lowry and Mr. Aidan Phelan, as containing an accurate record o f t h e Mansfield and Cheadle transactions. 8.18 Further sittings were held in October of 2001, and prior to those sittings the Tribunal reopened its correspondence with Mr. Vaughan, regarding his attendance at the Tribunal's public sittings to testify. Prior to that, Mr. V a u g h a n in earlier correspondence had indicated that he did not believe his evidence would be of any value, and furthermore, drew attention to a medical condition which was likely to be aggravated by the stress of giving evidence. In reply to Mr. Vaughan, the Tribunal indicated that, if appropriate evidence of his health condition was furnished, it might be open to the Tribunal to hear his evidence otherwise than at public sittings. Mr. V a u g h a n ' s response on 17 th July, 2001, was that he was not prepared to attend the Tribunal to testify, either in public or at sittings which, under the Tribunals of Inquiry Acts, could in appropriate circumstances be held on commission in private. It should be noted that both Mr. Lowry and Mr. Aidan Phelan had provided Mr. V a u g h a n with full waivers of confidentiality, thus avoiding any risk that he could be exposed to any liability to those clients, were he to give evidence concerning his dealings with t h e m or on behalf of them. Moreover, both had exhorted him to attend to testify, but notwithstanding these exhortations, and the relevant waivers, Mr. V a u g h a n was unmoved to alter his decision, refusing to attend. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 230 Written explanations provided by Mr. Christopher Vaughan concerning the "long form" and "short form" letters in 2002 8.19 Upon the emergence of the "long form" of the letters, as produced by Mr. Keena, on 21 s t March, 2002, it was apparent to the Tribunal that, if either or both transpired to be genuine letters written by Mr. V a u g h a n , the content of those portions, which either differed from the "short form" letters, or were additions unique to the "long form" letters, could give rise to possible inferences that, rather than Mr. Lowry ceasing involvement in the Cheadle transaction at the beginning of 2000, in favour of Mr. Aidan Phelan, Mr. Lowry's interest had continued. The second paragraph of the "long form" letter of 12 th July, 2000, refers to the purchase of this property in the name of Mr. V a u g h a n , as trustee "for our client". In the "short form", apart from deleting the final paragraph as "Aidan set out in the "long form", Phelan". the italicised words are replaced by the words The suggestion that this property was purchased in trust for Mr. Phelan is palpably w r o n g on any analysis of the evidence, already mentioned in relation to the Cheadle transaction, in that the contracts were exchanged on 14 th S e p t e m b e r , 1999, Mr. Phelan, even on his own evidence, not having become involved until 2000. 8.20 The second paragraph o f t h e "long form" o f t h e letter of 5 t h S e p t e m b e r , 2000, reads as follows: "What Michael I would wants like to do is to set up a timetable, to own the property Estates." in his own name bearing in mind prior that to for a month the sale to Thistlewood This paragraph had been deleted from the "short the "long form" letter is as follows: form". The final paragraph in "I have not written going to Michael about this as I get concerned about as he took correspondence to him, but a copy has been sent to Aiden lender happy as to the loan that Michael needs to keep the mortgage out." This paragraph had likewise been deleted from the "short form". The deletions from each of these letters appear to suggest that Mr. Lowry, as of July, and September, 2000, was the purchaser, and the person for whose benefit these properties were being held in trust by Mr. Vaughan. If the "long form" letters or either of t h e m proved genuine, consideration w o u l d have to be given as to the motivation w h e r e b y it was the "short form" that had formed part of Mr. V a u g h a n ' s conveyancing files produced to the Tribunal, and, in particular, as to whether the "short form" letters were devised or generated in order to conceal an ongoing REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 231 involvement on the part of Mr. Lowry, and to misrepresent the identity of the true purchaser, or owner of the properties. 8.21 Following receipt of the letters from Mr. Keena, the Tribunal in the course of its private investigative w o r k pursued explanations for these letters from Mr. Vaughan, Mr. Kevin Phelan, Mr. Aidan Phelan and Mr. Lowry. The questions arising from the letters formed the subject-matter of public hearings in July and December, of 2 0 0 2 , in which evidence was given by Mr. Aidan Phelan and Mr. Lowry. Ultimately it transpired, as will appear below, f r o m evidence given by Mr. V a u g h a n when he did attend to testify in 2009, that the explanations given in correspondence, and in evidence in 2002, were incorrect and had misrepresented the position. It is nevertheless important to set out briefly w h a t was then represented to the Tribunal as the true state of affairs concerning these letters, at a time w h e n the Tribunal's evaluation of the matter was confined to a limited number of documents, and was conducted in the absence of documents which did not come to light until much later, and in s o m e cases not until the course of Mr. V a u g h a n ' s examination in 2009. 8.22 the "long" On 21 s t March, 2002, the day he received the letters in both forms from Mr. Keena, Mr. Davis wrote to Mr. V a u g h a n by fax, enclosing copies of both forms and "short" forms, referring to the "long form" as having been received by the Tribunal only that day, and requesting that Mr. V a u g h a n reply by return. Mr. V a u g h a n responded by telephoning Mr. Davis, stating that he did not have any particular c o m m e n t in relation to w h a t he had received, did not think he was instructed in the matter any further, and that he would reply by fax later that day. He further stated that it was, or may have been the case, that the "short forms" of each letter were merely drafts, which he had expanded upon w h e n writing to Mr. Kevin Phelan on each occasion. W h e n Mr. Davis put it to him that the "long forms" did appear to be his letters, he replied, as recorded by Mr. Davis at the time that: " O h yes, they are my letters; 8.23 they have my name on them." Mr. Davis duly received by fax a letter of the same date from Mr. V a u g h a n , in which he acknowledged receipt, and confirmed that he had no immediate c o m m e n t to make, indicating that he was no longer instructed by any of the relevant persons, and was indeed unsure whether their waivers of confidentiality still applied, but that he would be prepared to contact them, to see if they wished to instruct him further. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8.24 7 On 25 t h March, 2002, Mr. Davis wrote to Mr. V a u g h a n with reference "short Page | 232 to Mr. V a u g h a n ' s earlier explanation that he may have expanded upon the form" of the documents, w h e n writing to Mr. Kevin Phelan on each occasion in Mr. Davis requested that Mr. V a u g h a n examine his July and S e p t e m b e r , 2000. file so as to clarify the position, pointing out that he felt that Mr. V a u g h a n would "agree" that it was "unusual that a Solicitor a would not retain an office copy of the final draft ofa letter issued on behalfof 8.25 client". In a further letter to Mr. V a u g h a n , dated 12 th April, 2002, Mr. Davis also pointed out that he did not think that Mr. V a u g h a n ' s explanation for the letters was satisfactory, and suggested that, from the existence of the forms" and "short forms", "long a number of inferences could be drawn, including the following: (i) that Mr. V a u g h a n had generated two separate sets of correspondence concerning the letters; (ii) that only one set was made available to the Tribunal on foot of its original request for assistance; (iii) that a separate set of documentation was obscured from the view of the Tribunal; (iv) that two files appeared to have been kept in connection with the matter, one for disclosure to the Tribunal, and one to be obscured from disclosure to the Tribunal; (v) that this concealment appeared to be related to the involvement of Mr. Lowry. 8.26 Mr. V a u g h a n wrote to the Tribunal on 16 th April, 2002, indicating that he had not yet obtained instructions, and after a further letter f r o m Mr. Davis, wrote again on 29 t h April, 2002, acknowledging Mr. Davis' most recent letter, stating that he had been seeking instructions f r o m his clients, and going on to state that he was "enclosing copies of an exchange of correspondence" What between himself and Mr. Kevin Phelan, for the information of the Tribunal. was enclosed was a letter of 18 th April, 2002, from Mr. V a u g h a n to Mr. Kevin The letter was in the form set Phelan at his address at Omagh, County Tyrone. out below: REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 233 HRISTOPHER Y A U G H A N S O L I C I T O R &C N O T A R Y PUBLIC Old Church Chambers Sandhill Road, Northampton N N 5 SLH DX 1 5 6 2 0 NORTHAMPTON J email: christophervaughaiK^brnathtmail.ner Tel: 01604 75 S 90 8 Fix: 01604 751960 Kevin Phelan E s q 106 G i i l y g o o l e y R o a d Omagh Co Tyrone lBT72 5 Q A 18 A p r i l 2002 Dear Kevin M r J o h n D a v i s from t h e M o r l a r t y T r i b u n a l h a s c o n t a c t e d m e i n r e c e n t w e e k s . M r D a v i s has queried d o c u m e n t s w h i c h passed b e t w e e n m y o f f i c e arid y o u i n J u l y a n d S e p t e m b e r 2 0 0 0 . I w o u l d b e g r a t e f u l i f y o u c o u l d assist m e w i t h r e g a r d t o q u e r i e s r a i s e d i n r e l a t i o n t o these d o c u m e n t s . I n order t o assist y o u I h a v e m a r k e d t h e d o c u m e n t s ' J u l y A ' a n d 'July B ' 'September A ' a n d 'September B ' respectively. A s y o u w i l l o b s e r v e t h e r e a r e t w o letters . w i t h t h e same date i n e a c h case. I have f o r w a r d e d ' J u l y A ' a n d ' S e p t e m b e r A ' t o t h e T r i b u n a l as t h e o n l y c o p i e s o n m y f i l e s . H o w e v e r t h e T r i b u n a l n o w appears t o have 'July B ' and 'September B ' w h i c h raise obvious queries o n their part. I w o u l d ask that y o u e x a m i n e y o u r l i i c s a n d letm e h a v e y o u r c o m m e n t s a n d observations. I w o u l d a p p r e c i a t e a n i m m e d i a t e r e s p o n s e as t h e T r i b u n a l i s a n x i o u s t o c l e a r u p t h i s confusion and are pressing m e w i t h some urgency. 1 trust that y o u w i l l b e i n a p o s i t i o n t o assist a n d l o o k f o r w a r d t o y o u r e a r l y r e s p o n s e . Yours sincerely C J V A U G H A N VAT Registration No. <<08 4 0 2 89 8 8.27 From that letter, it appeared that Mr. V a u g h a n had written to Mr. Kevin Phelan, indicating that the Tribunal had been in contact with him, and that he had queried certain documents passing between himself and Mr. Kevin Phelan, in July and S e p t e m b e r , 2000. Mr. V a u g h a n had sought the assistance of Mr. Kevin Phelan, with regard to the queries raised by the Tribunal in relation to the documents. He enclosed copies of the "long" and " s h o r t " forms of each of the letters, and he requested that Mr. Kevin Phelan examine his files, and that he provide his c o m m e n t s and observations to Mr. V a u g h a n . REPORT OF THE TRIBUNAL ON PAYMENTS TO POLITICIANS AND RELATED MATTERS - PART II VOLUME 1 Chapter 8.28 7 With his letter to Mr. Davis of 29 t h April, 2002, Mr. V a u g h a n 23 r d also Page | 234 enclosed Mr. Kevin Phelan's reply to him, which was dated which is set out below: April, 2002, and Omagh Mr. Christopher Vaughan Solicitor Old Church Chambers Sandhill R o a d Northampton N \ 5 5 L H 106 G i l l y g o o l e y R o a d Co.Tyrone N.Ireland BT78 5QA Fa*: (04882) 2 5 0 7 4 4 23 rd April 2002 Dear Christopher I acknowledge receipt o f your letter dated April 18th 2002. I have examined my files as requested by you and confirm the only letters I have on file are "July A " and "September A " . I recall on some occasions in the past you issued correspondence t o me outlining incorrect details f o l l o w i n g our prolonged and detailed meetings, I know on occasions you confused clients and projects, which resulted in corrections having to be made and new correspondence t o be issued. I believe the documentation you have forwarded has probably arisen f o r this reason. In any event as stated I have letters marked "July A " and "September A " on my files which J hold as originals. I have no idea where the documents marked "July B " and "September B " have come from I trust this information is o f assistance. Y o u r s sincerely K e v i n Phelan 8.29 If Mr. V a u g h a n ' s remarks on the telephone to Mr. Davis concerning these letters are ignored, on the basis that he may not have had sufficient opportunity to consider the matters being drawn to his attention, or to seek the instructions of his clients, the various explanations form" later offered and "short by him in of the correspondence, for the existence of the "long form" letters, should be noted. A number of features of Mr. V a u g h a n ' s correspondence with Mr. Davis, and partly also with Mr. Michael Kelly of Kelly Noone & Company, solicitors for Mr. Lowry, are noteworthy in light of s u b s e q u e n t evidence, and other documentation which came to the attention of the Tribunal shortly before and during the course of Mr. V a u g h a n ' s evidence in 2009. REPORT OF THE TRIBUNAL ON PAYMENTS TO POLITICIANS AND RELATED MATTERS - PART II VOLUME 1 Chapter 8.30 7 Referring firstly to Mr. V a u g h a n ' s letter of 29 t h April, 2002, it will be Page | 235 observed that this letter was written after instructions, and referred to the enclosure by Mr. V a u g h a n of "an exchange of correspondence" between himself and Mr. Kevin Phelan. The exchange consisted of one letter from Mr. V a u g h a n , purporting to raise the issue o f t h e "long" in response from Mr. Kevin given in Phelan, 2009, and "short" purporting it is clear form letters, and one letter to explain the them. From of subsequent evidence that exchange correspondence between Mr. V a u g h a n and Mr. Kevin Phelan concerning these matters was not limited to these two letters. letters contained the relevant exchange The suggestion that these two of correspondence wholly misrepresented the position. The true picture, which did not emerge until 2009, was that there was an exchange of correspondence between Mr. Kevin Phelan and Mr. V a u g h a n , also embracing correspondence between Mr. Kevin Phelan's solicitors and Mr. Vaughan, concerning matters similar to those, and in s o m e cases identical to those, being raised in the correspondence between the Tribunal and Mr. V a u g h a n . with his letter of 29 t h From the correspondence enclosed by Mr. V a u g h a n April, 2002, it appeared, as no doubt it was intended to and "short form" letters had j u s t ten appear, that this matter of the "long form" days previously been raised by Mr. V a u g h a n with Mr. Kevin Phelan, so as to elicit the response from Mr. Kevin Phelan dated 23 r d April, 2002. The true facts are that Mr. Kevin Phelan had been corresponding both directly, and through his solicitors, with Mr. V a u g h a n in relation to a number of assertions, the thrust of which was that documentation he held, concerning matters similar, and in s o m e cases identical, to matters being raised by the Tribunal, diverged from those altered documentation which matters. In short, Mr. had been furnished to the Tribunal concerning Kevin Phelan was effectively suggesting that versions of letters, actually sent by Mr. V a u g h a n to him, had been relayed to the Tribunal, so as to misrepresent the true position. Had this correspondence been made available to the Tribunal, it would not have been open to Mr. V a u g h a n to furnish Mr. Kevin Phelan's letter to him of 23 r d April, 2002, as a purported explanation for the "long form" and "short form" letters. 8.31 When, in response to with Mr. Kevin his letter of 29 t h April, 2002, enclosing Phelan, Mr. Davis again wrote seeking his his correspondence assistance, Mr. V a u g h a n responded, on 7 t h May, 2002, stating that he did not think that there was anything further he could do to assist the Tribunal. Efforts were then made by the Tribunal, with the solicitors to both Mr. Lowry and Mr. Aidan Phelan, to have t h e m obtain a more comprehensive explanation f r o m Mr. V a u g h a n . Mr. Lowry's solicitors, in response, informed the Tribunal that they had written to Mr. Vaughan, seeking an explanation as to why, in the context of their client's dealings in regard to the Cheadle property, the reference: REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter "Michael the sale", wants to own the property 7 in his own name for a month prior to Page | 236 along with the different versions of: "...this Phelan" and property was purchased I (sic) my name as Trustee for Aidan "this property was purchased I (sic) my name as Trustee for our client" came to be made. 8.32 Following an initial holding letter, Mr. V a u g h a n ' s substantive reply to Mr. Lowry's solicitors was sent on 4 t h July, 2002. In the course of w h a t was a relatively lengthy letter, he referred to the two property transactions undertaken as having been s o m e w h a t confusing and difficult, and stated: "Because and Kevin Phelan acted for both Aidan as well, Phelan and Michael difficult whom he Lowry when was was involved in other Phelan matters over it was very to know speaking with Kevin the telephone representing at any one time, especially matters. as any telephone conversation could cover a number of different This certainly may have because caused more first confusion than may on various occasions which is why prepared me there by me a been the one version have been of a document prepared by following misunderstanding of my instructions." 8.33 At a later point in his letter, after referring to his view that Mr. Lowry relinquished any claim to ownership of the Cheadle property in early 2000, and that the public registration of the identities of Mr. Lowry and his daughter as officers of Catclause Limited did part, not seem to accord continued, with a disguised involvement on the former's Mr. V a u g h a n form" in purporting to explain the second paragraph of the "long of the letter of 5 t h September, 2000, containing a reference to Mr. Michael Lowry wishing to own the property in his own name, and stated: "You indicate that I have confused bearing Aidan Phelan and Michael above. Lowry. This is not unexpected, in mind what I have written However, should I was instructed that The Revenue personally would expect that any site Gains owned [sic] by an investor Therefore to minimise any Capital Tax liability. the objective was correct but the name was stated REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter incorrectly 7 by me - I would put this down to either a simple Kevin Phelan complained to me over error or lack of it and I simply Page | 237 concentration. corrected it. With regard I regularly working to your reference faxed to the duplicate to Kevin letters as mentioned throughout our above, whole transmissions Phelan relationship. If he then corrected the amended the first versions version something on receipt of a FAX, I would have sent him not two and kept that hard copy on my file, but probably Kevin Phelan would therefore have version, of the FAX. of the same letter, and I would only have the final version." 8.34 In a letter to the Tribunal dated 17 th July, 2002, in further addressing letters in question came to provided to the Tribunal, be Mr. the question of how two forms of the two generated, with only the "short form" being V a u g h a n stated: "Kevin Phelan may well then have corrected of a Fax to him. the hard have copy I would my understanding of events on the receipt version probably further and then have sent him an version amended I kept of that amended of the first version on my file. to would disposed of the Fax avoid confusion. The end result would be that Kevin Phelan same Fax, the first incorrect would have two versions correct final of the version and the second version. Kevin Phelan in his letter to me of the 23rd April 2002 states of the two letters ofthe incorrect in question, version. I assume that he only that he has one version likewise disposed therefore However, could the Faxes been may sent well have had to a wider clients third distribution and as copies other have some have through one the possibly may well for professional mischievously advisors, and of those version parties sent the incorrect Sender. through to the Tribunal reason only known to the I cannot speak on behalf of Kevin Phelan Tribunal 8.35 has the correct version ofthe but so far as I am concerned question." the Faxes in Correspondence was also exchanged with the solicitors for Mr. Denis O'Brien, Mr. Aidan Phelan and Mr. Lowry; in essence, the respective solicitors indicated that they were unable to explain the discrepancies between the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 238 different forms of the letters, but since each of these individuals testified at public sittings, it s e e m s unnecessary to recount this correspondence. 8.36 As to Mr. Kevin Phelan, w h o s e letter of 23 r d April, 2002, to Mr. V a u g h a n has already been referred to, he remained unprepared to attend and testify at the Tribunal's sittings, and s u m m a r i s e d his position in a letter sent by fax to the Tribunal at lunchtime on 29 t h July, 2002, the day the relevant public sittings c o m m e n c e d . In this letter he referred to earlier correspondence, said that he had discussed the matter with his solicitor, and w e n t on to state: "Any issue considering the validity that should of correspondence be addressed with Christopher It is for the of Vaughan Tribunal is a matter to come with him. to its own conclusion that has come questions from over the validity Mr. Vaughan. or otherwise correspondence state therefore I would respectfully documentation that as to the validity of this have wrongly been directed to me. Further relation I have instructed that solicitors have arisen in England of which to act on my behalf Vaughan in is of to issues Christopher connected to. At this stage therefore my priority has to be the resolving disputes wish arising issues that I am connected business prejudice information 8.37 transactions my position to the to in relation England. to ongoing What out of within I do not to do is to by divulging in relation to these ongoing matters Tribunal." Mr. Kevin Phelan concluded this letter by stating that, whilst it was his matters wish to co-operate with the Tribunal, he felt, in the context of the mentioned, unable to respond substantively or attend public sittings, but that no inferences should be drawn from the absence of such a substantive response. 8.38 At this time, Mr. Kevin Phelan, as will become apparent f r o m a later chapter, was engaged in comprehensive negotiations with Mr. Aidan Phelan, Mr. Lowry and Mr. O'Brien, and had corresponded with Mr. Vaughan, with solicitors for Mr. Aidan Phelan, with solicitors for Mr. Denis O'Brien, and possibly others, in connection with matters related to the inquiries being conducted by the Tribunal in 2002, with specific reference to the "long form" and "short form" letters. He did not inform the Tribunal, as subsequently e m e r g e d from the evidence of Mr. Christopher V a u g h a n , not given until 2009, that he had, both directly and through solicitors, been in correspondence with Mr. V a u g h a n suggesting that certain letters, including that of 5 t h September, 2000, had been provided to the Tribunal, as part of Mr. V a u g h a n ' s conveyancing files, so as to misrepresent the true state of affairs concerning the ownership of the Mansfield and Cheadle REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter properties. Whilst in his correspondence which he was involved 7 to the Tribunal Mr. Kevin Phelan Page | 239 alluded to dealings with Mr. Christopher Vaughan, connected with disputes in in England, it is now clear, in light of subsequent evidence, that he could not have brought the correspondence referred above to the attention of the Tribunal. To have done so would have betrayed a complete contradiction between what was asserted in that correspondence with respect to Mr. Christopher Vaughan's activities, and what was contained in his letter of 23 rd April, 2002, to Mr. Christopher Vaughan, which was forwarded to the Tribunal as a purported explanation for the existence of the "long versions. form" and "short form" EVIDENCE HEARD 8.39 Public sittings in relation to the two letters and their different forms Following an Opening Statement, Mr. John commenced on 29 th July, 2002. Davis gave evidence, in his capacity as Tribunal solicitor, in relation to the foregoing correspondence, and his dealings with individuals involved, including Mr. Keena. It is worth noting that, in the course of his evidence, Mr. Davis was queried "short by counsel on behalf of Mr. Aidan Phelan as to whether he had and endeavoured to ascertain from Mr. Keena the source of the "long form" form" letters provided to the Tribunal. Mr. Davis' response was that he saw little point in pursuing the matter, as he assumed, and the Tribunal believes justifiably, that Mr. Keena, as a journalist, would not have been prepared to disclose his sources. Evidence of Mr. Denis O'Brien: no involvement in the transaction 8.40 Mr. Denis O'Brien then gave evidence. He stated that he did not see how the correspondence in question concerned him and, in accordance with what had already been conveyed in writing to the Tribunal by his solicitors, confirmed that he knew nothing of the letters in question, or the transaction to which they primarily related, and that he saw no reason why there should have been differing forms of the same letters. He acknowledged that he was now aware that Mr. Kevin Phelan and Mr. Vaughan had acted professionally for himself and Mr. Aidan Phelan, in relation to property transactions at Doncaster and Luton, but stated that he had never met either of these individuals, and in particular was unaware, at the time of the Doncaster transaction, that Mr. Vaughan was acting as solicitor for the vehicle that was used for purposes of the purchase. Accordingly, he was entirely unaware of any practice that might have taken place, whereby Mr. Vaughan may have sent letters to Mr. Kevin Phelan for approval, and nobody had brought any such practice to his attention. In conclusion, he reiterated earlier evidence, to the effect that he had had no REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 240 involvement whatsoever in the Cheadle transaction, either in regard to loan finance or otherwise, and he remained very unhappy that he had been wrongly linked to it. 8.41 Mr. O'Brien did not however inform the Tribunal that, as subsequently emerged, at or around the time he was giving evidence, and for s o m e time shortly afterwards, he w a s in dispute with Mr. Kevin Phelan; that negotiations were being conducted on his behalf with Mr. Kevin Phelan; that negotiations were, to some extent, integrated with negotiations then being conducted with Mr. Kevin Phelan by Mr. Denis O'Connor. Furthermore, there was at that time, on the part of Mr. O'Brien and his interests, an apprehension that Mr. Kevin Phelan was hostile to Mr. O'Brien, and that there was a prospect or risk that he might give evidence hostile to Mr. O'Brien in the course of the Tribunal's proceedings. All of these matters are recounted in greater detail in the course of a later chapter in this Volume, dealing with the Doncaster transaction. Evidence of Mr. Michael Lowry: Not happy that there appeared 8.42 Mr. Michael to be two versions of the letters in existence Part of his Lowry gave evidence on 30 t h July, 2002. evidence then described the updated arrangements he had entered into in regard to the Mansfield transaction, as well as detailing certain meetings held with his advisers, after Investec Bank had caused the Cheadle transaction to be brought to the Tribunal's attention, and these matters are referred to in the previous chapters relating to the Mansfield and Cheadle transactions. 8.43 Mr. Lowry also dealt with the letters from Mr. V a u g h a n to Mr. Kevin Phelan; he confirmed his earlier evidence, to the effect that he had ceased to have any beneficial interest in the Cheadle property as and from early in 2000, and stated that he was at a total loss to understand how Mr. V a u g h a n appeared to indicate otherwise in the longer forms of the two letters. Insofar as Mr. V a u g h a n came to do this, Mr. Lowry stated that this was emphatically not on foot of any instructions given by him. He had never received either letter in any form, at the times they had been sent to Mr. Kevin Phelan, and had become aware of their existence only by reason of having been furnished with t h e m by the Tribunal, following which he had instructed his solicitors to comply with the Tribunal's requirements, in particular by requesting a detailed explanation as to w h a t had transpired from Mr. Vaughan. 8.44 W h e n it was put to Mr. Lowry by Tribunal counsel that Mr. V a u g h a n ' s written response to his solicitors left much to be desired, by w a y of providing adequate responses to the queries raised, Mr. Lowry responded that this was not for him to judge, and was a matter for the Tribunal, but that it s e e m e d to him REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter that Mr. Vaughan had responded to 7 the best of his ability. Mr. Lowry Page | 241 acknowledged that he w a s not happy that there appeared to be two versions of the letters in existence. If references in the "long form" related to him, and suggested an ongoing involvement in the Cheadle property on his part after early 2000, they were wrong. 8.45 client", Regarding the letter of 12 th July, 2000, and the "long form" reference "for our to Mr. V a u g h a n having purchased the Cheadle property as trustee Mr. Lowry accepted that this was in substance correct, assuming the form" reference to having purchased "long reference was to him, and that the "short as trustee for Aidan Phelan was in fact incorrect. As to the reference in the form" of the letter of 5th S e p t e m b e r , 2000, to Mr. V a u g h a n being unhappy about sending correspondence to Mr. Lowry, Mr. Lowry stated that there was no basis or reason whatsoever for this. W h e n it was put to Mr. Lowry that the basis for in the letter of 12 th July, changing the reference to a purchase "for our client" 2000, to a purchase "for Aidan Phelan", was to remove any reference to Mr. Lowry in that context, Mr. Lowry replied that he could not accept that, and there would have been absolutely no reason w h y that should have been done, but he was unable to advance any explanation of his own for it, save to refer to Mr. V a u g h a n ' s own letter, to the effect that he had been confused. 8.46 With regard to the portion of the "long form" of the letter of 5 t h S e p t e m b e r , 2000, which stated: "What Michael I would wants like to do is to set up a timetable, to own the property Estates", in his own name bearing in mind prior that to for a month the sale to Thistlewood Mr. Lowry testified that, insofar as this s e e m e d to refer both to the Cheadle transaction and himself, he had at that date no remaining interest in the Cheadle property, and he had given no instructions whatsoever to any such effect to Mr. Vaughan. 8.47 Mr. Lowry was then referred to the meeting in Jury's Hotel, in Dublin on 17 th August, 2000, attended by himself, Mr. Vaughan, Mr. Aidan Phelan and Ms. Helen Malone, to which reference has already been made. The note of that meeting that had, as will be recalled, been prepared by Ms. Helen Malone, had been headed "UK Property ML", and, after a series of references to the Mansfield property, had then referred to the Cheadle property in terms of its history, cost, financing and projected action, including an apparent reference to Mr. V a u g h a n being the registered owner, in a capacity of trustee. It was suggested by Tribunal counsel to Mr. Lowry that, having taken the trouble to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 242 attend a meeting in Dublin with regard to both transactions, less than three w e e k s prior to his letter of 5 t h S e p t e m b e r , 2000, it s e e m e d highly improbable that Mr. V a u g h a n could at the time of such writing have been mistaken or confused as to the true facts. Mr. Lowry reiterated earlier responses in regard to his surprise that two forms of the letters existed, his unhappiness with this fact, and his inability to explain portions of the "long form" letters, which were primarily a matter for Mr. V a u g h a n . 8.48 Tribunal counsel also raised in some detail with Mr. Lowry the various between the "long form" and "short form" of both letters, in discrepancies matters of wording, spelling, punctuation and the like, in terms similar to those set forth in the Appendix to this chapter, and Mr. Lowry was in agreement that w h a t was disclosed appeared to indicate that, in the case of each letter, two separate occasions of preparation were involved; in other words, rather than the "long form" letters having been corrected, to remove elements of mistake, it s e e m e d that each letter had been entirely reconstituted. Mr. Michael Lowry confused 8.49 understood Mr. Christopher Vaughan's position to be that he got In conclusion, Mr. Lowry repeated that he had accurately recounted in his earlier evidence all material details relating to his involvement in the Cheadle transaction, and furnished to the Tribunal all material documents that were known to him; any suggestion that Mr. V a u g h a n as his solicitor may have created the "short form" of the letters, in order that these alone might be made available form", was a falsehood and to the Tribunal, whilst withholding from it the "long did not happen. Mr. Lowry testified that he could offer no explanation as to how letters, stating that he understood Mr. or w h y Mr. V a u g h a n wrote the "long form" V a u g h a n ' s position to be that he got confused, and that at times he confused Mr. Lowry with Mr. Aidan Phelan. In other words, Mr. Lowry adopted the explanation contained in Mr. Kevin Phelan's letter to Mr. V a u g h a n , of 23 r d April, 2002, which Mr. V a u g h a n had forwarded to the Tribunal as his response to the inquiries then made. At the same time, in recounting w h a t had happened in the course of two meetings in Dublin, one at the offices of Mr. Aidan Phelan in Clonskeagh, on 15 th March, 2001, and the other at the Regency Airport Hotel, on or around 27 t h March, 2001, Mr. Lowry could not recall whether Mr. V a u g h a n had stated at any of those meetings that there were times w h e n he got confused as to w h o his clients were. Evidence of Mr. Aidan Phelan: long form letters created mischievously 8.50 At a s o m e w h a t later stage, on 20 t h December, 2002, evidence in relation to these letters was given by Mr. Aidan Phelan. He stated that he had REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter had no knowledge of the "long Tribunal. Mr. Phelan form" 7 of either letter, until so informed by the "long forms" appeared to be on Mr. Page | 243 agreed that the V a u g h a n ' s notepaper, and to contain his signature, and he accepted that, apart from the changes and additions apparent between the "long" and "short" forms, they s e e m e d in each instance to be different in their overall format and layout. Save for absence of any reference to the c o m p a n y Catclause, Mr. Aidan Phelan felt that the "short form" of the letter, of 12 th July, 2000, substantially reflected the actual situation as of that date, insofar as he had by then taken over the Cheadle transaction, and he further felt that the "short form" of the 5th S e p t e m b e r , 2 0 0 0 letter accorded with w h a t had emerged in prior evidence given to the Tribunal. He agreed that the "short form" of the letters contained no reference to Mr. Lowry having any beneficial interest in the Cheadle property after the start of 2000, that the "long form" letters were quite different in this regard, and that, whilst the reference, in the 12 th July, 2 0 0 0 "long form" letter to Mr. V a u g h a n having purchased the property "as Trustee for our client", could have referred to anyone, it was quite possible that the reference w a s to Mr. Lowry. 8.51 Regarding the meeting of 17 th August, 2000, at Jury's Hotel, in relation to which Ms. Helen Malone had prepared a note, Mr. Aidan Phelan confirmed that, at that meeting, he believed that Mr. V a u g h a n could have had no doubt that he, Mr. Aidan Phelan, was the beneficial owner o f t h e Cheadle property, and that Mr. Lowry had only a moral responsibility to assist in giving effect to any sale: that incorrect. accordingly, the If the "long forms" "long forms" of the letters were in this regard were in fact correct, Mr. Phelan agreed that they would provide clear evidence that Mr. Lowry remained beneficially entitled, and that evidence to the contrary was incorrect. 8.52 When Mr. Aidan Phelan had gone to discuss the matter with Mr. V a u g h a n , he pointed out to him, in the context of the additional paragraph in the "long form" o f t h e 5 t h S e p t e m b e r , 2 0 0 0 letter, that no mortgage lender had been involved in the Mansfield transaction, and Mr. Phelan recalled that Mr. V a u g h a n had accepted that this was not something he should have or could have written, and that it flew in the face of the facts. Mr. Phelan's recollection was that Mr. V a u g h a n was unable to provide an adequate explanation as to how the form" "long of the letters came into existence; w h e n he had told him that his initial explanation, as advanced to Mr. Davis, s e e m e d implausible, Mr. Phelan got the impression that Mr. V a u g h a n was under pressure, and was seeking closure in the matter. the factual He conveyed his concern that the "long form" position, in the particularly in regard to Mr. letters did not reflect Lowry's but cessation had found of Mr. "long involvement Cheadle transaction in early 2000, V a u g h a n s o m e w h a t confused, and unable to explain satisfactorily how the form" of the letters had come about. Mr. Phelan more than once expressed the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter view that the "long form" 7 letters had been created mischievously, and that, if Page | 244 they had not been created by Mr. Vaughan, they were in effect forgeries, for the purpose of the creation of which access would have been required to Mr. V a u g h a n ' s office, or at least his notepaper. have required malice, and would He agreed that such a course would have entailed an intention to in addition mislead the Tribunal, but he was unable to point to any person that he felt might have been responsible for this. form" "short He disagreed with the suggestion that the "long letters may have recounted the true position that obtained, and that the form" letters were devised to obscure Mr. Lowry's involvement, and to withhold the true facts from the Tribunal. 8.53 In all, Mr. Aidan Phelan had met Mr. V a u g h a n on three occasions, and had urged him to come to Dublin to testify on each occasion; however, Mr. V a u g h a n was unprepared to do so, feeling that he had done enough, by making his conveyancing files available, and by attending a private meeting with Tribunal lawyers. Mr. Aidan Phelan agreed with Tribunal counsel that there were elements of improbability in the account advanced in correspondence in relation to the letters by Mr. V a u g h a n , and he had indicated to Mr. V a u g h a n his own view that the "long forms" of the letters were created mischievously, which he said However, w h e n Mr. V a u g h a n eventually Mr. V a u g h a n had agreed was possible. came to give evidence in 2009, he suggested that the only time the letters could have been altered was whilst they were in fact in the custody of or under the control of Mr. Aidan Phelan, as will appear later in this chapter, w h e n the relevant evidence of Mr. V a u g h a n given in 2 0 0 9 is considered. 8.54 In response to counsel for Mr. Lowry, Mr. Phelan agreed that there were persons who could have shed light on the matter w h o had not testified to the Tribunal, and that these included Mr. V a u g h a n , Mr. Kevin Phelan, Mr. Keena, and w h o e v e r may have been his informant. provided Mr. Keena with both "short" actual transactions, and must have He also agreed that w h o e v e r had versions had been close to the Tribunal's and "long" been generally aware of the dealings, but that by reason of absence, the reliability of any such person could not be tested. As will appear from further evidence of Mr. Aidan Phelan in 2009, at the time of his earlier evidence in December, 2002, Mr. Phelan was in fact in possession of instances of other similarly altered correspondence, of which the Tribunal was then unaware, and which will be dealt with later in this chapter. Whilst therefore Mr. Aidan Phelan drew attention to the absence of certain witnesses, he did not see fit to bring to the attention of the Tribunal that, at that point, he had in his possession documentation that was directly germane to the matters on which the Tribunal was examining him. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 8 Page | 245 Evidence of Ms. Helen Malone 8.55 Evidence was also heard from Ms. Helen Malone, business partner of Cheadle Mr. Aidan Phelan, who dealt with the various meetings she had attended, initially that of 17 th August, 2000, then at those held subsequent to the transaction having been notified to the Tribunal. Regarding the meeting of 17 th August, 2000, she confirmed that she had kept the note of the meeting that had commenced with a heading or reference relating the subject matter to Mr. Lowry's UK properties, and had then gone on to record what had been decided, in relation to both the Mansfield and Cheadle properties. As to the issue of the "long form" and "short form" letters, she said that she knew nothing about these documents, and stated that her attendance in some instances was by virtue of her expertise as a company secretary, preparing a note of any meeting as required, and advising on corporate matters, such as the striking off of Catclause, rather than as a contributor to any discussions of strategy. OVERVIEW O F EVIDENCE HEARD UP T O 2002 Different stages: initial evidence 8.56 form" story. the The evidence heard by the Tribunal in 2002, concerning the and "short form" "long letters, was not the end of the Mansfield and Cheadle It was not until after further documents came to light, and further true position concerning those transactions became clear. More evidence had been given relating to aspects of the Doncaster transaction, that documentation was to follow in the course of the evidence of Mr. Christopher Vaughan, when eventually he testified in 2009. his evidence were to prove of major Both that documentation and in particularising and significance reinforcing the impression that had already emerged of wholesale suppression of the true facts. It is important however that the information which came to light at each stage of the Tribunal's inquiries concerning these and related matters should be outlined, so that it will be understood that, despite repeated protests on the part of relevant witnesses that the Tribunal had their full co-operation, the opposite in fact proved to be the case. 8.57 It will be recalled that, prior to 2001, the Tribunal understood that it had received a comprehensive account of Mr. Lowry's financial affairs, including all his bank accounts. The Cooper/Investec disclosures brought to light the full extent of the Carysfort transaction, the part played by Mr. David Austin in the transaction, and the existence of a substantial account of Mr. Michael Lowry in an Isle of Man off-shore bank. In addition, resulting from those disclosures, information also emerged concerning the Mansfield and Cheadle transactions. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 246 In evidence in 2001, the Mansfield transaction was represented as involving dealings between Mr. Lowry and Mr. Aidan Phelan only, as purchasers, and that Mr. Lowry's involvement extended to the enjoyment of a mere 10% interest, on foot of his s o m e w h a t less than 10% contribution to the purchase price of that property. The Cheadle transaction was represented as a purchase by Mr. Lowry's company, Catclause, which due to a default by a promised guarantor, was taken over by Mr. Aidan Phelan. Documents purporting to represent the conveyancing files of Mr. Christopher Vaughan, solicitor, were produced in support of those accounts. Revelation of existence of "long 8.58 "short form" and "short form" letters and At the next stage, the revelation o f t h e existence o f t h e "long form" form" letters suggested that the earlier Mansfield and Cheadle evidence may have been incomplete, and that a distorted version of the true facts may have been provided to the Tribunal. 8.59 forms of As is clearly apparent from visual inspection of the "long" the two letters, and was in any event canvassed and with, "short" and acknowledged by, Mr. Lowry in the course of his evidence, the two forms of the letters were in each instance separately conceived and generated. It is untenable to suggest, as was in the first instance advanced verbally by Mr. V a u g h a n to Mr. Davis, that the "short forms" of the letters were merely initial drafts, which Mr. V a u g h a n then expanded upon in writing to Mr. Kevin Phelan, on each occasion. 8.60 It is similarly unrealistic to seek to explain the different forms of the letters by suggesting, as was raised by Mr. Kevin Phelan, in his letter of 23 r d April, 2002, regarding the matter to Mr. V a u g h a n , that they probably resulted from the repetition of a practice whereby, as in previous transactions, Mr. V a u g h a n had confused and misstated clients and projects, thereby requiring correction and fresh correspondence. Apart f r o m it being self-evident that the "short form" letters are not mere corrected versions of the "long form" letters, there is neither logic nor rationale in the suggestion that Mr. Kevin Phelan, to w h o m the letters were addressed, and w h o on the basis of Mr. V a u g h a n ' s explanation, was manifestly not confused, should have required the letters to be reissued, evidence corrected sensibly and resent to him. Furthermore, Mr. Aidan Phelan in the acknowledged the improbability of such a basis for emergence or generation of these documents. 8.61 In light of subsequent evidence, it is curious that Mr. Aidan Phelan, in endeavouring to explain the letters, should have expressed the view that the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter "long forms" 7 of the letters had been created mischievously, that is, forged, Page | 247 although being unable to point to any person or persons who he felt may have been responsible for this. At the time that evidence was given, Mr. Aidan Phelan was in possession of documentation sent to him by Mr. Kevin Phelan, in which Mr. Kevin Phelan, in correspondence with Mr. Vaughan, had effectively letters, suggested, on the basis of the existence of "long form" and "short form" that Mr. V a u g h a n and Mr. Aidan Phelan had misled the Tribunal. It is also curious that Mr. Aidan Phelan, in his evidence, acknowledged that to enable the creation of such forgeries, access would have been required to Mr. V a u g h a n ' s office, or at least to his notepaper, a suggested explanation which was echoed ultimately in Mr. V a u g h a n ' s evidence that his file had been left by him in the custody of Mr. Aidan Phelan for some time. Of course, the Tribunal was wholly ignorant of all these matters at the time of its examination of the "long and "short form" in letters. his Furthermore, telephone Mr. Vaughan had in Mr. any Davis form" event after acknowledged, initial conversation with discovery of the "long form" letters, that the "long form" letters were indeed his letters, and were not forgeries, a proposition from which he never resiled in correspondence with, or later in evidence to, the Tribunal, despite the evidence of Mr. Aidan Phelan to the contrary. Accordingly, the "long form" be regarded as forgeries. letters cannot 8.62 Despite the "long" and "short" forms of the letters having been separately generated, it was clear in 2 0 0 2 that efforts had been made, through the general similarities of form and content between them, and the duplication of an obvious and uncorrected spelling error ("/" instead of "in"), to convey a false impression that both were generated in the course o f t h e same process. 8.63 Most significant of all was the evidence concerning the meeting at Jury's Hotel, Dublin, on 17 th August, 2000, in which, according to Mr. Lowry, Mr. Aidan Phelan and Ms. Helen Malone, w h a t w a s discussed was a proposal or s c h e m e to mitigate the incidence o f t a x a t i o n in the context of a sale by Mr. Aidan Phelan. In the "long form" letter of 5 t h S e p t e m b e r , 2000, Mr. V a u g h a n alluded instead to the steps to be taken to enable the property to be disposed of by Mr. Lowry. W h a t was suggested was that Mr. Lowry required that the property be held in his own name for a short period prior to sale; that is, in his own name as opposed to the name of the then trustee holding the property, Mr. V a u g h a n . From this letter, it s e e m s clear that Mr. Lowry was the beneficiary of the trust, and was the person directing the conduct of the transaction, and benefiting from the disposal. The suggested explanation for the generation of this letter, namely that Mr. V a u g h a n t e n d e d to confuse clients and properties, does not 5th bear scrutiny w h e n it is remembered that the letter was written on September, 2000, j u s t over a fortnight after the meeting, and it is impossible to credit that an efficient solicitor, charged with such responsible work, should have so REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter radically misunderstood 7 his instructions, so soon after receiving t h e m , and Page | 248 should have so fundamentally confused the identity of the clients so soon after meeting them. 8.64 letter of It is impossible to avoid the conclusion that the "long 5th form" of the S e p t e m b e r , 2000, set forth w h a t Mr. V a u g h a n sought to convey to Mr. Kevin Phelan on foot of w h a t had transpired at the meeting on 17 th August, 2000, at Jury's Hotel in Dublin. Likewise, it was impossible, in 2002, for the Tribunal to avoid the conclusion that a view had been taken, that the content of the "long form" of the letter of 5 t h S e p t e m b e r , 2000, would be perceived to involve Mr. Lowry beneficially in the Cheadle transaction, at a time and in a manner at variance with the account which had been conveyed to the Tribunal. Furthermore, it was clear that on foot of that realisation, it had been determined deliberately to suppress and withhold from the Tribunal the "long form" with the "short forms" letters, being subsequently created and provided to the Tribunal Whilst the "long form" letters do as supposedly the true communications. contain elements of inaccuracy, their overall tenor is to the effect that Mr. Lowry remained beneficially interested in Cheadle in the year 2000, and was so at the dates of each of the letters 8.65 The "short form" letters were created at a time or times appreciably subsequent to their purported 2 0 0 0 dates, and at or around the time that the Cheadle transaction had been referred to the Tribunal form" in 2001, and were devised to substitute and supersede the "long misleading and delaying the Tribunal. letters, with the effect of THE EMERGENCE O F Y E T FURTHER FALSIFICATION Mr. Christopher Vaughan's belated evidence in April, 2009 8.66 available In November, 2008, the Tribunal, having heard w h a t it regarded as the evidence, issued Provisional Findings, comprising the Tribunal's impact were provisional views of the evidence adversely on persons to whom heard, and which related. Such if made, could affected persons they accordingly notified of those Provisional Findings, and accorded an opportunity to provide written submissions to the Tribunal addressed to them. As part of this process, Mr. Christopher V a u g h a n , even though he had not attended as a witness, was notified of a number of such Provisional Findings. 8.67 Following this notification, in January, 2009, the Tribunal was informed by Messrs. Meagher, solicitors, acting for Mr. Denis O'Brien, that Mr. V a u g h a n would be travelling to Dublin to attend a consultation with Mr. O'Brien's legal representatives. This offered the Tribunal an opportunity to serve Mr. V a u g h a n REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 249 with a Witness S u m m o n s whilst in the jurisdiction. In the event, the Tribunal arranged for Mr. V a u g h a n to attend at the Tribunal's offices in Dublin Castle, to accept service of a witness s u m m o n s , on 30 t h January, 2009. Mr. V a u g h a n duly did so, was served with a witness s u m m o n s , and was asked to take the witness box briefly to enable him to comply formally with that s u m m o n s . 8.68 Mr. V a u g h a n ' s substantive evidence was scheduled to c o m m e n c e on On the morning of his attendance, Mr. V a u g h a n produced to 21 s t April, 2009. the Tribunal a voluntary Statement, together with certain documentation. This included documentation which had recently been located on a complaint file, maintained by the firm with which his own practice had merged, Messrs. Scott Fowler, solicitors, and included correspondence from Mr. Kevin Phelan personally, and from his then solicitors, Messrs. W o o d c o c k & Sons, in relation to a series of disputes between him and Mr. V a u g h a n , dating back to early 2001. Much of this material had never previously been provided to the Tribunal. At that time, Mr. V a u g h a n also provided the Tribunal with fresh copies of his own conveyancing files in connection with the Mansfield and Cheadle transactions, identical to those initially provided to the Tribunal in 2001, that is, containing the "short form" letters. 8.69 how the In the course of his evidence in April, 2009, Mr. V a u g h a n furnished a detailed explanation, which he testified was based on his best recollection, for "long form" and "short form" letters of 12 th July, 2000, and 5th S e p t e m b e r , 2000, had come into existence. In brief, his explanation was to the effect that, shortly after sending the "long form" versions of those letters to Mr. Kevin Phelan, he was contacted by Mr. Phelan, w h o informed him that he had made errors in those letters. Mr. V a u g h a n therefore had a m e n d e d the letters, and sent the resulting "short Phelan. form" or so-called corrected versions to Mr. Kevin form" Having done so, he destroyed his file copies of the original "long letters, and placed the "short form" versions on his file in substitution for them. 8.70 As to why, both "short form" letters had been, in every case, completely reconstituted, and not simply amended, Mr. V a u g h a n stated that, from time to time, his own secretary might not have been available to him; that, in that event, he would have arranged to have a d o c u m e n t retyped by one of the secretaries in Scott Fowler, who at the time occupied adjoining offices. As to why, in circumstances in which he stated he was sensitive to criticism by Mr. Kevin Phelan, he would have sent him a letter, then sent him an altered version of that letter, and not have retained copies of both versions on his file, it was V a u g h a n ' s evidence that the letters were wrong, and they were destroyed. Mr. In response to the suggestion put to him that by so doing, he was putting himself at the mercy of a person likely to criticise him, Mr. V a u g h a n agreed that the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 250 proposition was absolutely correct, but it was not a matter that occurred to him at the time, and he observed that "the benefit ofhindsight is wonderful". Resumption of Mr. Christopher Vaughan's evidence in June, 2009 Further documents 8.71 and from Mr. Christopher Vaughan's files came to light It was not possible to complete Mr. V a u g h a n ' s evidence in April, 2009, consequent on the non-availability of his counsel, the balance of his evidence was deferred to 23 r d June, 2009. The Tribunal learned that, in the interim period, between April, 2009, and June, 2009, Messrs. Oliver Roche & Company, solicitors, of Omagh, County Tyrone, representing Mr. Kevin Phelan, had written to Mr. V a u g h a n ' s solicitors enclosing a large quantity of copy correspondence, including letters from Mr. V a u g h a n to Mr. Kevin Phelan, which had never previously been disclosed to the Tribunal by Mr. Vaughan, or by any other person with w h o m the Tribunal had had dealings. Whilst there was a regrettable delay in forwarding this material to the Tribunal, it was ultimately produced on the afternoon before Mr. V a u g h a n ' s evidence was due to resume. The documents produced included further instances of w h a t appeared to be altered correspondence, where Mr. Michael Lowry's name had again been removed, and in addition, a number of instances of correspondence containing references to the UK property transactions, and in particular the Cheadle transaction, which were inconsistent with the evidence previously heard by the Tribunal about those transactions, and were consistent with an involvement on the part of Mr. Lowry at variance with that evidence. None of these documents had been within the conveyancing files produced by Mr. V a u g h a n to the Tribunal, either in 2001, or again shortly before his initial attendance in April, 2009. 8.72 Apart from that documentation which had emanated from Mr. Kevin new information came to the Tribunal's attention after the Phelan, further completion of Mr. V a u g h a n ' s attendance, w h e n Mr. Aidan Phelan provided the Tribunal with a copy of a letter, dated 8 t h March, 2002, and enclosures, which he had received from Mr. Kevin Phelan's then solicitors. The letter contained a number of assertions relating to the UK property transactions which had been under examination by the Tribunal from 2001, and attached to that letter was a set of documents, which included documents which the Tribunal had never previously seen, and others which the Tribunal had only seen as a result of the then recent correspondence, from Mr. Kevin Phelan's O m a g h solicitors, to Mr. V a u g h a n ' s solicitors. These documents, a p p e n d e d to the letter of 8 t h March, 2002, included yet that further had instances been of altered in correspondence, the and of correspondence never included conveyancing files produced by Mr. V a u g h a n to the Tribunal. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8.73 The most significant of the 7 items of correspondence belatedly Page | 251 produced, in terms of the Tribunal's inquiries, are itemised in the Appendix to this chapter in chronological order and, where the d o c u m e n t in question is a "long form" letter, the corresponding "short form" letter, as it appeared on the files initially produced to the Tribunal, is also appended for ease of reference. These documents in the Appendix are as follows: (i) a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 5 t h October, 1998: (ii) the "short form" and "long form" versions of a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 27 t h August, 1999: (iii) the "short form" and "long form" versions of a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 12 th November, 1999: (iv) the "short form" and "long form" versions of a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 1 s t December, 1999: (v) a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 9 t h August, 2QOO: (vi) a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 18 th August, 2OOO: (vii) a letter from Mr. Christopher V a u g h a n to Mr. Aidan Phelan of 19 th S e p t e m b e r , 2OOO: (viii) a letter from Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 19 th S e p t e m b e r , 2OOO: (ix) a letter from Messrs. Goldsmith Williams, solicitors, to Mr. Christopher V a u g h a n of 21 s t September, 2OOO: (x) a letter f r o m Mr. Christopher V a u g h a n to Messrs. Goldsmith solicitors, of 4th October, 2OOO: Williams, (xi) a l e t t e r f r o m Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 18 th January, 2OO1: (xii) a l e t t e r f r o m Mr. Christopher V a u g h a n to Mr. Kevin Phelan of 26 t h January, 2OO1: REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (xiii) a fax from Mr. Aidan 17 th 7 Phelan to Mr. Kevin March, 2001. Phelan, with an attached Page | 252 memorandum, of The April 2009 evidence 8.74 the revisited On the resumption of his evidence in June, 2009, Mr. Vaughan's form" and "short form" letters, was revisited in by Mr. Kevin Phelan's light of the 18 th newly disclosed material furnished earlier testimony, on the "long solicitors. dated His attention was drawn to the contents o f t h e newly disclosed letter, August, 2000, which he had written to Mr. Kevin Phelan, already referred to in an earlier chapter, in which reference was made to the meeting of 17 th August, 2000, at Jury's Hotel, in Dublin, attended by Mr. Vaughan, Mr. Lowry, Mr. Aidan Phelan and Ms. Malone, and for which ML". Ms. Malone, had generated a note headed "UK property 8.75 From the contents of that letter, written on the day following that meeting of 17 th August, 2000, it was clear that what had been discussed on that occasion related to the tax implications that would arise for Mr. Michael Lowry consequent on a sale of the Cheadle property, and not, as Mr. Vaughan had insisted in the course of his evidence in April, 2009, for Mr. Aidan Phelan, and as had likewise been testified by Mr. Lowry, Mr. Aidan Phelan and Ms. Malone in 2002. It followed that Mr. Vaughan was obliged to concede that testimony that form" letter of 5 t h form" was of he had given in April, 2009, seeking to explain the "short acknowledge that the "long September, 2000, could no longer be sustained, and he was compelled to form" was the true letter. The "long course consistent only with Mr. Lowry's continuing ownership of Cheadle. 8.76 As to why the additional material now made available, including the letter of 18 th August, 2000, had not appeared within his files, Mr. Vaughan initially advanced, by way of explanation, that he had maintained separate files relating to the disposal of the Cheadle property, which had not come within the terms of the production made by him to the Tribunal in 2001. When put to him by Tribunal counsel that he had purported to provide documents relating both to the purchase and further disposal of the Cheadle property, Mr. Vaughan accepted that at least some of the material had not been contained in a separate file, and should have been included in the files he had produced to the Tribunal. Files out of Mr. Christopher 8.77 of time. Vaughan's possession Having been pressed on this matter, Mr. Vaughan then stated, in the He testified that, following the meeting, to which reference has already course of his evidence, that his files had been out of his possession for a period REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 253 been made, at Mr. Aidan Phelan's office in Dublin, in March, 2001, he had left his files in the custody of Mr. Aidan Phelan and Ms. Malone for a period of time. Whilst this matter will be returned to, it should nonetheless be observed at this juncture that this aspect of Mr. V a u g h a n ' s June, 2 0 0 9 evidence, w h e n testified that he was absolutely "positive" he that he had left his files at Mr. Aidan Phelan's office, directly conflicted with his earlier evidence in April, 2009, w h e n he had told the Tribunal that he did not have a good recollection of whether he had brought his files with him to that meeting, and queried w h a t evidence Mr. Aidan Phelan and Ms. Malone had given on that point. The Tribunal is compelled to conclude that Mr. V a u g h a n ' s evidence in that regard in April, 2009, was untruthful and evasive, and demonstrated an acute sensitivity on his part surrounding w h a t had occurred at that meeting in Dublin, in March, 2001. 8.78 The Tribunal cannot but record its dissatisfaction with the evidence of Mr. Vaughan, and in particular surrounding those aspects of his evidence which differed so markedly, between his initial attendance in April, 2009, before that additional material had come to light, and his later attendance in June, 2009. Had that material not become available, the Tribunal, as confirmed V a u g h a n , would have been left with Mr. V a u g h a n ' s incorrect and by Mr. untruthful account of w h a t had occurred. The Tribunal is also satisfied that Mr. V a u g h a n ' s belated acknowledgment, but only w h e n pressed, as to the falsified and incomplete contents of the files that he had produced to the Tribunal, was provided only w h e n it became impossible to persist with his incorrect account, in the light of the documentation then before the Tribunal. This false account was one which Mr. V a u g h a n had maintained to the Tribunal since mid-2001. Persistent 8.79 adherence to a false version of events The Tribunal also found much of Mr. V a u g h a n ' s evidence, as to the form" correspondence, to be both implausible This evidence has already been meaning of the unaltered "long and unsatisfactory in a number of respects. examined in the context of the Cheadle transaction, but it warrants repetition that Mr. V a u g h a n ' s evidence involved an attempt on his part to ascribe meanings to the contents of a number of letters which were wholly at variance with their plain and ordinary meaning, and the language which he had used. The Tribunal is compelled to conclude that this reflected a persistent effort on Mr. V a u g h a n ' s part to adhere to the false version of the transactions provided to the Tribunal by him, and by others, from the inception of the Tribunal's inquiries in 2001. This aspect of Mr. V a u g h a n ' s evidence is exemplified by his testimony in relation to the matters examined in the following paragraphs. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8.80 dated 9th 7 One of the letters that belatedly came to the Tribunal's attention was August, 2000, and was written by Mr. V a u g h a n to Mr. Kevin Phelan. Page | 254 The letter contains reference to the fact that there was no indication on Mr. V a u g h a n ' s client account bank statement of the source of funds that had been used to complete the Mansfield property acquisition, which funds, as will be recalled, had originated in a bank account of Mr. Denis O'Brien. The letter also records, in relation to the Cheadle property, that if anybody undertook a c o m p a n y search against Catclause, the c o m p a n y which had been incorporated by Mr. Michael Lowry to hold the property, "they would find out a link with M", and continues by recording that it was on the advice of Mr. Aidan Phelan that Catclause had been abandoned, and the Cheadle property had been put into the names of Mr. V a u g h a n and his wife as trustees, "for reasons of secrecy". A copy of this letter can be found within the Appendix to this chapter. Whilst it was patently clear, from the plain terms and the ordinary meaning of its contents, that the purpose of that letter was to alert Mr. Kevin Phelan as to w h a t might have been discoverable in relation to the funding of the Mansfield property, and the ownership of the Cheadle property, Mr. V a u g h a n in his evidence to the Tribunal insisted that the letter was written by him for no other purpose than to outline the mechanics of the two transactions, and was intended as a letter that Mr. Kevin Phelan would be at liberty to provide to prospective purchasers for their information. As to the reference in that letter to "reasons of secrecy", it was Mr. V a u g h a n ' s evidence that that merely recorded a desire on his part to keep the reasons for the a b a n d o n m e n t of Catclause, as the acquiring vehicle for the Cheadle property, secret from Mr. Kevin Phelan, and was not a desire on the part of the principals to the transaction to maintain secrecy as to the ownership at the time of its completion. 8.81 As regards the letter of 18 th August, 2000, which w a s written the day after the meeting at Jury's Hotel on 17 th August, 2000, and a number of other letters which followed and continued into early 2001, all of which on their face related to a s c h e m e w h e r e b y the Cheadle property would be transferred into Mr. Michael Lowry's name, and that, w h e n both that property and the Mansfield property were sold together, Mr. Lowry would be entitled to the substantive proceeds, Mr. V a u g h a n nevertheless sought to insist that these did not reflect a continuing interest on the part of Mr. Lowry in the Cheadle transaction after January, 2000. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8.82 the "long 7 It is important at this point to record that Mr. V a u g h a n accepted that form" versions of his correspondence to Mr. Kevin Phelan were Page | 255 genuine items of correspondence, and likewise the correspondence which had emerged, and which had never been included in his files in any form. accepted that the contents of the "long form" He also and additional correspondence represented the true facts pertaining to the property transactions, at the time the correspondence was issued, although his evidence as to the import of the contents of that correspondence was wholly unimpressive and unreliable. It is also of significance that Mr. V a u g h a n never suggested that the correspondence that had come to light after his files had been furnished to the Tribunal, namely, the "long form" correspondence and the additional correspondence, were forgeries, a version of events which had been advanced only by Mr. Aidan Phelan. 8.83 and "short It will be recalled that w h e n the Tribunal examined the two "long form" letters that emerged in 2000, it became clear that the form" "short form" versions had been entirely reconstituted. A detailed analysis in this regard is set out earlier in this chapter. It is clear, from even a cursory examination, that all of the three "long form" and "short form" letters, that were belatedly disclosed to the Tribunal in 2009, were similarly reconstituted. "long form" Furthermore, the versions contained references to an involvement of Mr. Michael Lowry in the transactions which are not consistent with the evidence which had been provided to the Tribunal. Moreover, the additional correspondence, which was not included in any form in the files produced to the Tribunal, also contained references to an involvement on the part of Mr. Michael Lowry in those transactions which are likewise inconsistent with the version of events advanced in evidence. In the light of all of the evidence heard by the Tribunal, the Tribunal is satisfied that Mr. Christopher V a u g h a n ' s files, as produced to the Tribunal were falsified in two significant respects: (i) by the removal of certain correspondence, and its replacement with "short form" versions, in which references to Mr. Michael Lowry's involvement in the transactions were deleted; (ii) and by the removal altogether of other correspondence, containing references to Mr. Lowry's involvement in those transactions. 8.84 the Having received that additional documentation, and having heard the evidence of Mr. Vaughan, it became clear that, from the initial examination by Tribunal of the possible had alteration of two letters on and Mr. Christopher startling Vaughan's files, w h a t emerged was the wholesale quite REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 256 falsification of those files. The Tribunal is satisfied that the sole purpose of that falsification was to mislead the Tribunal as to the true nature and extent of Mr. Lowry's involvement the in those of transactions, which has and to to thereby undermine significantly its the investigations, Tribunal's work. effect been protract The question of w h e n that falsification occurred, and w h o was party to it, will now be examined. When and by w h o m the files were falsified 8.85 On the day prior to the Tribunal being notified of the Cheadle transaction by the solicitors acting on behalf of Investec Bank, Mr. Aidan Phelan, w h o had j u s t returned f r o m a business trip to Canada, made arrangements for all of the persons involved in the Cheadle transaction to attend at his office in Dublin, on 15 th March, 2001. day was erroneously However, The location of the meeting or meetings on that in evidence Phelan's on a number had of occasions by March, as described Mr. Clonskeagh. Aidan practice 2001, relocated from Clonskeagh to Clanwilliam Court, where the events of that day in fact proceeded. The Tribunal heard evidence in connection with w h a t occurred on 15 th March, 2001, at a number of different stages in the course of its hearings, and in a number of different contexts. Firstly, the meetings were t o u c h e d upon in the course of evidence given relating to the Mansfield and Cheadle transactions, during 2001. Secondly, they were revisited in the context of evidence heard in 2002, in connection with the "long form" letters. and "short form" A n d finally, they were further returned to in the course of the evidence Different given by both Mr. Christopher V a u g h a n and Mr. Aidan Phelan, in 2009. accounts of the circumstances of the meetings, and of the persons w h o were in attendance, were given by different witnesses at different times. 8.86 In his initial evidence given in July, 2001, only four months after the and March meetings, Mr. A i d a n Phelan stated that Mr. Lowry, Mr. Vaughan, possibly Ms. Malone had attended. October, 2001, that it was For her part, Ms. Malone told the Tribunal in Phelan and Mr. Lowry who were in Mr. Aidan attendance, that Mr. V a u g h a n made an appearance, and that she thought, though she was unsure, that Mr. Kevin Phelan was also in attendance, if only briefly. S h e confirmed that she was herself in attendance. 8.87 W h e n Mr. Lowry gave evidence in November, 2001, he had referred only to a meeting between himself and Mr. Aidan Phelan. He stated that Mr. Phelan had telephoned him on 15 th March, 2001, to say that there w a s internal confusion in Investec Bank, and had asked him if he would call to see him about it. Mr. Lowry happened to be in Dublin at the time, and so was able to call in to see Mr. Phelan. In the course of his evidence on that occasion, Mr. Lowry did not mention that Mr. V a u g h a n was present, but he did state that he believed REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 257 that Mr. Kevin Phelan w a s in Mr. Aidan Phelan's office w h e n he arrived, although the former was not present for his meeting with Mr. Aidan Phelan. 8.88 W h e n the Tribunal again examined the circumstances surrounding this meeting in July, 2002, Mr. Lowry testified that Mr. V a u g h a n was also present in the office at the time Mr. Lowry had called in, and, whilst he spoke to him briefly, he did not have any meeting with him. Mr. Lowry's meeting on that occasion had been predominantly on a "one-to-one" basis with Mr. Aidan Phelan, although he said that Mr. Kevin Phelan may have been present for part, though not for all of the meeting. vicinity. He did not see Ms. Malone, but he understood that she was in the 8.89 2002. Mr. Aidan Phelan and Ms. Malone gave further evidence in December, On that occasion, Mr. Aidan Phelan testified to the Tribunal that it was not correct to view w h a t occurred on that day as a single meeting. He said there were various meetings, proceeding during the course of the day with various people, but that he was a c o m m o n attendee at all meetings. He told the Tribunal that Mr. Kevin Phelan was the first to call to his office, and did so at around 9 : 0 0 a m or 10:00am that morning, having been asked to do so by Mr. Lowry. Mr. Aidan Phelan, according to his evidence, told Mr. Kevin Phelan that there was a problem with Investec Bank, but that there did not appear to be any commercial ramifications for the properties, and he stated that, after their exchange, Mr. Kevin Phelan had departed. As to whether Mr. Kevin Phelan remained in his office for most of the day, Mr. Aidan Phelan testified that he had not. Mr. Aidan Phelan confirmed that both Mr. V a u g h a n and Mr. Lowry also called during the course of that day, and that Ms. Malone would meetings. have come in and out of 8.90 In her evidence in late 2002, Ms. Malone stated that Mr. Aidan Phelan had spoken to her on that morning about the difficulties which had arisen with Investec Bank. This w a s the first time she had heard about the matter. Her recollection was not clear, but she thought that Mr. Kevin Phelan was the first of those who attended on that day to meet with Mr. Aidan Phelan. Mr. V a u g h a n then arrived. Mr. Lowry was in Mr. Aidan Mr. Lowry and Mr. Phelan's office, V a u g h a n joined them, and then Mr. Aidan Phelan asked Ms. Malone to join them. She did not stay for long, and she thought that Mr. Lowry had not been there for long either. As far as she could recall, Mr. V a u g h a n may have still been there with Mr. Aidan Phelan, when she left the office that evening. 8.91 Whilst there were divergences between the evidence of Mr. Lowry, Mr. Aidan Phelan and Ms. Malone as to who was in attendance at Clanwilliam Court on that day, and at w h a t particular times, there was broad consensus that their REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Investec Bank Page | 258 business was directed to the problems that had arisen with concerning the Cheadle transaction. Mr. Lowry's definite recollection w a s that Mr. Aidan Phelan, Mr. Kevin Phelan and Mr. V a u g h a n were consulting for the purposes of the making of a statement to the Tribunal. However, Mr. Lowry said that he was not interested in the detail, and that he merely wanted a general overview of the problem that had arisen, observing that w h e n he left Clanwilliam Court, he was not much the wiser. He stated that neither he, nor Mr. Aidan Phelan, had any documents at the meeting. He was not involved in any round table meeting with the others present, was annoyed by the matter, and left them to get on with whatever information gathering exercise they were engaged in between themselves. 8.92 In her earliest evidence, Ms. Malone had testified to the Tribunal that purpose of the meeting as having been to brief her, and she viewed the everybody concerned, in relation to the Cheadle transaction. Her recall was that a history was given of w h a t had occurred, that she was very confused, and that she thought others were similarly confused. S h e knew very little about the affair and, according to her evidence, it was Mr. Aidan Phelan, Mr. Lowry and Mr. V a u g h a n who were discussing matters. Her involvement related solely to the fact that she had signed the bank documentation on behalf of Catclause Limited, as an officer, albeit that in so doing she had been acting as an alternate in place of either Mr. Lowry or his daughter, w h o were the registered officers of Catclause. Mr. Aidan Phelan confirmed to the Tribunal that he felt that he had to provide an expla nation to Ms. Malone in that, by reason of having signed the bank documentation, the matters which had arisen might impact on her. Mr. Aidan Phelan believed that he needed to prepare a statement in view of the matter being imminently brought to the attention o f t h e Tribunal. assistance of Ms. Malone in preparing a statement. He wished to have the 8.93 There would likewise appear to have been broad agreement that the discussions of lengthiest duration were those that occurred on that day, between Mr. Aidan Phelan and Mr. V a u g h a n . It is clear that Mr. V a u g h a n brought his property files to that meeting, and Mr. Aidan Phelan stated that he would have reviewed the entire o f t h o s e files in the course of their interaction. 8.94 On both occasions that he gave evidence in 2009, Mr. Vaughan testified in relation to his attendance at the meeting. In his initial statement to the Tribunal, which he confirmed at the c o m m e n c e m e n t of his evidence, he stated that, at a meeting at Clanwilliam Court, on 15 th March, 2001, he met Mr. Lowry, Mr. Aidan Phelan, Ms. Malone and, briefly, Mr. Kevin Phelan. By that time, as testified by Mr. V a u g h a n , his relationship with Mr. Kevin Phelan had REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 259 already begun to sour, and as will become apparent later in this Volume, the breakdown of their relationship escalated considerably in the following year. 8.95 Mr. V a u g h a n told the Tribunal that it was at that meeting, on 15 th March, 2001, that he learned for the first time of the existence of the Tribunal, and of the matters into which it was inquiring. He was requested to attend, to discuss the Mansfield and Cheadle transactions, but in the course of the family meeting he was also informed, for the first time, about the O'Brien interest in another of the property transactions in relation to which he was acting, namely, the Doncaster Rovers transaction. As to whether he had brought his files to the meeting, Mr. V a u g h a n ' s evidence in April, 2009, on his first attendance to testify, was that he had probably done so, but that he could not remember. As already related, w h e n he resumed his evidence in June, 2 0 0 9 , by which time the critical additional altered correspondence had come to the attention of the Tribunal, he testified that he had no doubt that he had brought his files with him on that occasion, and further that, at the conclusion of that meeting, he had left his files in the custody of Mr. Aidan Phelan and Ms. Malone. He could not recall how long they were out of his possession, but he w a s clear that, when he returned to England following that meeting, he did so without his files. As to whether his files could have been interfered with during the period that they were out of his possession, Mr. V a u g h a n testified: "if I haven't done to it". got control of the file, I can't say what anybody might have He said the files were "quite he was "absolutely positive" definitely" at the meeting on 15 th March, 2001, and that he left his files there. Fax from Mr. Aidan Phelan to Mr. Kevin Phelan of 17th March, 2001: summary of a false position 8.96 There is one final d o c u m e n t to which reference must be made, in any consideration of the circumstances in which Mr. V a u g h a n ' s files were falsified, and that is a fax from Mr. Aidan Phelan to Mr. Kevin Phelan dated 17 th March, 2001, two days after the controversial interactions of 15 th March, 2001, in Clanwilliam Court. The contents of that fax, and the evidence of Mr. Phelan in that regard will now be reviewed. 8.97 Before proceeding to consider that document, it should be recorded that it was Mr. Aidan Phelan's evidence that, whilst Mr. Christopher V a u g h a n ' s files were available on 15 th March, 2001, and that he had an opportunity to review their contents on that occasion, Mr. Vaughan, contrary to his evidence to the Tribunal, did not leave those files behind him in the custody of Mr. Phelan or REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 260 Ms. Malone, but took t h e m with him at the conclusion of their meeting. Mr. Phelan further categorically denied that he had any hand, act or part in the interference with, or falsification of, the contents of Mr. V a u g h a n ' s files as produced to the Tribunal. He observed that he believed that Mr. Kevin Phelan had access to those files, and that the Tribunal should make inquiries of him. In that regard, it must be borne in mind that, since the inception of the Tribunal's inquiries in 2001, Mr. Kevin Phelan had steadfastly refused to make himself available as a witness to the Tribunal, and although an Irish national, not being resident within the jurisdiction, he was not a compellable witness. This state of affairs was well known to Mr. Aidan Phelan w h e n he gave his evidence in 2009. 8.98 The fax of 17 th March, 2001, was an attachment to the letter of 8 t h March, 2002, from Mr. Kevin Phelan's solicitors to Mr. Aidan Phelan's solicitors, and had never been disclosed to the Tribunal until it was produced on the afternoon of 25 t h June, 2009. The fax enclosed a three page relating to the Mansfield and Cheadle properties. can be found in the Appendix to this chapter. 8.99 memorandum A copy of the m e m o r a n d u m Mr. Aidan Phelan accepted that the contents of the m e m o r a n d u m set circumstances of the Mansfield and Cheadle out a factual account of the transactions, in keeping with Mr. Christopher V a u g h a n ' s file as produced to the Tribunal, that is, the file which contained altered correspondence, and f r o m which correspondence had been removed. He also accepted that w h a t was stated in the m e m o r a n d u m did not and could not reflect the true position as would have been recorded in Mr. V a u g h a n ' s files, had they not been falsified. Mr. Aidan Phelan did not however agree, w h e n it was put to him by Tribunal counsel, that it appeared that the memorandum reflected the making of preparations, so as to deprive the Tribunal of access to information as to the true nature of the relationships between the individuals involved in the Mansfield and Cheadle transactions. 8.100 The fax cover sheet, which recorded the sending of the m e m o r a n d u m by Mr. Aidan Phelan to Mr. Kevin Phelan, was in the following terms: "Dear Kevin I append week. the list as discussed. I will call you on Monday to plan for next Yours sincerely, Aidan Phelan" REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8.101 It was Mr. Aidan Phelan's 7 evidence that he believed that the He had two the Page | 261 m e m o r a n d u m had been prepared, not by him, but by Mr. Kevin Phelan. testified that they had had a lengthy telephone returned from Canada, in connection with Mr. the Kevin conversation, after he background Phelan had to the transactions, and that he thought that drafted m e m o r a n d u m following that conversation. He thought that Mr. Kevin Phelan did so in his own office or home, and then brought the d o c u m e n t with him to Mr. Aidan Phelan's office, on 15 th March, 2001. He could not recall how the d o c u m e n t had come into being, but in looking at it, he observed that it was not framed in his kind of language, and so he believed that he had conveyed certain matters to Mr. Kevin Phelan, that Mr. Kevin Phelan had researched his own files, and that Mr. Kevin Phelan had prepared the m e m o r a n d u m to assist Mr. Aidan Phelan in the preparation of his prospective statement for the Tribunal. w h y he might then have faxed w h a t he contended was Mr. Kevin As to Phelan's d o c u m e n t to Mr. Kevin Phelan two days later, he thought that was because Mr. Kevin Phelan had asked him to do so. 8.102 Having regard to the contents of the m e m o r a n d u m , and all of the evidence heard by the Tribunal, it is the Tribunal's view that Mr. Aidan Phelan's evidence as to how, and by w h o m , the d o c u m e n t was generated is not reliable. In that regard, it is the Tribunal's view that the following matters are significant: (i) in his evidence to the Tribunal in December, 2002, Mr. Aidan Phelan testified that he had a clear memory of the circumstances of the meeting of 15 th March, 2001, as w o u l d have been expected, given the relatively close proximity of that meeting to Mr. Phelan's evidence. On that occasion he informed the Tribunal that Mr. Kevin Phelan called to his office early in the morning of 15 th March, 2001, saying that he had been requested to do so by Mr. Lowry; that the extent of his dealings with Mr. Kevin Phelan on that day was to inform him that there was a banking problem, but that it did not have commercial ramifications for the properties, following which, according to his earlier evidence, Mr. Kevin Phelan had departed. Aidan Phelan's evidence on that occasion, was that he had "no reason deal with him at all"; Mr. to (ii) at no point on any of the occasions that he attended to give evidence prior to July, 2009, did Mr. Aidan conversation between Phelan make any reference to any Mr. Kevin Phelan, or to Mr. prior Kevin himself and Phelan having brought, and having left with him, any d o c u m e n t relating to the transactions, to assist him in the preparation of his prospective statement for submission to the Tribunal; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (iii) 7 Page | 262 there are many references in the m e m o r a n d u m to correspondence on Mr. V a u g h a n ' s files sent to persons other than Mr. Kevin Phelan, and to which Mr. Kevin Phelan could not have had access prior to 15 th March, 2001. Mr. V a u g h a n had of course brought his files with him on that day, and this therefore would have been the first occasion on which access could have been had to them; (iv) significantly, the m e m o r a n d u m makes reference to a number of matters, in relation to documents submitted to Investec Bank on behalf of the c o m p a n y Catclause which, as will be recalled, were signed by Mr. Aidan Phelan and Ms. Helen Malone, in terms which could only be consistent with the d o c u m e n t having been generated either by Mr. Aidan Phelan or by Ms. Helen Malone. Most notable amongst those passages is the one which reads as follows: "Since the Company was not being used we did not file the Forms that the bank was acting on the 288 and we did not believe that we signed." documentation (v) in general terms, having regard to the level of detail and the references to documentation, following the the memorandum on 15 th appears March, to have been prepared a full interactions 2001, and following consideration of all files held relating to the properties. 8.103 The Tribunal is satisfied, having regard to the considerations set forth above, that the m e m o r a n d u m must have e m a n a t e d from Mr. Aidan Phelan, and not from Mr. Kevin Phelan. Despite Mr. Aidan Phelan's denial in evidence, the Tribunal is satisfied that the m e m o r a n d u m w a s prepared as a s u m m a r y of a false position in relation to the UK properties, that it was intended would be conveyed to the Tribunal in response to its imminent inquiries. The Tribunal is also satisfied that this false position was agreed in the course of the meetings on 15 th March, 2001, and that such a false position could only be advanced to the Tribunal if Mr. Christopher V a u g h a n ' s files relating to Mansfield and Cheadle were accordingly falsified. CONCLUSIONS 8.104 There were clear differences and inconsistencies in the evidence heard by the Tribunal in connection with the events at Clanwilliam Court on 15 th March, 2001, even w h e n that evidence was given a matter of months after those events had taken place. The Tribunal has already noted the striking inconsistencies between the evidence given by Mr. Vaughan, in the course of his first attendance REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 263 as a witness, and the evidence he provided during his later attendance, at a time when additional documentation had come to the Tribunal's attention. The Tribunal is satisfied that all of the evidence, relating to those events of 15 th March, 2001, was characterised by a degree of evasiveness and w a n t of candour which betrayed an extreme sensitivity surrounding w h a t had occurred on that occasion. 8.105 Regarding the files of Mr. Christopher Vaughan relating to the Mansfield and Cheadle transactions, the Tribunal is satisfied that the versions of those files which were produced to the Tribunal by Mr. V a u g h a n , in April and May, 2001, and again in April, 2009, in advance of the c o m m e n c e m e n t of his evidence, had been falsified by the alteration of certain correspondence, and by the removal of other correspondence, with the intention of concealing references to Mr. Michael Lowry in connection with those transactions, and of ensuring that the contents of Mr. V a u g h a n ' s files could be presented in a form which appeared to be consistent with the false account of Mr. Michael Lowry's involvement, which it was intended would be conveyed to the Tribunal. The Tribunal is satisfied that the falsification of the files occurred on or after the interactions of 15 th March, 2001, and is also satisfied that the falsification was decided upon and implemented with the full knowledge of Mr. Aidan Phelan, Mr. Michael Lowry, Mr. Christopher V a u g h a n and Mr. Kevin Phelan. 8.106 over the Mr. Aidan Phelan was the person most directly exposed to the Tribunal's inquiries, having been drawn into the controversy with Investec Bank previous number of weeks. Furthermore, as Mr. Denis O'Brien's accountant and financial adviser, he had a significant interest in concealing the true nature of the transactions on Mr. O'Brien's behalf, so as to obscure evidence of connections between Mr. O'Brien and Mr. Lowry, particularly having regard to the clear evidence of a money trail, c o m m e n c i n g with Mr. O'Brien and terminating with Mr. Lowry. 8.107 Mr. Michael Lowry had a direct personal interest in ensuring that documentation linking him to the transactions, and thereby to Mr. Denis O'Brien, would be concealed f r o m the Tribunal. Whilst the evidence suggests that Mr. Lowry's participation in the events of 15 th March, 2001, was relatively limited, the Tribunal is nonetheless satisfied that Mr. Lowry must have been fully aware of the course decided upon, and of its implementation. Otherwise, Mr. Lowry could not have given the false account of his involvement in those transactions which he subsequently provided to the Tribunal in the course of evidence, an account which he could not have given, had the concealed documents not been removed from the file. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8.108 7 It was suggested to the Tribunal, on behalf of Mr. Vaughan, that he w a s Page | 264 innocent of any alteration to his files, which he had simply left with Mr. Aidan Phelan, and then subsequently produced to the Tribunal. Whatever occurred on or after 15 th March, 2001, it was Mr. V a u g h a n who produced those files to the Tribunal, and it was therefore his responsibility to ensure that those files were genuine. Even if Mr. V a u g h a n was entirely unaware that the files had been interfered with, he must have realised very soon thereafter that the true position relating to the transactions was not represented by the contents of those files. Furthermore, the account of those transactions, which Mr. V a u g h a n provided to the Tribunal, in the course of correspondence, and at private meetings, and in the course of his evidence in April, 2009, could only have been provided in the knowledge that the concealed documents would not be available to the Tribunal. 8.109 form" The Tribunal must also have regard to the fact that the altered letters bear Mr. V a u g h a n ' s signature, and appear on his "short professional letterhead, facts that Mr. V a u g h a n accepted in evidence. It follows therefore that Mr. V a u g h a n must have been privy to the creation of these false "short form" versions of his correspondence, at least insofar as he signed them, and provided his letterhead for the purpose of generating t h e m . 8.110 The Tribunal is also satisfied that Mr. Kevin Phelan was fully aware that Mr. V a u g h a n ' s files had been falsified, and that those falsified files had been provided to the Tribunal. This is evident from the fact that the documents produced to the Tribunal by Mr. Kevin Phelan also contained the altered versions of the correspondence, and which tallied with the contents of Mr. V a u g h a n ' s falsified files. It follows therefore that Mr. Kevin Phelan's files were likewise falsified, to reflect and correspond with the falsified versions of Mr. V a u g h a n ' s files produced to the Tribunal. Mr. Kevin Phelan's complicity is also evident from his use of his knowledge that the files his own conduct, and in particular produced to the Tribunal had been falsified, in order to secure personal financial advantage in dealing with Mr. V a u g h a n , Mr. Lowry and Mr O'Brien. Mr. Kevin Phelan adopted provided to and Mr. V a u g h a n the by Mr. letter of 23 r d April, 2002, which to the Tribunal as a was forwarded Vaughan purported explanation for the two versions of those letters, albeit an explanation that was utterly implausible. drew that letter of It should be added that at a later date, w h e n the Tribunal 23 r d April, 2002, to Mr. Kevin Phelan's attention, he responded by informing the Tribunal that w h a t he had stated in that letter was incorrect, that the letter had not been drafted by him, and that he had subsequently requested that it be withdrawn. 8.111 It was belatedly suggested by both Mr. V a u g h a n and Mr. Aidan Phelan, in the course of their evidence to the Tribunal in 2009, that it was Mr. Kevin Phelan who was solely responsible for the falsification of Mr. V a u g h a n ' s files. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 7 Page | 265 Whilst the Tribunal is satisfied that Mr. Kevin Phelan was either a party to, or had full knowledge of that falsification, it is equally satisfied that Mr. Kevin Phelan could not have acted alone, without the knowledge and complicity of Mr. Aidan Phelan, Mr. V a u g h a n and Mr. Lowry. 8.112 At the beginning of this chapter, the question was raised: if it was merely coincidental that funds of Mr. Denis O'Brien inured to Mr. Lowry's benefit in both transactions, w h a t could have impelled the wholesale deception that sought to mislead The the Tribunal as to Mr. Lowry's it was true interests of the in the transaction? unequivocal answer is that because acute sensitivity engendered by unwanted disclosure of that connection, and that the experienced and respected professional persons involved, including the solicitor w h o remains retained by Mr. O'Brien in the Doncaster transaction, set about and implemented a cynical and mendacious course of furnishing to the Tribunal a materially false documentary record of those transactions. This was buttressed by untruthful testimony, which sought to misrepresent and minimise Mr. Lowry's true interests and involvement, and thereby to delay and mislead the Tribunal. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 9 _ Page | 266 DONCASTER R O V E R S F O O T B A L L C L U B T R A N S A C T I O N 9.01 During the course o f t h e Tribunal's renewed investigations into matters relating to Mr. Michael Lowry in 2001, and in particular the bank account opened by Mr. Lowry in Irish Nationwide Bank, Isle of Man, in October, 1996, with funds transferred from an account controlled by Mr. Denis O'Brien, and Mr. Lowry's acquisition of UK properties at Mansfield and Cheadle, the Tribunal had been informed of two other UK property transactions, one at Luton, and the other at Doncaster. The Tribunal had been given to understand that Mr. Lowry had no connection with either of these transactions: the former entailed a joint acquisition by Mr. Aidan Phelan and Mr. Denis O'Brien, and the latter was an acquisition by Mr. O'Brien solely. Nothing e m e r g e d from the evidence, then given in 2001, to suggest that any further scrutiny of either transaction was warranted. 9.02 articles T h e n on 11 th January, 2003, The Irish Times published a number of written by Mr. Colm Keena relating to the second of those two transactions, that is, the Doncaster transaction. The articles referred to a letter dated 25 t h S e p t e m b e r , 1998, from Mr. Christopher V a u g h a n , the UK solicitor who had acted in both the Mansfield and Cheadle transactions, addressed to Mr. Lowry, and published the text of the letter. The letter was addressed to Mr. Lowry at his home in Thurles, County Tipperary, and was headed: "Re. Doncaster Rovers Football Club Limited." It referred to meetings between Mr. V a u g h a n and Mr. Lowry over two days in September, 1998, and dealt with a number of issues, all relating to the Doncaster transaction. The second of two numbered paragraphs on the first page of the letter stated: "I had not appreciated transaction, which your total involvement in the Doncaster Rovers' Letter on and I am therefore to Kevin enclosing Paul a copy of my Completion May and Aiden was sent Phelan, [sic] Phelan Completion." A copy of the letter of 25 t h S e p t e m b e r , 1998, can be found within the Appendix to this chapter. 9.03 At the time of publication of those articles in January, 2003, the Tribunal had long completed hearing evidence in relation to the UK properties, and had proceeded with inquiries into the G S M licence competition, and in that regard had c o m m e n c e d public sittings in December, 2002. In the light of the contents of the articles, private enquiries were initiated into the Doncaster REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 information and documentation Page | 267 transaction, and the task of gathering evidence, relevant to it was commenced. Having largely completed hearing evidence in relation to the GSM competition, and having in the meantime also advanced its private enquiries into the Doncaster transaction, the Tribunal proceeded to public hearings which commenced on Wednesday 15 th September, 2004, when the Tribunal delivered its first Opening Statement 17 th on the matter. Immediately following the delivery of that statement, on September, 2004, Mr. Denis O'Brien commenced Judicial Review proceedings against the Tribunal seeking, amongst other reliefs, to quash the decision of the Tribunal to proceed to public hearings in connection with the Doncaster transaction on the grounds that there was insufficient evidence to warrant the Tribunal inquiring into the matter. until Mr. O'Brien's Judicial Review proceedings were completed. In the circumstances, it was necessary for the Tribunal to suspend hearing evidence 9.04 The first stage of Mr. O'Brien's legal proceedings involved an application for leave to bring a substantive challenge on numerous grounds against the Tribunal. This application was refused in the High Court, but on appeal to the Supreme Court, Mr. O'Brien was permitted to bring his substantive challenge, but limited to two grounds. The substantive challenge failed in the High Court, and Mr. O'Brien's appeal to the Supreme Court was ultimately dismissed on 16 th February, 2006. SUSPENSION O F HEARINGS: 9.05 produced N E W DOCUMENTATION Those proceedings delayed the Tribunal's investigations. However in by Mr. O'Brien in the course of the proceedings, which had not the interim between suspension of and resumption of hearings, documentation previously been made available to the Tribunal, but which proved to be highly significant, was examined. In support of his proceedings, Mr. O'Brien submitted, as an exhibit to his grounding affidavit, a correspondence file of Mr. Christopher Vaughan, the UK solicitor who had acted for Mr. Lowry in relation to the Mansfield and Cheadle transactions, and who had also acted for Mr. O'Brien in the This Doncaster acquisition, relating to Mr. Vaughan's dealings with the Tribunal. file contained an amount of documentation, never previously seen by, or provided to, the Tribunal, and it prompted the Tribunal to embark in private on a number of new lines of inquiry. As a result of those new inquiries, the Tribunal gathered a considerable quantity of further information and documentation, which likewise had not previously been produced to the Tribunal. Therefore, when the Tribunal resumed public sittings to hear evidence in relation to the Doncaster transaction in February, 2007, it was in possession of a large quantity of additional material to which it had not had access when it had been obliged to suspend public sittings in September, 2004. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9.06 9 It was a regrettable and recurring feature of much of the Tribunal's Page | 268 w o r k into the money trail aspect of its inquiries that relevant documentation and information was withheld from the Tribunal on a number of separate occasions. This is examined in detail in the previous chapter of this Volume in connection with the Mansfield and Cheadle transactions, and is also examined in Chapter 11 in connection with Doncaster. It should nonetheless be observed at this juncture that much of the material obtained by the Tribunal in the period between the suspension and resumption of its sittings into the Doncaster transaction should have been provided to the Tribunal at a much earlier stage. In particular, two categories of material relating firstly, to the settlement of a series of disputes during 2002 with Mr. Kevin Phelan, the property agent who sourced the Doncaster transaction, and secondly, relating to a blackmail complaint made to the London Metropolitan Police by Mr. Denis O'Brien Senior, Mr. O'Brien's father, resulting from an incident which occurred during mediation proceedings in litigation relating to the Doncaster acquisition, were both of central relevance to the Tribunal's inquiries, and the Tribunal is satisfied that there was no valid reason for the withholding of this material in advance of its public sittings in 2004. 9.07 In his Judicial Review proceedings, Mr. O'Brien asserted, ultimately unsuccessfully, that the Tribunal could not proceed to investigate the Doncaster transaction at public sittings in the absence of his solicitor, Mr. Christopher Vaughan, as a witness. It will be recalled that Mr. V a u g h a n had refused, until 2009, to attend as a witness at any of the Tribunal's public sittings, and, as he was resident outside the jurisdiction, the Tribunal could not compel his attendance. The circumstances in which Mr. Vaughan ultimately attended, following notification of the Tribunal's Provisional Findings in November, 2008, have already been addressed in detail in Chapter 8 of this Volume. Despite his refusal to attend as a witness from 2 0 0 1 to 2008, Mr. V a u g h a n did in part engage with the Tribunal's Tribunal with private inquiries, to the extent of furnishing the Tribunal with information, the and documentation, providing attending two private meetings. W h e n Mr. V a u g h a n ultimately attended to give provided evidence in April, 2009, and again in June, 2009, the Tribunal was immediately before both of his attendances with yet more new documentation. As is apparent f r o m the preceding chapters of this Volume, it thereupon became evident that the versions of Mr. V a u g h a n ' s files, produced to the Tribunal in 2001, had been falsified, and that information which he had furnished to the Tribunal prior to his attendance to give evidence, and evidence he gave on the first occasion of his attendance, were in each case erroneous. 9.08 W h a t emerged in the course of the Tribunal's inquiries was that Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998, was not the only occasion on which REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 an Page | 269 professional persons associated with Mr. Lowry described him as having involvement in, or connection with, the Doncaster transaction. Apart from a faxed letter from Mr. Kevin Phelan to Mr. Aidan Phelan in August, 1999, which did not emerge until after Mr. O'Brien had issued his proceedings, the most unexpected development lay in the role played by Mr. Denis O'Connor, Mr. Lowry's adviser and accountant. Mr. O ' C o n n o r had been centrally involved in Mr. Lowry's dealings with the Tribunal from the outset. He assisted the Tribunal in its early inquiries into the sources of funds in accounts held by Mr. Lowry. He had been unaware of any of Mr. Lowry's UK property acquisitions until March, 2001, w h e n they came to the attention of the Tribunal. It transpired however, as will be seen, that from that time Mr. O'Connor became increasingly e n m e s h e d in dealings with Mr. Kevin Phelan, not only on behalf of Mr. Lowry, but also on behalf of Mr. Aidan Phelan, Mr. Christopher V a u g h a n , and a number of other persons and entities, including Mr. O'Brien's company, Westferry Limited. He played a pivotal role in agreeing terms with Mr. Kevin Phelan in 2002, w h e r e b y the latter was paid more than S t g . ? 6 0 , 0 0 0 . 0 0 by Vineacre, a c o m p a n y of which Mr. Lowry was a director, and S t g . ? 1 5 0 , 0 0 0 . 0 0 by Mr. O'Brien, through his c o m p a n y Westferry. W h a t was even more perplexing is that, later in 2002, he then assumed responsibility for endeavouring to reach a compromise of the litigation which had been instituted by the vendors of Doncaster Rovers against Westferry, and in that context at a meeting in London with the solicitor acting for Westferry, he too indicated that Mr. Lowry had a connection with the Doncaster transaction. BACKGROUND T O DONCASTER ROVERS TRANSACTION 9.09 In the late 1990's, Doncaster Rovers Football Club had fallen on hard In or around the involved the times, both financially and in the performance of its teams. latter months of 1997, a proposal was put to the club which acquisition of the club's ground, Belle Vue, located in the centre of Doncaster, and the relocation of the club to a new stadium in a different area of the city. The lands at Belle Vue could then be redeveloped with the prospect of securing sizeable profits. The intention was to promote a retail development, subject to the necessary planning permission being secured from Doncaster Metropolitan Borough Council. 9.10 This proposal was made and promoted by Mr. Kevin Phelan, the same property development consultant w h o later played a role in the promotion of the Mansfield and Cheadle transactions. It was Mr. Kevin Phelan w h o set about locating investors to provide finance to fund this transaction. 9.11 through Mr. Kevin Phelan appears to have conducted his business in the UK a number of different companies and entities, including Gameplan REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Glebe Trust and M&P Associates. The last of these, M&P Page | 270 International, Associates, was the entity through which he acted in the early stages of both the Mansfield and Doncaster transactions. S o m e t i m e shortly before the Tribunal's public sittings into the Doncaster transaction resumed in 2007, it came to the Tribunal's attention that an the address address used by M&P had Associates been used in in some other correspondence matched which correspondence, which had featured in earlier public sittings of the Tribunal. That other correspondence was from Maher Meat Packers Limited, a c o m p a n y owned and operated by Mr. Bill Maher. Mr. Maher had featured in the initial inquiries of the Tribunal into Mr. Lowry's affairs conducted in 1999, as the source of a cash payment of Stg.?25,000.00. That matter is addressed in Chapter 2 of this Volume, and for current purposes it is sufficient to note that Mr. Maher declined to attend to give evidence on that occasion, but that Mr. Lowry testified that he had known Mr. Maher f r o m the late 1980s, as they would have been of the same generation and came from neighbouring parishes, and he had a number of business dealings with Mr. Maher, involving Mr. Lowry advising Mr. Maher in relation to the refrigeration needs of his meat packing business. 9.12 An examination of official Court and Companies Office records is It informative as to the association between Mr. Kevin Phelan and Mr. Maher. seems that they were co-directors of a Northern Ireland registered company, Classic Home Interiors Limited, which w a s w o u n d up by Order of the High Court of Northern Ireland on 29 t h April, 1997, with the consequence that Mr. Kevin Phelan and Mr. Maher were disqualified from holding c o m p a n y directorships for eight and six years respectively. Mr. Kevin Phelan had previously been disqualified from holding office as a c o m p a n y director in t h i s j u r i s d i c t i o n in late 1994, arising from his directorship of a c o m p a n y by the name of Classic Home Interiors (Ireland) Limited. 9.13 From the evidence of Mr. Christopher Vaughan, w h e n he did attend in 2009, it appears that from the late s u m m e r of 1997, Mr. Kevin Phelan and Mr. Maher were actively engaged in seeking property development opportunities in the North of England. Mr. V a u g h a n stated that his first encounter with Mr. Kevin Phelan occurred in late summer, 1997, w h e n he was introduced to Mr. V a u g h a n by an independent financial adviser known to him, and was asked to give s o m e urgent advice to Mr. Kevin Phelan, and two others, following a meeting between t h e m and representatives of Hull City Football Club, the purchase of which they were negotiating. It was in those circumstances that Mr. V a u g h a n met Mr. Kevin Phelan, Mr. Bill Maher and a Mr. Paul May in a hotel near the M1 Motorway that same evening. Mr. May is an English businessman who appears, a m o n g s t other things, to have operated a c o m p a n y called Cash-A-Cheque Limited, and who was subsequently involved both directly, and through that company, with the affairs of Doncaster Rovers. Mr. V a u g h a n was subsequently instructed by Mr. Kevin Phelan REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 As matters ultimately Page | 271 to act in relation to the proposed Hull City Football Club transaction. transpired, a new partner became involved, and the purchase was handled by the solicitor acting for that partner. "M&P" Mr. V a u g h a n confirmed that the in the name of Mr. Kevin Phelan's business, M&P Associates, referred to Maher and Phelan. 9.14 Despite the fact that Mr. Kevin Phelan was in partnership around this time with a long-standing personal and business associate of Mr. Lowry, in the person of Mr. Bill Maher, it will be recalled that it was Mr. Lowry's evidence in 2001, that his introduction to Mr. Kevin Phelan arose through the s o m e w h a t circuitous means of an approach made to him by an unconnected mutual friend, who furnished message Mr. Lowry with Mr. Kevin Phelan's telephone number, and a requesting Mr. Lowry to make contact with him. T h e y then met in Monaghan in October or November, 1997, w h e n Mr. Kevin Phelan outlined to Mr. Lowry the property investment opportunities to be had in the North of England, and they agreed that Mr. Kevin Phelan could make contact with him w h e n an appropriate opportunity arose. According to Mr. Lowry's evidence, there was no further contact between t h e m until June or July the following year w h e n , Mr. Kevin Phelan brought the Mansfield property to his attention. 9.15 W h e n the Tribunal brought the equivalent addresses of Maher Meat Packers and M&P Associates to Mr. Lowry's attention, w h e n he gave evidence in connection with Doncaster in 2007, Mr. Lowry stated that he did know that the business name M&P Associates referred to Mr. Maher and Mr. Kevin Phelan, and that he had only learned of that connection around the time he had first given evidence to the Tribunal in June, 1999, relating to the cash payment of S t g . ? 2 5 , 0 0 0 . 0 0 which he had received from Mr. Maher. Shortly after giving that evidence in 1999, Mr. Kevin Phelan had told Mr. Lowry that he had not realised that Mr. Lowry and Mr. Maher had a business association. According to Mr. Lowry, it was Mr. Kevin Phelan's explanation that because of s o m e restriction that had been placed on him, he had an agreement with Mr. Maher, w h o m he had known previously from the meat business, w h e r e b y he could use Mr. Maher's office as an address for his business, but that was merely an act of convenience, and that Mr. Maher had no involvement in the business of M&P Associates. Whatever may have been said to Mr. Lowry by Mr. Kevin Phelan in 1999, it appears from Mr. Christopher V a u g h a n ' s evidence that in 1997 Mr. Kevin Phelan and Mr. Maher were involved together in the Hull City Football Club transaction. 9.16 and Whilst Mr. V a u g h a n was aware o f t h e association between Mr. Maher Mr. Kevin Phelan in the property business, and Mr. Aidan Phelan also confirmed in his evidence that he was aware of Mr. Maher's connection with M&P Associates, it s e e m s that Mr. Lowry, w h o unlike either Mr. V a u g h a n or Mr. Aidan REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Page | 272 Phelan was both personally and professionally acquainted with Mr. Bill Maher for a long number of years, was the only person centrally connected with the various English property transactions w h o was unaware of Mr. Maher's involvement. This apparently coincidental association between a person not only known to Mr. Lowry, but with w h o m Mr. Lowry had business dealings, and Mr. Kevin Phelan, was not the only such coincidence to emerge in connection with the Tribunal's inquiry into the Doncaster transaction. 9.17 At the time the Doncaster acquisition was conceived by Mr. Kevin Phelan in late 1997, the large majority of shares in the club was held by two companies, Dinard Limited and Shelter Trust Anstalt. Those companies were owned by Mr. Ken Richardson, and members of his family, and the companies were represented by a Mr. Mark Weaver. It was intended that the purchase of the club would be effected by a transfer of the shares held by Dinard and Shelter Trust. 9.18 The vehicle that was ultimately used to purchase the shares in August, 1998, on behalf of a trust controlled by Mr. O'Brien, was a c o m p a n y by the name of Westferry Limited. That company had in fact been incorporated by Mr. Kevin Phelan on 23 r d October, 1997, at around the same time that, according to Mr. Lowry, he and Mr. Kevin Phelan had their first meeting in Monaghan to discuss possible investments in UK properties. Westferry was an off-shore company, incorporated in the Isle of Man, and its initial beneficial owner w a s Glebe Trust, a trust established by Mr. Kevin Phelan at the same time as he incorporated Westferry. The only purpose for which Westferry was ever used was to acquire the shares in Doncaster Rovers. 9.19 It was w h e n the Tribunal finally received a full copy of Mr. Christopher V a u g h a n ' s files relating to the Doncaster acquisition in April, 2007, that the second unusual coincidence emerged. W h a t became apparent was that it was initially envisaged in early 1998, that the Doncaster project would be funded by Mr. Pat Doherty. Like Mr. Bill Maher, Mr. Doherty had also featured in the Tribunal's inquiries into Mr. Lowry's affairs conducted in 1999, in connection with a payment of ? 3 5 , 0 0 0 . 0 0 in cash made to Mr. Lowry by Mr. Doherty in May, 1995, for the purchase of some items of antique furniture. Mr. Doherty, who had been involved in the property development business for s o m e years, unlike Mr. Maher, did attend to give evidence, and stated that he had known Mr. Lowry for some ten years prior to his giving evidence to the Tribunal in 1999. 9.20 It should be pointed out that the Tribunal has heard no evidence to suggest that the involvement of Mr. Bill Maher or Mr. Pat Doherty in these matters had, in itself, any connection with any possible links between Mr. Michael Lowry REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C hapter 9 and Mr. Denis O'Brien. Nor likewise does there appear to be a link between Mr. Maher's and Mr. Doherty's involvement in Doncaster Rovers, and their earlier payments to Mr. Lowry. Nonetheless, it is a curious feature that Mr. Lowry was embryonic Page | 273 acquainted with three of the personalities centrally involved in the stages of the transaction, prior to any involvement on the part of Mr. Aidan Phelan or Mr. Denis O'Brien, namely Mr. Kevin Phelan, Mr. Bill Maher and Mr. Pat Doherty. Mr. Lowry was also personally acquainted with Mr. Aidan Phelan, having been introduced to him by Mr. Denis O'Connor, following reports in the media relating to the provision by Mr. Aidan Phelan of a mobile telephone for use by Mr. Lowry as detailed in Chapter 7. Thereafter, Mr. Aidan Phelan acted for Mr. Lowry, in a professional capacity, and there then developed personal acquaintanceship. between t h e m a close INITIAL I N V O L V E M E N T O F MR. AIDAN P H E L A N A N D M R . DENIS O ' B R I E N IN T H E D O N C A S T E R R O V E R S P R O J E C T 9.21 Mr. Aidan Phelan informed the Tribunal in evidence that Mr. Kevin Phelan approached him some time around J a n u a r y or February, 1998, at a time when Mr. Aidan Phelan was sourcing investment opportunities for Mr. Mr. Aidan Phelan was unable to recall precisely how he had Denis first O'Brien. encountered Mr. Kevin Phelan, and informed the Tribunal that there was genuine confusion as to how his association with Mr. Kevin Phelan had been formed. 9.22 Apparently Mr. Kevin Phelan told Mr. Aidan Phelan that he had previously been involved in a similar project involving the relocation of Hull City Football Club to a new ground, and the d e v e l o p m e n t of the existing site. Mr. Aidan Phelan travelled to Doncaster and met with the local council, which was keen to move the football ground f r o m its then current location at Belle Vue to a new site at a location called Lakeside, and it ultimately provided Mr. Aidan Phelan with a letter, stating that it would support a planning consent. met with representatives of Asda, who were Mr. Aidan Phelan also occupiers of the potential redeveloped Belle Vue site. Mr. Aidan Phelan viewed it as a good project, which would take no longer than about nine months, and he agreed that Mr. Kevin Phelan would be entitled to 4 0 % o f t h e profits on the project, provided he ran the project right through to the end, that is, to a point where planning permission was obtained. 9.23 In evidence, Mr. Denis O'Brien confirmed that Mr. Aidan Phelan brought the Doncaster project to him some time in early 1998, but said that he himself had never met, or had any dealings with Mr. Kevin Phelan. Mr. O'Brien understood the project to be enthusiastically supported by Doncaster Council, believed that the project had exceptionally high profit potential, and shared Mr. Aidan Phelan's view that the project could be turned around in a short period of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Page | 274 time, without the requirement for any other resources, other than funding, from his end. "It was to be money-in-money-out", as he put it. Mr. O'Brien said that the relatively high equity share to which Mr. Kevin Phelan would be entitled reflected the intensive w o r k that it was expected would be required in turning the project around in a short time. 9.24 Mr. O'Brien provided a deposit of S t g . ? 6 7 0 , 0 0 0 . 0 0 , and on 8 t h May, 1998, a share purchase agreement was entered into between Westferry Limited and Dinard and Shelter Trust, with an agreed purchase price of S t g . ? 4 . 3 million. Of this, S t g . ? 6 9 7 , 0 0 0 . 0 0 was by agreement held in retention in a joint account at Lloyds Bank in Jersey, pending the final resolution of certain matters related to payments to be made by the purchasers, including compensation payments to players, the repayment of loans and various other fees. In addition, S t g . ? 2 5 0 , 0 0 0 . 0 0 from this retention a m o u n t w a s to be paid by the purchasers to the vendors if evidence could be produced, prior to the completion of the share purchase, that Doncaster Council had granted a new lease in respect of a car parking area adjoining the main football stadium at Belle Vue. 9.25 For commercial reasons, Mr. O'Brien decided to keep his involvement in the acquisition confidential, and he was conscious that, as he was running a publicly quoted c o m p a n y at the time, the perception that he was involved in a football venture becoming might not have been wholly beneficial in that context. He also had a concern that shareholders in Esat T e l e c o m might become apprehensive that he was becoming distracted from his role as chairman and chief executive of that company. the project. In the circumstances, Mr. Aidan Phelan fronted 9.26 Aidan Indeed, whilst Mr. V a u g h a n testified that he became aware of Mr. Phelan's involvement in the transaction 8th some time during the period between the share purchase agreement of May, 1998, and the completion of the transaction on 18 th August, 1998, Mr. V a u g h a n informed the Tribunal that at no time throughout the whole process of the Doncaster Rovers Football Club acquisition was he ever aware of the existence or involvement of Mr. O'Brien. Denis The first time he became aware that Mr. O'Brien had an involvement in Doncaster Rovers was at a meeting in Mr. Aidan Phelan's offices in Clanwilliam Court, Dublin, on 15 th March, 2001, which has been examined in Chapter 8, and which related to the Tribunal's inquiries concerning the Mansfield and Cheadle transactions. 9.27 Mr. Peter V a n d e r p u m p , a director of W a l b r o o k Trustees (IOM) Limited, a c o m p a n y owned by Deloitte & Touche and involved in providing trust and company administration services, gave evidence to the Tribunal that on 13 th REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Page | 275 August, 1998, Mr. Aidan Phelan asked W a l b r o o k Trustees, as trustees of the Wellington Trust, which was set up for the benefit of Mr. Denis O'Brien and his family, to take over administration of Westferry Limited. As a result, both he and one other W a l b r o o k Trustees director were appointed as directors of Westferry. Prior to this, the beneficial owner of Westferry w a s the Glebe Trust. 9.28 The completion of the contract for the sale of the shares in Doncaster Rovers took place on 18 th August, 1998, the same day that Doncaster Rovers played their first match in the Vauxhall Conference, to which they had relegated the previous season. attended in Doncaster at the been Mr. Aidan Phelan informed the Tribunal that he match, and also for the completion of the acquisition, the outstanding funding for which was provided by means of a loan facility advanced by Anglo Irish Bank to Mr. O'Brien. 9.29 Kevin Five days later, on 23 r d August, 1998, Mr. Christopher V a u g h a n wrote a lengthy seven page letter, with enclosures, addressed to Mr. Paul May and Mr. Phelan, dealing with a large number of issues which needed to be considered urgently. These included the fees payable to both Mr. V a u g h a n and to a firm of accountants, Grant Thornton, Mr. V a u g h a n ' s appointment as c o m p a n y secretary of Westferry, the issue o f t h e retention monies, and the crystallisation of previous approaches to Doncaster Council. In relation to the S t g . ? 2 5 0 , 0 0 0 . 0 0 retained to cover payment to the vendors in the event of a renewal of the lease on the car park attached to Belle Vue stadium, Mr. V a u g h a n advised that it was vital that Westferry should as soon as possible divest itself of all its assets, moreover that it would continue to exist merely as a shell company, so that there would be little point in the vendors suing Westferry to claim the s u m due. This paragraph in the letter took on a particular significance in the context of a dispute that developed between Westferry and the vendors. 9.30 On a point of detail, Mr Paul May's role in the Doncaster Rovers project was to take over as financial director o f t h e football club, which he was to have a central role in running, and which was intended to continue as a going concern, once relocated to new playing facilities. Neither he, nor Mr. Kevin Phelan, w h o are both resident outside this jurisdiction and, as such, not compellable as witnesses, were agreeable to attend to give evidence at the Tribunal's hearings. 9.31 Returning to Mr. V a u g h a n ' s letter of 23 r d August, 1998, the final paragraph stated: " a second copy of this letter is enclosed should be arranged for Aiden [sic] Phelan, and I think by which that a meeting within the next two weeks time I hope that a lot of the financial issues will have been clarified." REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C hapter 9 Mr. Vaughan was anxious at this time to meet with the representatives issues that were then outstanding in connection with the acquisition. 9.32 of Page | 276 Westferry, and in particular Mr. Aidan Phelan, with a view to resolving the various One month later, on 23 r d September, 1998, Mr. Vaughan wrote to Mr. Aidan Phelan, inquiring as to arrangements for a meeting on the following day, 24 th September, 1998, and enclosing a brief agenda of topics that Mr. Vaughan wished to discuss, as well as a detailed bill of legal costs, and revised completion and financial statements. Mr. Vaughan's letter also stated that the most important issue was turning Westferry into a shell company with no assets as soon as possible, in accordance with his earlier advice of 23 rd August, 1998. 9.33 Mr. Vaughan informed the Tribunal that he had been anxious to have a meeting with Mr. Aidan Phelan, w h o m he had never previously met, and so, when Mr. Kevin Phelan told him a meeting had been arranged, he assumed it was to be with Mr. Aidan Phelan, and wrote to him accordingly. He did not have the correct fax number for Mr. Aidan Phelan, and therefore the letter did not reach him on 23 rd September, 1998, but arrived by post at a later date. Mr. Vaughan also informed the Tribunal that subsequently it transpired that the meeting was not to be in connection with Doncaster Rovers, but rather the purchase o f t h e Mansfield property by Mr. Michael Lowry. MEETINGS B E T W E E N M R .C H R I S T O P H E R VAUGHAN, M R . KEVIN P H E L A N A N D M R . M I C H A E L L O W R Y I N S E P T E M B E R , 1998, A N D M R . CHRISTOPHER VAUGHAN'S LETTER O F 25TH SEPTEMBER, 1998 9.34 Rovers As already transaction mentioned, the Tribunal's prompted by the inquiries of into the the Doncaster of 25 th were contents letter September, 1998, written by Mr. Christopher Vaughan to Mr. Michael Lowry, which related to the Doncaster Rovers project, and referred to a meeting on the previous day at which both men were in attendance. 9.35 In evidence given to the Tribunal in 2001, at a time when the Tribunal was not inquiring into the Doncaster transaction, and was not aware of the letter of 25 th September, 1998, Mr. Lowry testified that, following their initial contact in late 1997, the next time that he heard from Mr. Kevin Phelan was in or around June or July of 1998, when the latter informed him that he had a small development in Mansfield that he thought Mr. Lowry should take a look at. Nothing further occurred until some time in September, 1998, when, according to Mr. Lowry's earlier evidence in 2001, he met Mr. Kevin Phelan and looked at the Mansfield property. Initially Mr. Lowry informed the Tribunal that it was on this In later same trip that he met Mr. Christopher Vaughan for the first time. evidence, given at a time when the Tribunal was inquiring into the Doncaster REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 and w h e n it had become clear that there was no visit to the Page | 277 transaction, Mansfield site in the course of Mr. Lowry's trip to England, referred to in Mr. Vaughan's letter of 25 t h S e p t e m b e r , 1998, Mr. Lowry corrected his earlier evidence, by stating that he believed he had visited the Mansfield site with Mr. Kevin Phelan a number of weeks before the S e p t e m b e r meeting. 9.36 In the course of the Tribunal's private inquiries, Mr. Lowry produced copies of airline tickets which showed that his visit to Northampton in fact t o o k place on 23 r d and 24 t h September, 1998, and not on 24 t h and 25 t h September, 1998, as recorded in Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998. Whilst Mr. Lowry disputed the accuracy of the dates recorded in Mr. V a u g h a n ' s letter, he accepted that he did meet with Mr. V a u g h a n on the evening of W e d n e s d a y , 23 r d September, 1998, and then again on the morning of Thursday, 24 t h September, 1998. Available information 9.37 In examining Mr. Lowry's visit to Northampton over the course of 23 r d and 24 t h S e p t e m b e r , 1998, and, in particular, w h a t gave rise to the terms of Mr. V a u g h a n ' s letter, dated 25 t h S e p t e m b e r , 1998, to Mr. Lowry, in which he refers to Mr. Lowry's "total involvement" in the Doncaster transaction, the Tribunal has had regard to a number of different accounts of those events. In the course of public hearings in 2007, the Tribunal examined a number of varying accounts given by Mr. V a u g h a n at different times relating to the events over that W e d n e s d a y and Thursday. There were a number of significant inconsistencies between those accounts, which could not be resolved satisfactorily until Mr. V a u g h a n agreed to attend as a witness in the course of 2009. 9.38 The chronological order in which these accounts were given is significant, as is the order in which they came to the attention of the Tribunal, which differed. It is accordingly proposed that the accounts given by Mr. V a u g h a n be set out first in the chronological order in which Mr. V a u g h a n provided them, whilst noting the chronological order in which they came to the attention of the Tribunal, where relevant. Thereafter, it is proposed to consider Mr. V a u g h a n ' s evidence to the Tribunal in 2009, and then, finally, Mr. Lowry's evidence, which was given in 2007. Mr. Christopher Vaughan's versions of his meetings with Mr. Michael Lowry over 23 rd and 24 th September, 1998 Mr. Christopher 9.39 Vaughan's letter to Mr. Michael Lowry of 25th September, 1998 As the letter of 25 t h S e p t e m b e r , 1998, was the starting point for the Tribunal's inquiries into the Doncaster transaction and, more specifically, the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Page | 278 events surrounding Mr. Lowry's visit to England at the end of S e p t e m b e r , 1998, it merits reproducing the text of Mr. Christopher V a u g h a n ' s letter in full. The letter is on Mr. V a u g h a n ' s headed notepaper and reads as follows: "Mr. Michael Lowry Abbey Road Thurles County Tipperary Eire 25th September, Dear Michael, Re: Doncaster Rovers Football I was very pleased Club Limited 1998. 1998 to meet you on the 24th and 25th September My apologies for getting you to Leicester a few minute [sic] late for your BUPA appointment. I hope that all went well and that you eventually returned to Ireland. I am enclosing 1. Copies of my letters of the 23rd and 25th September 1998 to Aiden [sic] Phelan. You did take a copy of the letter of the 23rd with you on the 24th. However, you will recall that two of the figures were wrong on the Completion Statement and those have now been amended, and I would be grateful ifyou would destroy the incorrect copy and substitute this one. 2. I had not appreciated your total involvement in the Doncaster Rovers' transaction and I am therefore enclosing a copy of my Completion Letter which was sent to Kevin Phelan, Paul May and Aiden Phelan on Completion. You will see that in that letter I make reference to the divesting by Westferry ofall its assets. This is a matter that I discussed with you on the 24th September and it is absolutely vital that this process is initiated urgently. It is not an issue that I can deal with as a Solicitor as I think that there is a possible conflict of interest with my involvement with Doncaster Rovers. I think that it would be best for Aiden Phelan to arrange for the matter to be dealt with via Anglo Irish Bank and either their solicitors in London Theodore Goddard, or Messrs Simcocks in the Isle of Man, who dealt with the other Westferry matters, prior to the acquisition of the shares in Doncaster Rovers. I have absolutely no doubt in my mind that if Mr. Richardson, who was the controller of Dinard Trading and Shelter Trust Anshalt, does not receive his ?250,000 on the 31st December 1998 a lot of expensive unnecessary and embarrassing litigation will ensue which will not be to anyone's benefit! Agreement - Gameplan nothing International LTD and Bryan the document Phelan was FAXED through I have heard to him. Doncaster from Kevin since Rovers/Westferry/Paul May REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 this with Paul of the shares Page | 279 I am preparing as [sic] draft agreement and I am discussing at the moment in respect of his ?120,000 and the transfer to the new Chairman. I understand that you are trying and Aiden Phelan. to organise a meeting between myself Obviously one of the matters to be discussed is the question of my outstanding costs as an enormous amount of work has gone into the Doncaster Rovers acquisition and only half my fees have been paid. Likewise I believe that there is an outstanding account due to Grant Thornton which needs to be paid as we still need their financial input in producing a balance sheet as at the completion date of the 18th August 1998 to enable the Retention Funds to be accessed. Kind Yours Regards, sincerely" The letter is signed by Mr. Vaughan, and there is a manuscript note at the bottom which reads as follows: "*P.S I may meet Aiden [sic] on Thursday 1st October." A copy of both the office copy of this letter, from Mr. V a u g h a n ' s files, and a faxed copy of the final signed version, which ultimately came into the possession of Mr. Ken Richardson, and Mr. Mark Weaver, can be found in the Appendix to this chapter. 9.40 Of all Mr. V a u g h a n ' s accounts of his dealings with Mr. Lowry at the end of S e p t e m b e r , 1998, his letter of 25 t h September, 1998, is the first in time, and the only one that is contemporaneous. following: On its face, the letter suggests the (i) that Mr. V a u g h a n met Mr. Lowry over w h a t now appears established as having been 23 r d and 24 t h September, 1998; (ii) that Mr. V a u g h a n drove Mr. Lowry to his BUPA appointment in Leicester on 24 t h S e p t e m b e r , 1998; (iii) that Mr. Lowry was given a copy of Mr. V a u g h a n ' s letter to Mr. Aidan Phelan dated 23 r d September, 1998; (iv) that the figures in the completion statement attached to that letter of 23 r d September, 1998, were discussed, and it was pointed out to Mr. Lowry during the meeting that two of the figures were wrong; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r (v) 9 Page | 280 that Mr. V a u g h a n formed the impression from his dealings over those two days, that Mr. Lowry had a "total involvement" in the Doncaster transaction, something Mr. V a u g h a n had not previously appreciated; (vi) that Mr. V a u g h a n discussed with Mr. Lowry his advice that Westferry should be divested of its assets, as also referred to in his letter of 23 r d August, 1998, sent to Mr. Kevin Phelan, Mr. Paul May and Mr. Aidan Phelan; (vii) that Mr. V a u g h a n also discussed with Mr. Lowry an agreement governing a payment due to Mr. May, arising out of his w o r k in operating the football club; (viii) that Mr. V a u g h a n understood that Mr. Lowry w a s going to try to organise a meeting between Mr. V a u g h a n and Mr. Aidan Phelan. 9.41 S o m e six months before that letter featured in an Irish Times report, it had become a source of considerable concern to a number of individuals and entities connected with the Doncaster transaction. The production of a copy of the letter by Mr. Ken Richardson and Mr. Mark Weaver, representatives of Dinard and Shelter Trust Anstalt, in the course of a mediation negotiation with Mr. Denis O'Brien Senior on behalf of Westferry, gave rise to a blackmail complaint being made to the London Metropolitan Police by Mr. O'Brien Senior against Mr. Richardson and Mr. Weaver. The Tribunal knew nothing of these events at the time they occurred, September, and was unaware of the contents of the Mr. letter of 25 t h had an 1998, or of any suggestion that Lowry might have involvement of any nature in the Doncaster transaction, or that a letter from Mr. O'Brien's solicitors indicating such an involvement had been used to blackmail him. 9.42 W h e n the letter became the cause of controversy at the time of the mediation, it appears that its existence or significance had not been previously appreciated by some of those connected with the transaction. Prompt inquiries were made of Mr. V a u g h a n as to the circumstances in which the letter had come to be written in S e p t e m b e r , 1998. The Tribunal heard evidence from Mr. Aidan Phelan, Mr. Peter V a n d e r p u m p , in his capacity as a director of Westferry, acting on behalf of Mr. O'Brien, Mr. Denis O'Connor, accountant and financial adviser to Mr. Michael Lowry and Ms. Kate Macmillan, solicitor acting for Westferry, each of w h o m gave evidence in relation to accounts given to t h e m by Mr. Vaughan concerning the circumstances in which the letter was written. These accounts will now be reviewed. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Vaughan's account to Mr. Aidan Phelan had Page | 281 Mr. Christopher 9.43 Mr. Aidan Phelan testified that, after Mr. Denis O'Brien Senior 25 t h brought the existence of the letter of September, 1998, to his attention, some time in or around S e p t e m b e r , 2002, he made contact with Mr. V a u g h a n by telephone. It s e e m s that Mr. Aidan Phelan may also have visited Mr. V a u g h a n at a later time, following the publication of the letter in The Irish Times in January, 2003. Mr. Aidan Phelan in his evidence stated that Mr. V a u g h a n had confirmed to him that he had written the letter of 25 t h September, 1998, and told him that he had formed the impression, f r o m s o m e t h i n g Mr. Lowry had said, that Mr. Lowry was involved in the Doncaster transaction. Mr. V a u g h a n also informed Mr. Aidan Phelan that w h e n Mr. Kevin Phelan became aware of the terms of the letter of 25 t h September, 1998, he told Mr. Vaughan that Mr. Lowry had misrepresented his involvement in Doncaster. Mr. Christopher Vaughan's explanations Vanderpump in October, 2002 9.44 arising from inquiries made by Mr. Peter Following the production of Mr. V a u g h a n ' s letter by Mr. Ken Richardson and Mr. Mark W e a v e r in the course o f t h e mediation with Westferry in S e p t e m b e r , 2002, Mr. John Ryall, an accountant and employee of Mr. Denis O'Brien, informed Mr. Peter V a n d e r p u m p , a Director of Westferry, of w h a t had occurred at the mediation, and requested Mr. V a n d e r p u m p to write to Mr. V a u g h a n to clarify the situation regarding his letter. Mr. V a n d e r p u m p did so on 17 th October, 2002, stating that it had come to Westferry's attention that correspondence from Mr. V a u g h a n ' s office suggested that Mr. Lowry had a shareholding in Westferry, or was involved in the negotiations relating to the Doncaster purchase. The letter Mr. Mr. reminded Mr. V a u g h a n that the sole beneficial owners of Westferry were O'Brien and his family, that no other party was involved, and sought V a u g h a n ' s confirmation that this was his full and complete understanding of the matter. It should be pointed out that this letter only came to the attention of the Tribunal by reason of its having been included in Mr. V a u g h a n ' s file, exhibited as part of Mr. Denis O'Brien's affidavit in support of his Judicial Review application in September, 2004, against the Tribunal, as also were two responses drafted by Mr. Vaughan, one dated 21 s t October, 2002, and the other 23 r d October, 2002. 9.45 The first version, dated 21 s t October, 2002, may have been a draft Insofar as it contains an prepared by Mr. V a u g h a n which he may not have sent. account of w h a t had occurred in the course of Mr. V a u g h a n ' s meetings with Mr. Lowry at the end of S e p t e m b e r , 1998, the letter states as follows: "What I can state quite categorically 24th September is that before I met Michael Lowry for that the first time on the I had absolutely no knowledge REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 in the acquisition to him some of DRFC, and you will see problems facing some those Page | 282 he might have been involved that in that letter the acquisition influence matters I explained of the future ofthe Club, and with the thought that he might have I set them out in that letter. Suffice were resolved by Michael Lowry. it to say that none of I do not think involved political that I misunderstood but in hindsight his comments I must put to me that to some he sort was of in DRFC, it down ego that he was trying to attach venture." his name to what appear [sic] to be a successful 9.46 Mr. V a u g h a n ' s recollection was that the response dated 23 r d October, 2002, was sent to Mr. V a n d e r p u m p , and whilst this version does not specifically deal with the meetings with Mr. Lowry in late S e p t e m b e r , 1998, it does contain the following passage: "I am quite convinced Westferry, owner interest Kevin that during the course maintained 'Glebe Trust', ofthe acquisition he was the of DRFC by Phelan called to me that and also beneficial beneficial to me of a trust that he had a in Westferry. I am also sure that he made representations Lowry was also involved in Glebe Trust. to the effect that Michael I have to say that at no time during did Michael Completion." Mr. Christopher 9.47 Vaughan's accounts Lowry have any input the acquisition of DRFC by nor later Westferry following into that process, to Mr. Denis O'Connor On 18 th October, 2002, the day following Mr. V a n d e r p u m p ' s letter to Mr. Vaughan, Mr. Mark Weaver visited Mr. V a u g h a n ' s office, and in the course of their interaction furnished him with a copy of his letter of 25 t h S e p t e m b e r , 1998, addressed to Mr. Lowry. Mr. Denis O'Connor testified that he happened to have received a telephone call from Mr. Kevin Phelan on the same day, informing him of Mr. Mark W e a v e r ' s visit to Mr. V a u g h a n ' s office. As a result, Mr. O'Connor telephoned Mr. V a u g h a n and arranged to meet Mr. V a u g h a n in Northampton, on 23 r d October, 2002. 9.48 23 r d It was Mr. O ' C o n n o r ' s evidence that w h e n he met with Mr. V a u g h a n on October, 2002, he had not previously seen a copy of the letter of 25 t h September, 1998, recording Mr. Lowry's Doncaster involvement. He stated that when he attended Mr. V a u g h a n ' s office, there was a lot of chaos, Mr. V a u g h a n was unable to find a copy of the letter of 25 t h S e p t e m b e r , 1998, but did provide a copy of his file note of 18 th October, 2002, recording Mr. W e a v e r ' s visit, which Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Page | 283 O'Connor read. He testified that Mr. V a u g h a n told him that the letter that Mr. Weaver had given him was a bad copy of one of his own letters, which had issued in error, and was of no concern. It should be observed that the date of this meeting between Mr. O ' C o n n o r and Mr. V a u g h a n was the same date as Mr. Vaughan's letter to Mr. Peter V a n d e r p u m p 25 t h in which he set out his revised explanation of how the letter of September, 1998, came to be written; further that despite Mr. O ' C o n n o r ' s suggestion that Mr. V a u g h a n was unable to find a copy of the letter, he had nevertheless attached a copy w h e n writing that day to Mr. V a n d e r p u m p . 9.49 Mr. O ' C o n n o r also testified that on another occasion, although he was unclear as to when, he did ask Mr. V a u g h a n about his letter of 25 t h September, 1998, and how Mr. V a u g h a n had come to write it. Mr. O'Connor could recall a conversation wherein either he or Mr. Vaughan, referring to Mr. Lowry, made a c o m m e n t along the lines of "typical politicians". Mr. O ' C o n n o r stated: "...I remember do everything some type of discussion like that, politicians pretending to the so that at least they are the big people That type ofa conversation." at the end when right result comes out. Mr. O'Connor also said that he recalled talk" his conversation with talk" Mr. Vaughan including reference to "loose or "bravado or bragging by Mr. Lowry, which led to Mr. V a u g h a n writing the letter in the terms he did. Mr. Christopher 9.50 Vaughan's accounts to Ms. Kate Macmillan Ms. Kate Macmillan and Ms. Ruth Collard were solicitors in the firm Carter-Ruck & Partners, and were acting on behalf of Westferry, primarily in connection with the ongoing dispute with Dinard and Shelter Trust over the retention monies, but they were also instructed in connection with Mr. O'Brien Senior's blackmail complaint arising out o f t h e events that occurred in the course of the mediation meeting in S e p t e m b e r , 2 0 0 2 . On 22 n d October, 2002, Macmillan telephoned Mr. Vaughan, and made handwritten notes of Ms. her conversation with him, which she then converted into a typed attendance of the same date. Although w h e n testifying, her specific recollection of her conversation with Mr. V a u g h a n was not very clear and, she was accordingly relying in the main on the notes she took at the time, Ms. Macmillan confirmed that those notes were an accurate contemporaneous record of her conversation with Mr. V a u g h a n . The typed attendance she prepared recorded the following: "CV said that it was important 1998 in context. day that CV had to look at his letter to ML of 25 September on the he was The letter was written a month after the purchase met ML for the first time. ML had said that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 in Doncaster had Rovers Football about Perhaps Club Limited. Doncaster he was CV said that Rovers latching Football on to perhaps Club some Page | 284 involved was [sic] ML was said to him puff. Limited politicians' which might transaction, and therefore it. CV said have been perceived it was advantageous taken at the time as successful to to considered for him to be connected from ML in relation that he had never Rovers Football instructions Doncaster Club Limited. CV said that he believed Club Limited at all." that ML was not involved 9.51 in Doncaster Rovers Football Ms. Macmillan again spoke to Mr. V a u g h a n on the telephone on 28 t h She provided the Tribunal with her handwritten notes of that October, 2002. conversation, which recorded that Mr. V a u g h a n had told her, by reason of Mr. Lowry's late arrival, that the meeting on the evening of 23 r d S e p t e m b e r , 1998, had had to be deferred, and that it took place later at Mr. Paul May's house. Macmillan recorded the following in her note: Ms. " I was genuinely sd in pres of surprised when he sd inv PM/KP." She confirmed in evidence that this portion of her handwritten note recorded that Mr. V a u g h a n told her that he was genuinely surprised w h e n Mr. Lowry had said he was "involved", which he had done in the presence of Mr. May and Mr. Kevin Phelan. Ms. Macmillan also recorded Mr. V a u g h a n as having expressed his belief that Mr. Kevin Phelan was behind, and had orchestrated, the events that had given rise to the blackmail complaint. 9.52 On foot of these telephone contacts, Ms. Macmillan prepared a draft witness statement for Mr. V a u g h a n which, if approved by him, was intended for use in the blackmail complaint. Mr. V a u g h a n , under cover of She faxed her draft of the witness statement to letter dated 8th November, 2002. This draft statement came to the attention of the Tribunal for the first time by reason of it having been included in the copy of Mr. V a u g h a n ' s file exhibited in Mr. O'Brien's Judicial Review proceedings. That copy of the statement contains handwritten annotations made by Mr. V a u g h a n in the course of reviewing the draft. In parts of the statement, ticks certain appear alterations beside or corrections paragraphs are made no in handwriting, or whereas other where alterations corrections are made. T h e relevant section, containing an account of the meeting with Mr. Lowry at the end of S e p t e m b e r , 1998, reads as follows: "23. I met him for the first time on the evening at Paul May's Michael May's Lowry house house. and At this meeting Paul May. of 24 September Kevin place late 1998 Phelan, at Paul in were myself, took been The meeting Lowry had because Michael arriving REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 England place and time was short. the other three The meeting was fairly brief and somewhere. property Kevin took The deal, Phelan he talk Page | 285 before went out for dinner meeting was mainly about the proposed ofissues Mansfield DRFL. but it touched is a person changes tack on a number who hops including deal around and a great is the sort in twenty in conversation: who can frequently of person seconds. about twenty different subjects 24. I met Michael discuss minute Someone person the Lowry again Mansfield in my office on 25 September and then had 1998 to 50 deal an approximately him to there, long car Journey else had been with him when supposed I drove Leicester. but this to drive him dropped out and I stepped into the breach. 25. From the meeting with Michael Lowry on 24 September on 25 September 1998 and from my 1998, I got the meetings impression that I could talk to Michael to him in the terms of issues might to sort Lowry about DRFL, which is why I wrote 1998...I had a number he I did on 25 September out regarding the transaction, and I thought Limited's it be able to help. I did not have Westferry express because spoken previous authority Westferry about to write this letter but I did not think I needed Limited's openly representative, in Michael Kevin Lowry's Phelan, presence had the DRFL evening." There were no corrections to any of these numbered paragraphs, and all have a handwritten tick beside them. Mr. Christopher 9.53 Vaughan's accounts to the Tribunal It is noteworthy that, in all of the accounts given by Mr. V a u g h a n set out above, almost all of which occurred at a time prior to the time w h e n the letter of 25 t h S e p t e m b e r , 1998, came to the attention of the Tribunal, Mr. V a u g h a n is recorded as having indicated that he wrote his letter referring to "total involvement", on the basis of w h a t he had been informed by Mr. Lowry, albeit that he was subsequently of the belief that Mr. Lowry had no involvement in Doncaster Rovers, and, with the benefit of hindsight, he believed that w h a t Mr. Lowry had told him might have been by reason of a desire on Mr. Lowry's part to associate h i m s e l f w i t h a transaction that he perceived to be successful. 9.54 W h e n the Tribunal became aware of the contents of the letter of 25 t h September, 1998, a number of queries were raised with Mr. V a u g h a n by letter of the 13 th January, 2003. Mr. V a u g h a n responded by letter dated 6 t h March, 2003, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 286 in which he provided the following account of Mr. Lowry's visit to the UK in late September, 1998: "I met Kevin Phelan general Phelan discussion broadened and Michael about the the Lowry on the 24th September. Mansfield property. I believe We had a that Kevin projects Phelan discussion in. by raising queries raised on other with Kevin which he was involved I would have certainly matters the issue as to the outstanding a meeting with Aidan Phelan in DFRC [sic] and the need to have those matters and I gave him a unsuccessfully to consider copy of my letter dated 23rd September attempted to fax to Aidan Phelan 1998 which I had day. the previous Michael I formed because Lowry was present what I subsequently of the frank issues throughout discovered in which to the whole ofthose discussions view, and that the to be a totally incorrect Kevin Phelan manner relating project. was discussing was outstanding involved DRFC, Michael Lowry somehow in the DRFC Michael Lowry and Kevin Phelan then wanted to go on to have a for Michael of the to the meal Lowry details somewhere to come relating Solicitor but I returned to my home. It was arranged to finalise to my office the following property property. day and some to the Mansfield in respect of the for me to speak Vendors Michael Lowry was brought to my office early in the morning but I have no note or It had been Lowry arranged during of the 25th September of meeting would come presumably Kevin by Kevin Phelan on that day. and collect recollection that a car of Phelan to my office Michael the course at the the morning Hospital. then and take him to Leicester to arrive for an appointment recall BUPA and I in my The car failed to take (I cannot what went wrong) offered Michael Lowry in my car to the BUPA north up the Ml Hospital from Leicester, office. which is about 30 miles motorway Following September Vendors Michael Lowry arriving the at my office on the morning file. of the 25th the as to we examined Mansfield property I contacted Solicitors as to issues property. that had arisen from our discussions the purchase of that No one else travelled Lowry. in my car to Leicester other than myself and Michael REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 the discussions in the car related Politics. to the general Page | 287 So far as I can recall property market in England, Sport and Irish Based on my incorrect issues assumption from the previous touched days meeting on again me in the outstanding relating to DRFC were again Lowry offered by me. resolving with It is my recollection those outstanding that Michael issues, to assist by agreeing to try arrange he knew. [sic] a meeting Aidan Phelan whom he led me to believe I have meeting found no handwritten notes on the DRFC file in relation in the car the to to the on the 24th September or the discussion Lowry following day, which is not surprising to discuss the Mansfield as Michael property." had come Northampton It is noteworthy that Mr. V a u g h a n in his response to the Tribunal made no reference to Mr. Lowry having told him that he was involved in Doncaster, but rather he limited his explanation for having written the 25 t h S e p t e m b e r , 1998, letter to the fact that Mr. Kevin Phelan had discussed the Doncaster project in Mr. Lowry's presence, and the fact that Mr. Lowry had, in the course of the car j o u r n e y the following day, offered to try to arrange a meeting with Mr. Aidan Phelan. The Tribunal w a s not at the time it received this response from V a u g h a n aware of any of his previous accounts, as set out above. Mr. 9.55 Following receipt of Mr. V a u g h a n ' s letter of 6 t h March, 2003, the Tribunal was informed by Mr. Lowry that the meeting on the evening of his arrival in England had taken place in a hotel premises and was, as he described it, a social meeting over drinks. The Tribunal wrote to Mr. V a u g h a n relaying Mr. Lowry's account and queried why, if the meeting was to be about Mansfield, he had brought his Doncaster file with him, and had made available to Mr. Lowry copies of the completion statement. Mr. V a u g h a n responded to the Tribunal on 8 t h September, 2004, the day before he was due to meet m e m b e r s of the Tribunal legal t e a m at a private meeting in London, and asserted that Mr. Lowry was mistaken, that the meeting had taken place in the boardroom at Mr. V a u g h a n ' s office, that Mr. V a u g h a n did not go to an hotel or have drinks socially with Mr. Lowry, that Mr. V a u g h a n met Mr. Lowry purely for business in his building, and that the Doncaster files were in his room, which was close to the boardroom, and were available to be consulted. 9.56 At the meeting in London on the following day, 9 t h September, 2004, Mr. V a u g h a n reiterated and confirmed this version of events, saying that the meeting took place within office hours, which as far as he was concerned meant some time before 6:00pm. At this time, the Tribunal had not yet received a copy REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 288 of Mr. Lowry's plane ticket indicating that his flight had not departed from Dublin until 6:15pm. 9.57 W h e n subsequently the Tribunal became aware for the first time of the draft witness statement prepared by Ms. Kate Macmillan, which recorded the meeting as having occurred in Mr. Paul May's house, the Tribunal again wrote to Mr. V a u g h a n to seek his assistance, and received a reply by letter dated 7 t h October, 2004, in which Mr. V a u g h a n stated that he had started to go through the draft witness statement, as could be seen from his manuscript notes, but he had given up because there were so many aspects that were wrong. W h a t could be seen were his initial attempts to edit the draft statement, but he came to the conclusion that the whole statement needed rewriting. In correspondence Mr. V a u g h a n sent to Ms. Collard at the time, that is, in November, 2002, he indicated that he wished to confine his witness statement to matters related to his meetings with Mr. Mark Weaver, and he did not state in that correspondence that the draft witness statement contained erroneous material or that the draft statement needed to be rewritten by reason of its being erroneous in any aspects. Evidence of Mr. Christopher Vaughan Location and participants 9.58 at meeting of September, 1998 Given the non-compellability of Mr. Kevin Phelan and Mr. Paul May, the evidence of w h a t occurred over those days, and of the interactions which led to Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998, in terms which indicated that he regarded Mr. Lowry as a principal party to the Mr. Doncaster transaction, was confined to that of Mr. V a u g h a n and Lowry. As Mr. V a u g h a n ' s various accounts of w h a t had transpired on those days, and w h a t had prompted him to write in that manner to Mr. Lowry, h a v e j u s t been outlined, it is helpful to set out a s u m m a r y of his evidence in the first instance, even though Mr. Lowry's evidence was heard earlier, during the Tribunal's resumed substantive inquiries into the Doncaster transaction, in 2007. 9.59 Mr. V a u g h a n stated that in the period leading up to the meetings of 23 r d and 24 t h September, 1998, he was anxious that matters would be moved along in relation to Doncaster. The completion in mid-August, 1998, had been relatively fraught from his point of view, as receipt of the monies to close the sale had been delayed. The completion also coincided with Mr. V a u g h a n ' s annual holidays, and he had brought the files relating to w h a t was the largest transaction for which he had up to then been retained, and a fax machine, with him, so that he could deal with the completion whilst on holidays. Mr. V a u g h a n regarded the completion as merely the first step in a complicated process, and it w a s for that reason that he set about drafting the lengthy letter of 23 r d August, 1998, addressed to Mr. Paul May and Mr. Kevin Phelan, and copied to Mr. Aidan Phelan, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 289 setting out all the matters that needed to be attended to in the short term following completion. 9.60 S u b s e q u e n t to his return from holidays, on 24 t h August, 1998, Mr. V a u g h a n met with Mr. Paul May, w h o m he described as a careful and clever businessman, and who shared his concerns that matters needed to be progressed. Thereafter, there was a period of limbo for some three weeks or so when nothing appeared to happen. Accordingly, when Mr. V a u g h a n learned that a meeting had been arranged for 24 t h S e p t e m b e r , 1998, he assumed that it would pertain to Doncaster, and that Mr. Aidan Phelan would be in attendance. It was in those circumstances that he prepared his letter to Mr. Aidan Phelan dated 23 r d S e p t e m b e r , 1998, with which he enclosed a copy of an agenda for the meeting, a note of his fees setting out a detailed history of the w o r k undertaken by him in connection with the transaction, a completion statement for the transaction, and a statement of the finances of the football club. Mr. V a u g h a n faxed the letter, and also sent a hard copy by post but, as matters transpired, he had used the incorrect fax number, and Mr. Aidan Phelan did not receive the letter until the hard copy arrived a number of days later. In any event, Mr. Kevin Phelan had contacted Mr. V a u g h a n shortly before the meeting to tell him that Mr. Aidan Phelan would not be attending, but that he would be bringing another client of his, Mr. Michael Lowry, who Mr. Kevin Phelan indicated was an investor in the much more modest Mansfield transaction. It was Mr. V a u g h a n ' s evidence that at that stage he had no inkling that Mr. Lowry might have any connection with the Doncaster transaction. 9.61 Despite the fact that Mr. Lowry's airline ticket for 23 r d S e p t e m b e r , 1998, recorded that his flight did not depart Dublin until 6:15pm, it was Mr. V a u g h a n ' s evidence that the meeting on that evening had proceeded in the boardroom of his office in the early evening, some time around 6 : 0 0 p m ; that, apart from Mr. Kevin Phelan and Mr. Lowry, Mr. Paul May might possibly have been in attendance. In that regard, Mr. V a u g h a n ' s evidence to the Tribunal was at variance with a statement which he provided the day before his evidence c o m m e n c e d , in which he had positively indicated that Mr. May had attended the meeting. Mr. V a u g h a n believed that, after the meeting in his office had concluded, the others may have proceeded elsewhere in order to have a meal, but he did not join t h e m . had been Vaughan He denied that the location of the meeting that evening house, as her in Ms. Kate Macmillan had recorded meeting Mr. had Mr. Paul May's as conveying to October, 2002, or that the proceeded in a social setting in an hotel, as had been testified by Mr. Lowry. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 9 Substance 9.62 of the meeting As to what transpired at that meeting on the evening of 23 r d and Page | 290 September, 1998, Mr. V a u g h a n testified that there was a wide-ranging detailed discussion of Doncaster. other than to postpone dealing He had no recollection of Mansfield featuring, with it until the following morning. The proceedings, in the main, were conducted by Mr. Kevin Phelan and Mr. Paul May, although Mr. Lowry may have provided some input in a general way, as Mr. V a u g h a n understood Mr. Lowry to be a successful businessman, as well as a politician. It was Mr. V a u g h a n ' s evidence that it was apparent that Mr. May and Mr. Kevin Phelan had no difficulty in discussing Doncaster openly in the presence of Mr. Lowry, and Mr. V a u g h a n did not believe it was for him to stop them. He stated that Mr. Lowry s e e m e d to indicate that he might be able to assist in moving matters along. 9.63 Mr. V a u g h a n ' s key concern at the time was to meet with Mr. Aidan Phelan, w h o m he regarded as the proper person with w h o m to arrange to have certain required c o m p a n y documentation executed on behalf of Westferry. Mr. V a u g h a n was disappointed that Mr. Aidan Phelan was not present, and viewed Mr. Lowry, w h o indicated that he knew Mr. Aidan Phelan and might be able to arrange a meeting between them, as a man who "could help", as he put it. It was his evidence that it was this, combined with the fact that both Mr. May and Mr. Kevin Phelan discussed Doncaster so openly in front of Mr. Lowry, that caused him to form, w h a t he subsequently learned was a mistaken impression, that Mr. Lowry was involved in the transaction. 9.64 Mr. V a u g h a n confirmed, as stated in his letter of 25 t h September, 1998, that he gave to Mr. Lowry at the evening meeting on 23 r d S e p t e m b e r , 1998, a copy of his letter to Mr. Aidan Phelan of the same date, with its attachments, that is, the agenda for the meeting, Mr. V a u g h a n ' s legal bill, a copy of the completion statement, and a copy of the Doncaster Rovers Club financial statements. 9.65 The following morning, 24 t h September, 1998, Mr. Kevin Phelan dropped Mr. Lowry to Mr. V a u g h a n ' s office in Northampton. Mr. Lowry and Mr. V a u g h a n then proceeded to discuss matters in relation to Mansfield, after which Mr. V a u g h a n offered to drive Mr. Lowry to a medical appointment he had made in Leicester. Whilst Mr. V a u g h a n had no specific recollection of their exchanges in the course of the car j o u r n e y to Leicester, he stated that he felt that here at last was s o m e o n e who could move matters along in relation to Doncaster. a later point in his evidence, Indeed, at Mr. V a u g h a n appeared to suggest that it was primarily their discussions in the course of that j o u r n e y that led him to believe that Mr. Lowry was a person w h o "could help". REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.66 9 As to his letter dated 25 t h S e p t e m b e r , 1998, Mr. V a u g h a n agreed that record of w h a t had Page | 291 it was a contemporaneous, or a near contemporaneous, occurred over the previous two days. He agreed that the letter was effectively an attendance note of those meetings, and that it accorded with his general practice of treating a letter, s u c h as the letter in question, written after a meeting, as constituting description an of attendance Mr. Lowry as for the purposes a "total of his file. In relation to his having involvement" in the Doncaster "total" transaction, it was Mr. V a u g h a n ' s evidence that he believed that the word was unfortunate, and should not have been used in the letter. 9.67 Insofar as Mr. V a u g h a n had stated in the letter that it was his understanding that Mr. Lowry was: "trying to organise a meeting between myselfand Aiden [sic] Phelan" he testified that for the first time over those days he had met s o m e b o d y who indicated that he might be able to facilitate such a meeting. Mr. V a u g h a n agreed that from his point of view Mr. Aidan Phelan was the principal in the transaction, and that Mr. Lowry was the man w h o was going to get to Mr. Aidan Phelan on his behalf. He stated that one of the most important issues for him was that Mr. Lowry s e e m e d to be s o m e b o d y who could facilitate contact between him and Mr. Aidan Phelan, something which he had been unable to achieve previously. Response 9.68 to the evidence of Mr. Michael Lowry and Ms. Kate Macmillan Insofar as Mr. Lowry in his evidence had disputed the contents of Mr. V a u g h a n ' s letter, effectively stating that w h a t Mr. V a u g h a n had written could not have been based on Mr. Lowry's contact with him over the preceding days, and that there had been no detailed discussion between them in relation to Doncaster, it was Mr. V a u g h a n ' s evidence that he thought the contemporaneous evidence, that is, the contents of his letter of 25 t h September, 1998, was correct. 9.69 As to Mr. V a u g h a n ' s draft letter to Mr. Peter V a n d e r p u m p of Westferry dated 21 s t October, 2002, which according to the evidence, had not been sent by him, but had been retained by him on his file, and in particular the passage in which he had written: "I do not think involved political that I misunderstood his comments I must put to me that to some he was sort of in DRFC, but in hindsight it down ego that he was trying to attach venture." his name to what appear [sic] to be a successful REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 292 Mr. V a u g h a n stated that he believed that he had reviewed the draft and thought that it was not correct. As regards the passage of the letter, in which he had indicated that he had not misunderstood Mr. Lowry's comments, it was his evidence that in so stating he had been "totally wrong", although he stood by the portion of that passage relating to his perception of Mr. Lowry's motivations as having arisen from "some sort ofpolitical 9.70 ego". As to the matters which he relayed to Ms. Kate Macmillan, solicitor, on two separate occasions in October, 2002, namely that the location o f t h e meeting on the evening of 23 r d S e p t e m b e r , 1998, had been Mr. Paul May's house, as Mr. Lowry's flight had been delayed, that Mr. Lowry had said or indicated that he was involved in the Doncaster transaction, and that Mr. V a u g h a n was surprised that Mr. Lowry had said this in the presence of Mr. May and Mr. Kevin Phelan, Mr. V a u g h a n criticised Ms. Macmillan's notes. He observed that he had not had an opportunity to test Ms. Macmillan's earlier evidence in relation to her confirmation of the accuracy of her notes. 9.71 2002, As to the draft police statement prepared by Ms. Macmillan and sent to Mr. V a u g h a n for his approval, arising from their two conversations in October, and which again recorded that the meeting on the evening of 23 r d September, 1998, occurred in Mr. May's house, and which Mr. V a u g h a n in his own annotations had ticked, it was Mr. V a u g h a n ' s evidence that the draft statement was fundamentally wrong, and was never signed by him. It was his explanation that the ticks he had made on that statement may simply have been indicative of his having read the paragraphs in question. As to w h y he had never conveyed to Ms. Macmillan, on receipt of the draft statement, that it was fundamentally wrong, Mr. V a u g h a n testified that he could have written a lengthy letter to Ms. Macmillan, but the simple fact w a s that he was unhappy with the statement, and did not sign it. 9.72 One of the most revealing elements of Mr. V a u g h a n ' s evidence, in "total of his relation to w h a t caused him to form his understanding of Mr. Lowry's involvement" in the Doncaster transaction, arose at the conclusion evidence, in the course of cross-examination by counsel for Mr. Denis O'Brien. His responses to Mr. O'Brien's counsel were in direct conflict with his evidence to the Tribunal that he had been mistaken in his understanding of Mr. Lowry's role and, that in drafting his letter of 21 s t October, 2002, to Mr. V a n d e r p u m p , in which he had indicated that he did not think that he had misunderstood Mr. Lowry's c o m m e n t s to him that he was involved in the Doncaster transaction, he had been incorrect. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.73 9 In the course of that cross-examination by counsel for Mr. O'Brien, it Page | 293 was put to Mr. V a u g h a n that the mistake he made in his letter of 25 t h S e p t e m b e r , 1998, had caused e m b a r r a s s m e n t and difficulty for Mr. O'Brien. Mr. V a u g h a n ' s trenchant response, as recorded in the transcript of that day's evidence, was as follows: "A. When I say I made a mistake, - - the opinion - - I was led into making a mistake, it was Q. I am not seeking to apportion blame Mr. Vaughan. A. - - the opinion wrong which actually later I reached was based on what I was told. So, I think I formed a genuine it's to say I made a mistake. opinion on proved to be wrong. So, I will retract the fact that I made a mistake. Q. I will accept that. You had a genuine opinion correct? based on information you were given by Mr. Lowry, isn't that A. 9.74 Correct." After much prevarication and not a little obfuscation in his testimony, Mr. Vaughan, in this exchange, was emphatic in asserting that he had formed a genuine opinion of Mr. Lowry's "total based on information he had been involvement" given by in the Doncaster transaction Mr. Lowry. Mr. V a u g h a n also retracted, in the clearest terms, his evidence that he had been mistaken in the understanding which he reached on that occasion. made an error, he explained that this was In acknowledging that he had basis of w h a t he had on the subsequently been told. 9.75 Mr. V a u g h a n testified that his letter to Mr. Lowry of 25 t h S e p t e m b e r , Although the 1998, had been posted to Mr. Lowry at his address in Thurles. original of that letter never came to light, a copy of it, that is, the letter on Mr. V a u g h a n ' s letterhead, with his signature, and bearing a handwritten postscript, to which further reference will be made, did c o m e to the attention of the Tribunal. Whilst evidently that copy had been improperly obtained, either by Mr. Kevin Phelan or Mr. Mark Weaver, it was nonetheless a genuine copy of the original letter which, according to Mr. V a u g h a n , he had posted to Mr. Lowry. He confirmed its authenticity in his evidence. 9.76 According to his evidence, Mr. V a u g h a n spoke to Mr. Kevin Phelan Mr. some short time after sending the letter of 25 t h S e p t e m b e r , 1998, w h e n Kevin Phelan was horrified to learn that Mr. V a u g h a n had written to Mr. Lowry in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 294 those terms, and informed him that he was in error, and that Mr. Lowry had no involvement in the Doncaster transaction. It was Mr. V a u g h a n ' s testimony that he had also prepared a letter addressed to Mr. Aidan Phelan of the same date, in which he had confirmed his understanding that Mr. Lowry was trying to arrange a meeting between t h e m some time in the near future. W h e n he spoke to Mr. Kevin Phelan, he also indicated to him that he had written to Mr. Aidan Phelan in those terms, which, according to Mr. V a u g h a n , heightened Mr. Kevin Phelan's concern as to the potential e m b a r r a s s m e n t that would be caused by his further reference in that letter to Mr. Lowry. It happened that Mr. V a u g h a n had not by then sent the letter to Mr. Aidan Phelan, so that he was able to put Mr. Kevin Phelan's mind at rest, and it was, he stated, for that reason that he had drawn a line across the copy of that letter on his file. Evidence of Mr. Michael Lowry 9.77 W h e n Mr. Lowry gave evidence in 2001, in relation to his meeting with Mr. V a u g h a n in Northampton in September, 1998, his evidence had been of a single meeting with Mr. V a u g h a n relating solely to the Mansfield acquisition. At that time, he had not informed the Tribunal that their dealings on that occasion had extended to a meeting on the evening of 23 r d September, 1998, or to a car j o u r n e y after their meeting the following day. Nor for that matter had Mr. V a u g h a n in his correspondence with the Tribunal, or at private meetings which he attended, given any account which expanded upon a single meeting with Mr. Lowry in his office, confined to the Mansfield acquisition. 9.78 Mr. Lowry's evidence concerning his visit to England in S e p t e m b e r , 1998, when he attended again in 2007, was considerably more expansive. He stated that Mr. Kevin Phelan collected him from Birmingham Airport s o m e time on the evening of 23 r d S e p t e m b e r , 1998. The primary purpose of his visit to the UK was to attend a medical appointment in Leicester the following day. This had been arranged for him by Mr. Kevin Phelan. It had initially been envisaged that Mr. Lowry and Mr. Kevin Phelan would meet Mr. V a u g h a n together the following morning, that is, on the morning of 24 t h September, 1998, at Mr. V a u g h a n ' s office. However, late in the day, Mr. Kevin Phelan had to attend an important meeting elsewhere, which disrupted arrangements for 24 t h September. It was in those circumstances that Mr. Kevin Phelan had arranged to meet Mr. V a u g h a n , at the hotel in which Mr. Lowry was staying on the evening of his arrival. T h e y met, and Mr. Kevin Phelan availed of that opportunity to have a general discussion about several projects with Mr. Vaughan. According to Mr. Lowry, because Mr. Kevin Phelan had a relationship with Mr. V a u g h a n which dated back s o m e time, they were both involved in several other projects with which Mr. Lowry had no REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 There was also a general discussion in relation to the Mansfield Page | 295 connection. project. 9.79 Although the text of Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 23 r d 1998, records that Mr. V a u g h a n furnished Mr. Lowry at that meeting on September, 1998, with a copy of his letter of the same date to Mr. Aidan Phelan, together with its attachments, as was subsequently confirmed by Mr. V a u g h a n in evidence, Mr. Lowry denied that he had received that letter, or any documentation connection with the Doncaster transaction, from Mr. Vaughan. know whether Mr. Vaughan had files with him at their in Mr. Lowry did not meeting on 23 r d September, although he did recall that there was paperwork and documentation on the table. Whilst he recalled that there were a number of projects discussed between Mr. V a u g h a n and Mr. Kevin Phelan, he did not know if Doncaster was included in those discussions. He only had a passing interest in w h a t was happening. It appeared that Mr. V a u g h a n and Mr. Kevin Phelan had no difficulty in discussing their affairs in his presence, even though he had no involvement in those discussions, and he had remained at the table merely so as to be sociable. Mr. Lowry made no reference to Mr. Paul May as having been a participant at that meeting. 9.80 Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998, made absolutely no sense whatsoever, and he could not explain w h y he was the n a m e d addressee. He stated that he did not receive it, and suggested that it was not intended for him, that it had been sent to him by mistake and that it was intended for either Mr. Kevin Phelan or Mr. Aidan Phelan. This proposition is unsustainable in light of the fact that the letter opens with a reference to Mr. Lowry's BUPA appointment, something which cannot have applied to either Mr. Kevin Phelan or Mr. Aidan Phelan. 9.81 Mr. Lowry testified that on the second day of his visit to the English 1998, Mr. Kevin Phelan dropped him to Mr. Midlands, on 24 t h September, V a u g h a n ' s office in the morning, and, that as Mr. Kevin Phelan was otherwise engaged, w h e n their meeting had concluded, Mr. V a u g h a n offered to drive Mr. Lowry to his appointment in Leicester. T h e y had some general discussions in the car on the w a y to Leicester covering topics such as politics, Mr. Lowry's recent resignation, the Tribunal, and rugby. Mr. Lowry told Mr. V a u g h a n that he knew Mr. Aidan Phelan, in which context Mr. V a u g h a n alluded to the difficulties he had encountered in making contact with him, and thereupon Mr. Lowry offered to telephone Mr. Aidan Phelan, but ultimately did not do so. At that point, it was Mr. Lowry's understanding that Mr. Aidan Phelan was the sole investor in the Doncaster transaction. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.82 9 In his evidence in 2001, in relation to the Mansfield acquisition, Mr. Page | 296 Lowry testified that he was unaware that Mr. Aidan Phelan, who by then was both a business and personal acquaintance, had had any dealings with Mr. Kevin Phelan in relation to UK properties until he was introduced in March, 1999, by Mr. Kevin Phelan as the 9 0 % investor in the Mansfield project. That aspect of his evidence must be regarded as incorrect, in the light of his 2 0 0 7 evidence, from which it appears that he was aware, at the latest from S e p t e m b e r , 1998, of Mr. Aidan Phelan's involvement in UK property transactions with Mr. Kevin Phelan. MR. CHRISTOPHER VAUGHAN'S UNDERSTANDING O F MR. MICHAEL LOWRY'S ROLE 9.83 23 r d The starting point of any consideration of w h a t actually transpired on and 24 t h September, 1998, between Mr. Lowry and Mr. V a u g h a n , and w h a t caused Mr. V a u g h a n , an experienced solicitor, to form the view that Mr. Lowry was totally involved in the Doncaster transaction, and to write to him in terms and furnish him with documentation appropriate only to a party as intimately involved as either Mr. Kevin Phelan or Mr. Aidan Phelan or Mr. May, must be Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998. Mr. V a u g h a n himself a c k n o w l e d g e d that his letter was the most contemporaneous record, and was equivalent to a solicitor's attendance for the purposes of his files. 9.84 Vaughan Whilst it was suggested on many occasions, and in particular by means form" and "long form" correspondence, that Mr. and clients, and to form of an explanation for the "short had a tendency to confuse transactions, incorrect impressions and understandings, the opposite proved to be the case from the belated availability of a series of letters, which had either been removed entirely from Mr. V a u g h a n ' s files, as produced by him to the Tribunal, or replaced with other letters in w h i c h references to Mr. Lowry had been erased. Whatever may be said of Mr. V a u g h a n ' s interaction with the Tribunal, he is undoubtedly an experienced, inconceivable skilled that and he astute solicitor, been and so the Tribunal in regards error it in as his could have fundamentally appreciation or understanding of Mr. Lowry's role as to write to him on the footing that he had a "total involvement" in the Doncaster transaction, if he had no connection whatsoever with the transaction. 9.85 It is apparent from the contents of Mr. V a u g h a n ' s letter that the topics discussed with Mr. Lowry over the previous two days included: (i) Mr. V a u g h a n ' s proposal that Westferry should divest itself of all assets, to ensure that it was proofed against any j u d g m e n t that the vendors might secure, in respect of an agreement that an additional S t g . ? 2 5 0 , 0 0 0 . 0 0 should be paid by Westferry in respect of a car park lease; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 9 Page | 297 (ii) an agreement for the retention of Mr. Paul May by Doncaster Rovers at a fee of Stg.?120,000.00; (iii) Mr. V a u g h a n ' s outstanding fees for w o r k done in relation to the Doncaster acquisition; (iv) 9.86 fees due to Grant Thornton in connection with the transaction. With that letter, Mr. V a u g h a n furnished Mr. Lowry with another copy of his letter, dated 23 r d September, 1998, and enclosures, although noting that Mr. Lowry "did take" a copy of that letter with him the previous day, appended to which was an agenda for the meeting which Mr. V a u g h a n had been expecting to have with Mr. Aidan Phelan, a copy of a statement of his own professional fees, a copy of the completion statement in relation to the acquisition of Westferry, and a copy of a breakdown of the finances of Doncaster Rovers and the application of the purchase monies which had been provided to Mr. Vaughan. Also furnished with the letter of 25 t h September, 1998, was a copy of the very extensive letter dated 23 r d August, 1998, which Mr. V a u g h a n had sent to Mr. Paul May, Mr. Kevin Phelan, and Mr. Aidan Phelan which extended to some seven pages, and which addressed in the greatest of detail all issues which had arisen in relation to the acquisition, the various retention funds, and the continuing administration and operation of the business of the football club. In so writing to him on September, 1998, Mr. Vaughan furnished Mr. Lowry with information 25 t h and documentation o f t h e most confidential and sensitive nature, and the Tribunal is satisfied that he would not have done so, had he any uncertainty regarding Mr. Lowry's entitlement to that material. 9.87 Mr. V a u g h a n ' s efforts, in the course of his examination by Tribunal counsel, to portray his perception of Mr. Lowry's role as having been one which resulted from no more than Mr. Kevin Phelan's and Mr. Paul May's preparedness to discuss the Doncaster project in his presence, and from his own understanding that Mr. Lowry, being acquainted with Mr. Aidan Phelan, could facilitate contact between Mr. V a u g h a n and Mr. Aidan Phelan, f r o m w h o m he was so anxious to obtain instructions, does not rest easily with the contents of his letter of 25 t h September, 1998, and the depth and sensitivity of the confidential material cross- which he furnished examination when, Mr. Lowry. It w a s also one that did not withstand after persistently adhering to this account, Mr. Vaughan asserted that he had not in fact made any mistake in the understanding which he had formed; that he formed a genuine opinion; that the opinion was based on w h a t he was told, and on information which he was given by Mr. Lowry. In that element of his evidence, Mr. V a u g h a n ' s testimony was also entirely consistent REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 298 with the information he had conveyed to Ms. Kate Macmillan in October, 2002, and with his initial draft letter to Mr. V a n d e r p u m p of 21 s t October, 2002. 9.88 The location of the evening meeting of 23 r d September, 1998, although of secondary importance to w h a t transpired in the course of it, was, the Tribunal is satisfied, neither in the boardroom of Mr. V a u g h a n ' s office, as he testified, nor in an hotel, as was testified by Mr. Lowry. The Tribunal is satisfied that the location of the meeting was at Mr. Paul May's house, as had been conveyed by Mr. V a u g h a n to Ms. Kate Macmillan in October, 2002. Furthermore, such a view was fortified by receipt of yet another letter, which had been withheld from the Tribunal, after the completion of Mr. V a u g h a n ' s evidence, that is, a letter written by Mr. V a u g h a n to Mr. Kevin Phelan dated 5 t h October, 1998, some ten days after these events. Whilst the dating of the meetings, to which Mr. V a u g h a n referred in that letter to Mr. Kevin Phelan, was again in error, the sequence and location could not have been clearer, in that w h a t Mr. V a u g h a n stated to Mr. Kevin Phelan on that occasion was: "It was clear from the discussion house on 24th on September, September, financial 1998, that I had with Michael and subsequently Lowry at Paul's him to to when I drove Leicester resolve 9.89 Tribunal 25th 1998, that he is seeking to make money his personal difficulties." The significance of the location of that evening meeting lies in the Mr. Paul May, as far as the relation to any UK property Mr. matters which were intended to be discussed. is aware, had no role or function in transaction involving Mr. Kevin Phelan, other than the Doncaster transaction. May was appointed an officer o f t h e Doncaster club, Mr. V a u g h a n ' s lengthy post completion letter of 23 r d August, 1998, was addressed to him jointly with Mr. Kevin Phelan, and the terms of Mr. May's e n g a g e m e n t by the club was one of the matters discussed at s o m e point over those two days between Mr. V a u g h a n and Mr. Lowry, as confirmed in the letter of 25 t h September, 1998. Since, as the Tribunal has found, the meeting did proceed in Mr. Paul May's house and not elsewhere, the matters intended to be discussed can only have been the Doncaster transaction. 9.90 Whilst the Tribunal is satisfied that Mr. V a u g h a n ' s understanding and involvement" in the Doncaster transaction was impression of Mr. Lowry's "total based on w h a t Mr. Lowry told him, and not on his passive presence at a meeting at which Doncaster issues were discussed, it does not of course follow of itself that Mr. Lowry had any such involvement. Mr. V a u g h a n confirmed that, by the time he gave evidence, he realised that he had been in error. That realisation had REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 but Page | 299 not resulted from any independent investigation that he had undertaken, rather from w h a t he had been told after the event. 9.91 The Tribunal is satisfied that Mr. V a u g h a n did post his letter of 25 t h It is further satisfied that, September, 1998, to Mr. Lowry at his Thurles address. contrary to Mr. Lowry's evidence, that letter must have been received by him. W h a t he then did in relation to it is uncertain, but w h a t is clear is that the original letter was copied, and ultimately came into possession of the representatives of the vendors of Doncaster, w h o produced it at a later date in the context of litigation relating to that transaction. T h a t copy of Mr. V a u g h a n ' s original letter to Mr. Lowry also came to the attention of the Tribunal, and in the course of Mr. Vaughan's evidence he confirmed its authenticity. In the absence of some unknown third party having intercepted that letter in the post from Mr. V a u g h a n in Northampton to Mr. Lowry in Thurles, the only conclusion that can be reached is that the original letter w a s received by Mr. Lowry, and it was as a result of his dealings with it, which are unknown, that a copy ultimately came into the hands of the v e n d o r s ' representatives. 9.92 T h a t copy of Mr. V a u g h a n ' s original letter, as posted by him to Mr. Lowry contained a postscript in Mr. V a u g h a n ' s handwriting, in the following terms: "*PS I may meet Aiden [sic] on Thursday 1st October." It seems therefore that, before this letter was posted, Mr. V a u g h a n had in fact made at least a tentative arrangement to meet with Mr. Aidan Phelan. T h a t arrangement would of course have rendered his letter of the same date to Mr. Aidan Phelan s o m e w h a t marginal, and the Tribunal views the fixing of a date as that which must have prompted Mr. V a u g h a n to withhold sending the letter, and to put a copy on his file with a line through it. 9.93 As to Mr. V a u g h a n ' s evidence of his interaction with Mr. Kevin Phelan some days after 25 t h September, 1998, w h e n Mr. Kevin Phelan expressed his horror, in response to Mr. V a u g h a n informing him that he had written to Mr. Lowry in those terms, and informed Mr. Vaughan that he was in error in his understanding of Mr. Lowry's involvement, the Tribunal must register its caution surrounding the reliability of Mr. V a u g h a n ' s account of that encounter. Mr. V a u g h a n was far f r o m dependable in his evidence to the Tribunal, as reflected in his admission in June, 2009, that significant matters in the evidence he had given in April, 2009, regarding the Mansfield and Cheadle properties were incorrect. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.94 Kate 9 Also, it is noteworthy that Mr. Vaughan did not bring this interaction Page | 300 with Mr. Kevin Phelan to the attention of either Mr. Peter Vanderpump or Ms. Macmillan in the course of their inquiries in October, 2002. This is particularly surprising given that Mr. Vaughan informed Ms. Macmillan that he believed that Mr. Kevin Phelan was behind the emergence of the copy of the letter of 25 th September, 1998, produced by Mr. Ken Richardson and Mr. Mark Weaver in the course o f t h e mediation between Dinard and Westferry, and which had caused significant concern for Westferry, and had given rise to the making of the blackmail complaint. In that context, information to the effect that Mr. Kevin Phelan had corrected Mr. Vaughan's belief about Mr. Lowry's involvement in the Doncaster transaction very shortly after the letter of 25 th September, 1998, had issued, would have been both relevant and useful from Westferry's perspective, and it is difficult to believe that Mr. Vaughan would have omitted to bring that critical information to Westferry's attention. Indeed, the first time that this purported conversation between Mr. Kevin Phelan and Mr. Vaughan was alluded to was in response to inquiries raised by the Tribunal. 9.95 It is also surprising that, if, shortly after sending the letter of 25 t h 1998, he had such a conversation with Mr. Kevin Phelan, no September, corrective steps were taken by Mr. Vaughan to ensure that the highly sensitive material he had forwarded to Mr. Lowry was returned. Mr. Vaughan's evidence it out", did not that he may have assumed that Mr. Kevin Phelan would "sort reflect the kind of response which would be expected of an experienced solicitor in such a serious situation. There is no evidence to suggest that any steps were taken by any person to rectify the situation. FURTHER INSTANCES O F REFERENCES T O MR.MICHAEL LOWRY IN T H E C O U R S E O F T H E D O N C A S T E R P R O J E C T Progress of the transaction 9.96 Before proceeding to relate some further instances of recorded references to Mr. Lowry in the course of the Doncaster project, it is helpful to outline the progress of the transaction, following the completion of the acquisition in August, 1998. At that point, the shares in the club had been transferred to Westferry, which was by then owned and controlled by the O'Brien family trust. What was acquired by Westferry was both the playing club, and its stadium at Belle Vue. The intention was that the playing club would relocate to a new ground, and would be sold to new owners. Planning permission for the existing ground would be obtained, and the ground would be sold for redevelopment. The project would be managed by Mr. Kevin Phelan exclusively, and he would be entitled to 40% of the profits secured. It was anticipated that all of the elements of the project would be accomplished, and brought to completion within nine to twelve months from August, 1998. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.97 9 Matters did not however proceed according to plan. Doncaster Council Page | 301 did not prove as supportive of the redevelopment of the stadium as Mr. Aidan Phelan had been led to believe. Mr. Aidan Phelan took an increasingly more active role in managing the project, and, as it continued to stall, he became progressively more disenchanted with Mr. Kevin Phelan's ability to deliver the intended outcome. He appointed McAlpine Special Projects, UK-based property consultants, as d e v e l o p m e n t partners, and ultimately Mr. Kevin Phelan was excluded from any managerial role in Doncaster, and indeed in the other UK projects which he had introduced. 9.98 Phelan By 2001, w h e n the Mansfield and Cheadle properties first came to the attention of the Tribunal, relations between Mr. Kevin Phelan and Mr. Aidan had deteriorated, as had relations between Mr. Kevin Phelan, Mr. Christopher V a u g h a n and various other professionals involved in the Doncaster transaction. W h e n Mr. Aidan Phelan severed his business connections with Mr. Denis O'Brien, and his own business interests increasingly became directed to overseas activities, stewardship o f t h e Doncaster project passed in early 2 0 0 2 to Mr. Denis O'Brien Senior, Mr. O'Brien's father. As will be seen, Mr. O'Brien Senior assumed responsibility for a number of issues relating to Doncaster, most significantly a claim t h e n pending by Mr. Kevin Phelan for fees due to him, and litigation also then pending between the vendors of Doncaster, Dinard and Shelter Trust, and Westferry, relating to the retention funds which had been held on completion o f t h e transaction in August, 1998. Fax from Mr. Kevin Phelan to Mr. Aidan Phelan of 11th August, 1999 9.99 In August, from Mr. 1999, some twelve months Kevin Phelan to Mr. Aidan into the project, a fax was Phelan. In the course of transmitted references to a series of matters pertaining to Doncaster, and short references to other projects, the fax contained the following passage: "7. ML Kevin Phelan to refer all queries regarding Doncaster to Aidan Phelan." A copy of the fax referred to above can be found in the Appendix to this chapter. 9.100 This d o c u m e n t had not been within the files of Westferry produced to the Tribunal in advance of the delivery of its Opening S t a t e m e n t in S e p t e m b e r , 2004, or in advance of the issue of Mr. O'Brien's Judicial Review proceedings immediately thereafter, in which he sought to prevent the Tribunal from investigating the Doncaster transaction on the grounds of insufficient evidence. It was not only in Mr. O'Brien's possession, in the possession of Westferry, and in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 302 the possession of his solicitors, Messrs. William Fry, but had come specifically to their attention some time earlier in the context o f t h e negotiations, for which Mr. Denis O'Brien Senior had assumed responsibility, with Mr. Kevin Phelan's Kevin finally solicitors, which culminated Phelan by Westferry in a payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 to Mr. 2002. A copy of the document was in August, 1st produced to the Tribunal on November, 2004, in circumstances which are related more fully in Chapter 11 of this Volume. 9.101 At the time the fax came to the attention of Mr. O'Brien's solicitors, in 2002, they advised that inquiries would have to be instituted regarding the reference to "ML" in the context of Doncaster. W h a t emerged from the inquiries actually made was a suggestion by Mr. Denis O'Connor, Mr. Lowry's accountant and adviser, whose role in all of these matters will be explored in the next chapter, that the "ML" Lloyd, with whom he reference in the fax might have related to a Mr. Michael understood Mr. Kevin Phelan Phelan's had some business Messrs. connection. The inquiries made of Mr. Kevin UK solicitors, W o o d c o c k & Sons, w h o were then in correspondence with William Fry, were to the effect that " M L " was indeed a reference to Mr. Lowry, but was intended to relate to the Mansfield property. It should be added, that this followed upon an initial response f r o m W o o d c o c k & Sons, w h e n asked to confirm that Mr. Lowry had no involvement in the Doncaster transaction, that this was tantamount to asking the impossible. 9.102 It was in these circumstances that the Tribunal pursued inquiries in in the context, and during the currency, of the 2 0 0 7 into the reference to "ML" Doncaster Project. As Mr. Kevin Phelan refused to attend as a witness, it was to Mr. Aidan Phelan, the recipient of the fax, that the Tribunal's inquiries were primarily directed. It was Mr. Aidan Phelan's evidence that he had no recollection of w h a t he understood Mr. Kevin Phelan to be referring to at paragraph 7 of his fax, if he ever s a w it. He had no knowledge of a Mr. Michael Lloyd, that is, the individual suggested on foot of Mr. Denis O ' C o n n o r ' s inquiries as having possibly been the "ML" alluded to. Mr. Aidan Phelan agreed that the explanation furnished by Mr. Kevin Phelan's solicitors to William Fry that the passage, whilst referring to Mr. Michael Lowry, related not to the Doncaster transaction but to the Mansfield transaction, made no sense. Mr. Kevin Phelan was managing the Mansfield project as of August, 1999, so that the notion of him referring queries to Mr. Aidan Phelan in relation to it made no sense to him. He also agreed in cross- examination by counsel for Mr. Denis O'Brien that the reference to Mr. Lowry was equally senseless in connection with Doncaster. He confirmed that no inquiries had been pursued with him in 2002, by William Fry, or by any representative of Westferry, w h e n the reference came to the attention of William Fry. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.103 9 Mr. Michael Lowry testified to the effect that he had never seen the Page | 303 document, and he could not speculate as to w h y his name should have appeared in a d o c u m e n t generated in the course o f t h e Doncaster project. He recalled that his accountant and adviser, Mr. Denis O'Connor, had mentioned the matter to him at one point, following a meeting which Mr. O'Connor had attended with Mr. Kevin Phelan's UK solicitors, W o o d c o c k & Sons, w h e n Mr. O'Connor had inquired of him whether he knew of a Mr. Michael Lloyd. 9.104 The explanations which the Tribunal received, in the absence of Mr. in Mr. Kevin Phelan's fax to Mr. Aidan Kevin Phelan, as to the reference to "ML" Phelan in the context of the Doncaster project, were unimpressive. The relevant passage in its ordinary meaning is clear: as regards "ML", that is, Mr. M. Lowry, Mr. Kevin Phelan was to refer all queries, in connection with Doncaster, to Mr. Aidan Phelan. Mr. Aidan Phelan's evidence that he had no idea w h a t Mr. Kevin Phelan was referring to, was unconvincing, as was the explanation seemingly accepted by William Fry, Westferry and the O'Brien interests, in advance of paying S t g . ? 1 5 0 , 0 0 0 . 0 0 to Mr. Kevin Phelan, that there had been an error, and that the reference should in fact have related to Mansfield. Letter from Mr. Kevin Phelan to Mr. Aidan Phelan of 30 th August, 2000 9.105 A further reference to Mr. Lowry, in the course o f t h e Doncaster project, arose in correspondence from Mr. Kevin Phelan to Mr. Aidan Phelan the following year, in a letter dated 30 t h August, 2000. Before referring to the contents of this It will be recalled from preceding letter, it is helpful to place it in context. chapters that on 17 th August, 2000, there had been a meeting in Jury's Hotel in Dublin, attended by Mr. Aidan Phelan, Mr. Michael Lowry, Mr. Christopher V a u g h a n and Ms. Helen Malone. Malone, which was headed: A note was produced at that meeting by Ms. "UK property ML." The Tribunal was unaware in the course of its substantive investigations of the Mansfield and Cheadle transactions in 2001, by reason of the falsification of Mr. Christopher V a u g h a n ' s files, that at that meeting w h a t had been under discussion was a disposal of both the Mansfield and Cheadle properties in one transaction, on terms that the entire of the proceeds, gross or net, would accrue to Mr. Lowry. This fact only emerged conclusively w h e n Mr. V a u g h a n returned to give evidence in June, 2009, by which time the full extent of the falsification of his files had become apparent, and the actual correspondence from his files, which reflected w h a t had been discussed on that occasion, came to light. The correspondence in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 304 question was dated 18 th August, 2000, and is referred to in detail in an earlier chapter of this Volume. 9.106 Mr. Kevin Phelan's letter to Mr. Aidan Phelan, dated 30 t h August, 2000, written on behalf of G a m e p l a n International, an entity through which Mr. Kevin Phelan conducted business, opened as follows: "Dear Aidan, Further following on to our discussion your 17th August discussions Vaughan with Christopher Vaughan and Michael Lowry reflect from 2000 meeting, and also we have now had time to the letter received those consider 2000." Christopher dated 18th August The letter then proceeded to record disappointment over Mr. Aidan Phelan's failure to keep G a m e p l a n advised on progress regarding Doncaster, and over a reference that had apparently been made w h e r e b y the Doncaster property had been described as a "pup". The letter then asserted that lack of progress had been due to the exclusion of G a m e p l a n as managers of the Project, and enclosed invoices for fees due in respect of two other projects, namely, projects at Luton and Altrincham. A copy of the letter can be found in the Appendix to this chapter. 9.107 W h a t the letter suggests on its face, particularly bearing in mind that it Doncaster/Altrincham/Luton projects", was that Mr. Kevin was headed "Ref: Phelan had discussions with Mr. V a u g h a n and Mr. Lowry in connection with the Doncaster project, and it was in those circumstances that this d o c u m e n t was also raised in the course o f t h e Tribunal's inquiries in 2007. 9.108 Mr. Aidan Phelan stated that he did not believe that the 17 th Doncaster project was discussed at the meeting in Jury's Hotel on August, 2000, and in that regard he pointed to Ms. Helen Malone's note. He believed that in the course of that meeting he would have criticised Mr. Kevin Phelan, would also have had harsh words with Mr. Lowry, and would have said that Mr. Kevin Phelan had not performed on the Mansfield and Cheadle projects. In his view, Mr. Kevin Phelan's letter of 30 t h August, 2000, was a response to that criticism, or "returning serve", as he put it. He imagined that his criticism of Mr. Kevin Phelan had been passed on to him by Mr. V a u g h a n and Mr. Lowry, and that Mr. Kevin Phelan had retaliated in his letter by criticising Mr. Aidan Phelan's lack of progress on the Doncaster project. He did not believe that Mr. Kevin Phelan had any discussions with Mr. Lowry or Mr. V a u g h a n in connection with Doncaster. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9.109 9 It was Mr. Lowry's evidence that he recalled that the meeting at Jury's Page | 305 Hotel had in fact covered not just Mansfield and Cheadle, but also Doncaster, Altrincham and Luton. Mansfield and Cheadle were discussed at the beginning of the meeting, and when those discussions were concluded, he left the meeting and Mr. Vaughan, Mr. Aidan Phelan and Ms. Helen Malone remained for a Mr. Lowry thought that this relatively lengthy time to discuss the other projects. meeting of 17 th August, 2000, marked the commencement of the souring of relations with Mr. Kevin Phelan, in that it was felt that Mr. Kevin Phelan had not delivered on the property investments which he had introduced, and it was time that somebody so informed him. It was Mr. Lowry's evidence that he was probably directed to relay to Mr. Kevin Phelan the misgivings surrounding his performance in relation to Cheadle and Mansfield, and that Mr. Vaughan was told to convey the same information in relation to Doncaster, and that between everybody Mr. Kevin Phelan got a sharp message that he was not performing. Mr. Lowry further testified that he thought that Mr. Kevin Phelan was probably stung by that message, and that it was that which prompted him to write to Mr. Aidan Phelan in the terms in which he did. 9.110 The Tribunal can appreciate that Mr. Kevin Phelan's criticisms of the of the Doncaster project by Mr. Aidan Phelan may well have management resulted from some rebuke which he perceived to have originated with Mr. Aidan Phelan. This does not however explain his reference to discussions with Mr. Lowry, in the letter headed "Doncaster/Altrincham/Luton Projects". Apart from a request for the payment of fees in respect of Luton and Altrincham, the letter related solely to Doncaster, and no reference whatsoever was made to Mansfield or Cheadle, either explicitly or by inference. The discussion which Mr. Kevin Phelan had with Mr. Lowry, on foot of which he wrote that letter, can only have been material to the subject-matter of his criticisms, i f t h e y related to Doncaster. ENCOUNTERS WITH M R . DENIS O'CONNOR Brokering settlements 9.111 On 10 th September, 2002, a meeting took place in London, at the offices of Messrs. Carter-Ruck, solicitors for Westferry, which again drew Mr. Michael Lowry, not just by name, but by association, into the most confidential and sensitive realms of the Doncaster project. Ms. Ruth Collard, an experienced litigation partner in the firm, had been instructed to represent Westferry in the defence of proceedings which had been instituted by the vendors of Doncaster, in which it was sought to recover the retention funds held back when the acquisition completed. Ms. Collard had initially taken instructions from Mr. Aidan Phelan, and following the termination of his business relationship with Mr. Denis O'Brien, her REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 assumed Page | 306 instructions were received from Mr. Denis O'Brien Senior, w h e n he responsibility for Doncaster. 9.112 The significance of that meeting in terms of the Tribunal's inquiries lay not j u s t in w h a t transpired at it, and in Ms. Collard's record of w h a t she w a s informed, but also in the purpose of the meeting, and the person for w h o s e benefit it was convened. The purpose of the meeting was to brief that person on the claim by the vendors against Westferry, with a view to brokering a settlement, by that person, between the parties to the litigation in advance of a mediation of the dispute, due to proceed in London on 27 t h S e p t e m b e r , 2002. The person in question was Mr. Denis O'Connor, Mr. Lowry's accountant and adviser, w h o had played a central role in all of Mr. Lowry's earlier dealings with the Tribunal, and who had assisted and facilitated the Tribunal's inquiries into the sources of funds in accounts of Mr. Lowry, the Tribunal's further inquiries in 2 0 0 1 into Mr. Lowry's account in Irish Nationwide (IOM), and into his involvement in the Mansfield and Cheadle properties. 9.113 Mr. O'Connor, as will be examined in the next chapter, had from March, 2001, when, according to the evidence heard by the Tribunal, he first learned of Mr. Lowry's involvement in UK property investments, developed a relationship with Mr. Kevin Phelan. Between June, 2001, and August, 2002, Mr. O'Connor personally assumed responsibility for resolving disputes which had arisen between Mr. Kevin Phelan and virtually all of the parties w h o featured in the UK property transactions which had come to the attention of the Tribunal. By August, 2002, Mr. O'Connor had brokered or promoted the resolution of disputes, including the withdrawal of complaints made by Mr. Kevin Phelan to professional bodies, on behalf of Mr. Lowry, Mr. Aidan Phelan, Brian Phelan & Partners, the accountancy firm of which Mr. Aidan Phelan had formerly been a partner, Mr. Christopher V a u g h a n , Mr. Craig Tallents, an accountant who had been retained by Westferry, and Westferry itself. 9.114 embraced Having successfully achieved a resolution of these disputes, which aggregate payments of more than S t g . ? 2 1 0 , 0 0 0 . 0 0 to Mr. Kevin Phelan, Mr. O'Connor then became e n m e s h e d in the Westferry litigation. Before proceeding to outline w h a t transpired at the meeting of 10 th September, 2002, between Mr. O'Connor and Ms. Collard in London, there is one final detail which should not be overlooked. Mr. Kevin Phelan, in the course of the various disputes, had made w h a t were regarded as wild and untruthful allegations concerning a number of matters, including the falsification of documentation submitted to the Tribunal. Those latter allegations were, as the evidence ultimately conclusively revealed, neither wild nor untruthful. What was undoubtedly clear to those involved, was that Mr. Kevin Phelan was in possession of information which could REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 307 be damaging, principally to Mr. Denis O'Brien and Mr. Michael Lowry, were it to come to the attention of the Tribunal, and, as was evident from Mr. Kevin Phelan's correspondence to various parties in 2 0 0 1 and 2002, that he intended to use the information to achieve his own ends. S o m e of that information did in fact come to the Tribunal's attention in March, 2002, w h e n Mr. Colm furnished the Tribunal with copies of the original "long form" letters. Keena As will be seen, it w a s at this time that Mr. Denis O ' C o n n o r s e e m s to have redoubled his efforts to meet Mr. Kevin Phelan's demands. 9.115 Apart from Mr. Kevin Phelan's use of this information to promote his own ends, there was evident concern on the part of Westferry as to assistance from him to the vendors of Doncaster, in their litigation against Westferry. It was apparent that Mr. Kevin Phelan had already furnished the vendors' Vaughan's Mr. representative, lengthy Mr. Mark Weaver, with a copy of Mr. Christopher post-completion letter of 23 r d August, confidential 1998, which Weaver himself produced to Mr. Christopher V a u g h a n when he attended at his offices in Northampton on 18 th February, 2002. On that occasion, Mr. W e a v e r also intimated that he w a s in possession of another letter which linked Mr. Lowry to the Doncaster project. That letter can only have been Mr. V a u g h a n ' s letter of 25 t h September, 1998, and it s e e m s that, before final payments were actually made to Mr. Kevin Phelan, he had already provided the vendors with a copy of that letter. The Tribunal is satisfied that all of these matters were known to Mr. O'Connor, w h e n he seemingly volunteered himself as an intermediary between Westferry on the one hand, and Mr. W e a v e r and Mr. Richardson o f t h e vendors on the other hand. Meeting with Ms. Ruth Collard and Mr. Craig Tallents 10th September, 2002 9.116 Whilst the circumstances in which Mr. O ' C o n n o r came to become involved in this dispute, in particular having regard to his previous involvement in other disputes with Mr. Kevin Phelan, will be examined in greater detail in the following chapter, it is sufficient for current purposes to focus upon w h a t occurred at the meeting between September, 2002. Mr. O'Connor, Ms. Collard and Mr. Tallents on 10 th 9.117 Ms. Collard produced a typed attendance of that meeting, which was an expansion of some handwritten notes she had taken in the course of that meeting. A copy of Ms. Collard's typed attendance note can be found in the Appendix to this chapter, and it will be seen that it recorded that Mr. O ' C o n n o r explained how he had become involved in the matter, and that he had been trying to "sort out", on Mr. O'Brien Senior's behalf, the position with Mr. Kevin Phelan. He said that Mr. Kevin Phelan had told him that he had spoken to Mr. Mark REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 308 Weaver, who had indicated that the vendors would drop their S t g . ? 2 5 0 , 0 0 0 . 0 0 claim arising f r o m the car park lease issue, if Westferry agreed to the release of the retention fund to t h e m , and withdrew its claim in connection with a payroll matter. Mr. Kevin Phelan would do this for an "uplift" of Stg.?25,000.00, and in Ms. Collard asked Mr. return for an opportunity to sell the stadium at Belle Vue. O'Connor w h a t was meant by "uplift" he did not know. 9.118 and recorded Mr. O ' C o n n o r as replying that The attendance note further recorded Mr. O'Connor as informing Ms. Mr. Collard that he was also representing a m e m b e r of the Irish Parliament, Michael Lowry, w h o was being investigated as part of Tribunal proceedings in Dublin, and that Mr. Kevin Phelan had made various threats to cause trouble for Mr. Lowry. S h e noted that Mr. O ' C o n n o r said that, as a result of discussions he had had with Mr. Denis O'Brien Senior and Mr. Kevin Phelan, he had been asked if he would be prepared to meet Mr. Ken Richardson and Mr. Mark Weaver, and that at Mr. O'Brien Senior's request, a meeting had been arranged; that Mr. O'Connor had stated "that the other side were laughing at us" and that they wanted to cause the m a x i m u m e m b a r r a s s m e n t for Mr. O'Brien and for others, including Mr. Lowry. The attendance note then recorded the following: "RC asked how they could cause any embarrassment he had no connection and that to ML, as, so far as DOC said room that when RC she was aware, ML did have to the proceedings. he had been a connection in the discussions had taken place between KP and KR regarding previously." the lease. said no one had ever suggested 9.119 correct. that to her Mr. O ' C o n n o r in his evidence disputed a number of portions of Ms. Collard's attendance note, while accepting that other portions appeared to be For example, Mr. O ' C o n n o r t o o k issue with the portion of Ms. Collard's "uplift" note dealing with Mr. Kevin Phelan's suggestion that he w o u l d take an arising from settlement of the litigation between Westferry and Dinard. Insofar as Ms. Collard's note suggested that Mr. O ' C o n n o r told her that he did not know w h a t "uplift" meant. meant, Mr. O'Connor disputed this and said he knew exactly w h a t it 9.120 In relation to the critical passage of the attendance note, where Mr. O'Connor is recorded as informing Ms. Collard that Mr. Lowry had a connection with Doncaster Rovers, Mr. O ' C o n n o r testified that he did not know how Ms. Collard could have made such a record as he had never been aware of Mr. Lowry meeting Mr. Ken Richardson. He further testified that he could not have said anything regarding Mr. Lowry's involvement with any discussions connected with REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 Page | 309 the Doncaster car park lease, because he knew nothing of the lease, or the part it played in the Doncaster purchase. 9.121 For her part, Ms. Collard testified that she believed that Mr. O ' C o n n o r did inform her of a connection on the part of Mr. Lowry in the manner recorded in her attendance note, and observed that the matter of the car park lease had been one of the main issues that she had had to deal with in the litigation, and accordingly, she would have been particularly attentive to any mention of a In addition, Ms. Collard was able to produce to the handwritten notes which were taken meeting involving the lease. Tribunal her much shorter contemporaneously in the course o f t h e meeting, and which recorded: "ML - lease meeting" W h e n asked if it was possible that a meeting about the lease might have been mentioned, but that she could have been mistaken about the identity of those she had been told had been in attendance, Ms. Collard testified that she did not believe she would have noted it in the manner she had in her typed attendance, if that was the case. accurate. Regard Ms. Collard stood over her notes, and believed they were must be had to the fact that Ms. Collard's record of w h a t occurred at the notes were also to a contemporaneous meeting, and the importance which, as she stated, she attached to any matter relating to the lease, by reason of its central importance to the litigation involved. in which she w a s then 9.122 Ms. Collard impressed the Tribunal as a careful, retentive and independent professional witness. She testified that Mr. O ' C o n n o r ' s observation had surprised her, as she had not understood that Mr. Lowry had any Doncaster involvement, and retained that belief; she acknowledged a degree of discomfort at her part in conveying views of the London Police to the Tribunal in regard to the blackmail complaint made by Mr. O'Brien Senior, as recounted in Chapter 11; in testifying that she did not think that she would have noted and confirmed the content of Mr. O ' C o n n o r ' s remark, unless he had said it, which self-evidently was not evidence in the interest of her clients, she evinced a quiet and impressive conviction. Apart from Mr. O ' C o n n o r ' s denial of having stated w h a t was attributed to him, he did also speculate that something he may then have said, which amounted to no more than a reference to a number of persons happening to have a general involvement with the Tribunal, could have been set down out of context by Ms. Collard. This cannot realistically be viewed as requiring serious analysis or consideration. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9 CONCLUSIONS Page | 310 9.123 The foregoing has set forth a limited number of significant matters private relating to Doncaster explored at public hearings following extensive inquiries. In the next chapter it will be apparent that, from March, 2001, onwards, which was the month in which the Mansfield and Cheadle transactions came to the attention of the Tribunal, efforts to resolve outstanding financial entitlements raised by Mr. Kevin Phelan, not merely for Doncaster, but for all the property transactions dealt with in this Volume, intensified, with Mr. Denis O'Connor continuing to act as the person primarily involved in seeking and implementing such resolution. It is accordingly proposed to defer the expression of further substantive conclusions on Doncaster until the conclusion of that chapter. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 1 0 Page | 311 DISPUTES A N D S E T T L E M E N T S O N U K PROPERTIES INTRODUCTION Five stages 10.01 The Tribunal's inquiries into the UK properties proceeded over what were effectively five separate stages. The first stage was the initial inquiries into Mansfield and Cheadle in 2001. The second stage in 2002 related to the two "long form" and "short form" letters. The third stage entailed enquiries focused on the Doncaster transaction, prior to the institution of proceedings by Mr. Denis O'Brien to halt that inquiry, following delivery of the Tribunal's Opening Statement in September, 2004. The fourth stage comprised the substantive court challenge, and the further information unearthed arose from by the Doncaster Tribunal, hearings, and proceeded in March, 2007, following the dismissal of Mr. O'Brien's consequent on the contents of the file of Mr. Christopher Vaughan, disclosed by Mr. O'Brien in that challenge. The final stage Mr. Christopher Vaughan's belated attendance as a witness in April and June, 2009, he having declined to attend during any of the substantive public sittings convened by the Tribunal from 2001 to 2007. Each stage of public sittings encompassed revisiting properties. of earlier inquiries into the Mansfield, Cheadle and a Doncaster 10.02 At the outset of the Tribunal's inquiries, in the case of Mr. Michael Lowry, in 1997, and in the case of other persons in 2001, the Tribunal was assured by all persons in possession of information relevant to its inquiries that they wished to assist the Tribunal, and that they would volunteer all material information and documentation. As those inquiries unfolded, it became evident incrementally, that those assurances had been hollow. On the contrary, what had emerged, by the time of the conclusion of its investigations, was a deliberate and calculated strategy to mislead the Tribunal and to conceal the true facts surrounding those transactions. This strategy, as the Tribunal has already found, commenced in or about the 15 th March, 2001, in the course of interactions between Mr. Lowry, Mr. Aidan Phelan, Ms. Helen Malone, Mr. Christopher It was Denis Vaughan and Mr. Kevin Phelan, at Mr. Aidan Phelan's office in Dublin. 2001, when the same persons assembled, with the addition of Mr. further elaborated at a gathering at the Regency Airport Hotel on 27 t h March, O'Connor, Mr. Lowry's accountant and adviser, with w h o m the Tribunal had at that point established a positive professional relationship in the context of its earlier inquiries in 1999 into Mr. Lowry's affairs. That strategy entailed a wholesale falsification of Mr. Christopher Vaughan's files, so that the contents of his files, as produced to the Tribunal, would support a false account of the transactions, with which the Tribunal would be provided, initially in the form of information, and ultimately in the form of sworn testimony. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 312 Impact of Tribunal proceedings on Mr. Kevin Phelan 10.03 What those involved did not perhaps anticipate in March, 2001, was that the grievances of Mr. Kevin Phelan, even then apparent in the case of Mr. Vaughan and Mr. Aidan Phelan, would be fuelled by adverse references made to him in the course of evidence at public sittings of the Tribunal, and that he might use his knowledge of the falsification of Mr. Vaughan's files to promote his own interests. Nor was it anticipated that, such was the vehemence of his hostility, he might assist the interests. Doncaster vendors in their litigation against Westferry, by providing them with information and documentation damaging to the O'Brien 10.04 Following the Regency Airport Hotel gathering, Mr. Denis O'Connor assumed a central role in seeking to reach what were described as with Mr. Kevin Phelan. "settlements" The Tribunal is satisfied that the objective of these settlements was not essentially commercial, but was to counter the risk that, as a result of Mr. Kevin Phelan's dealings, the false accounts with which the Tribunal had been furnished would be eroded, and the true facts would become apparent, as would the extent of the efforts to mislead and undermine the work of the Tribunal. SHUTTLE 10.05 DIPLOMACY These efforts on the part of Mr. Denis O'Connor, which Mr. Vaughan diplomacy", met with extended over the years 2001 and 2002. All of either misrepresentation or obfuscation. Mr. described as "shuttle made, they were these matters were withheld from the Tribunal, and when material inquiries were O'Connor's activities are the subject matter of this chapter, and will be traced from their origins at the Regency Hotel gathering, through to their culmination in the latter months of 2002, spanning the Tribunal's inquiries into the Mansfield and Cheadle transactions and the Doncaster transaction. Regency Airport Hotel meeting on 27 th March, 2001 10.06 It will be recalled, from preceding chapters, that on 15 th March, 2001, which was the day before the solicitors acting for Investec Bank informed the Tribunal of the Cheadle transaction, a series of meetings took place at Mr. Aidan Phelan's offices at Clanwilliam Court, Dublin, at which Mr. Aidan Phelan, Mr. Kevin Phelan, Mr. Christopher Vaughan, Mr. Michael Lowry and Ms. Helen Malone attended, to formulate responses to the anticipated inquiries from the Tribunal concerning both the Cheadle and Mansfield properties. Upon the return of Mr. Denis O'Connor from a business trip to the USA, he met Mr. Lowry. Following that meeting, Mr. O'Connor made direct contact with the Tribunal by telephone, and REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 313 conveyed intended future co-operation on Mr. Lowry's part. Mr. O ' C o n n o r and Mr. Lowry met again subsequently, Mr. Lowry on this occasion bringing documents, with Mr. O ' C o n n o r feeling a better grip on the situation was required, it being clear to him that Mr. Lowry w a s likely to have to testify once again to the Tribunal. 10.07 A meeting was organised for 27 t h March, 2001, at the Regency Airport Hotel in Dublin, at which Mr. Aidan Phelan, Ms. Malone, Mr. Lowry, Mr. O'Connor, Mr. V a u g h a n and Mr. Kevin Phelan were present. Although early evidence, in the course of public hearings relating to the Mansfield and Cheadle transactions, was unclear as to the degree of participation by Mr. Kevin Phelan, later evidence given by Mr. O'Connor, in the course of public hearings relating to the Doncaster transaction, indicated that Mr. Kevin Phelan played only a limited part in the meeting, by reason of a deterioration in relations between him and Mr. Aidan Phelan. 10.08 The purpose of the meeting was to brief Mr. O ' C o n n o r on UK property so that Mr. O'Connor would be armed with the necessary Though several told the transactions, information to enable him to assist the Tribunal on Mr. Lowry's behalf. the meeting was a very lengthy no one, and despite the Ms. presence of experienced professionals, note was taken. Helen Malone Tribunal that she was not asked to take a note at this meeting, and w h e n asked whether this was because matters discussed at the meeting were too sensitive, she responded in evidence: "/ can't say that." Mr. Kevin Phelan's fee claims against Westferry and others 10.09 It will be recalled that it was originally agreed between Mr. Kevin Phelan and Mr. Aidan Phelan that the former would be entitled to 4 0 % of any profits from an ultimate Doncaster sale. with progress, and in a letter of 30 t h Mr. Kevin Phelan became disappointed August, 2000, referred to in the previous chapter, he sought payment of agreed fees, or alternatively to have his c o m p a n y Gameplan revert to m a n a g i n g the project. With that letter, he enclosed fee invoices in relation to property projects at Luton and Altrincham, but does not appear to have enclosed any invoices in connection with Doncaster. 10.10 At the meeting in the Regency Airport Hotel, Mr. Aidan Phelan testified that, despite the apparent tensions, he had queried Mr. Kevin Phelan in relation to money due. Mr. Kevin Phelan stated that he was owed S t g . ? 5 , 0 0 0 . 0 0 in connection with the Mansfield and Cheadle transactions, which Mr. Aidan Phelan duly paid, believing that this payment cleared all outstanding monies owing to Mr. Kevin Phelan in respect of all projects in which Mr. Aidan Phelan had a role. As to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 314 Doncaster, Mr. Aidan Phelan viewed Mr. Kevin Phelan's entitlement as being strictly limited to 4 0 % of any future uplift. 10.11 the Mr. Denis O'Connor informed the Tribunal that, prior to the meeting at Hotel, he had had only one unrelated contact, through Regency Airport another client, with Mr. Kevin Phelan, in early 1997, and he believed that there was a degree of mutual recognition between the two as a result. However, following that meeting, Mr. O'Connor became the point of contact for Mr. Kevin Phelan in regard to overall issues relating to the UK properties, and in particular Mr. Kevin Phelan's claims for fees. 10.12 On 18 th June, 2001, following a meeting between Mr. O'Connor and Mr. Kevin Phelan in the course of the previous week, Mr. O ' C o n n o r wrote to Mr. Aidan Phelan, setting out Mr. Kevin Phelan's claims in relation to Altrincham, Cheadle and Mansfield. Doncaster, In the letter, Mr. O'Connor stated that he He knew nothing about Doncaster or Altrincham, but offered to assist if required. enclosed with the letter three invoices provided to him by Mr. Kevin Phelan, including an invoice relating to Doncaster, w h e r e b y Mr. Kevin Phelan claimed S t g . ? 1 4 9 , 2 0 0 . 0 0 in respect of travel, time and a c c o m m o d a t i o n for the years 1998 to 2000. In the conclusion of his letter, Mr. O ' C o n n o r expressed the anxiety of Mr. Michael Lowry to complete his deals, but alluded to Mr. Kevin Phelan's hostility, stating that Mr. Kevin Phelan had said that he would not deal with Mr. Aidan Phelan, but might deal with Mr. O'Connor. Mr. Kevin Phelan had referred in the course of his conversation with Mr. O ' C o n n o r to the claim by the vendors in the Doncaster transaction in relation to the car park lease, and Mr. O'Connor stated in his letter that he might be able to help in that regard, provided he was given more details. However, his priorities were stated as being to ensure Mansfield was sorted out, and to bring the Cheadle transaction to finality, by reason of Mr. Lowry's "moral obligation" in relation to that transaction. 10.13 The letter of 18 th June, 2001, from Mr. O ' C o n n o r to Mr. Aidan Phelan, was obtained by the Tribunal f r o m the files of Messrs. William Fry concerning the fee dispute between Westferry and Mr. Kevin Phelan, a file which was not made available to the Tribunal until after the suspension of its initial hearings Doncaster in S e p t e m b e r , 2004. The letter had not been provided by into Mr. O'Connor, either for the Tribunal's initial Doncaster hearing, or, indeed, three years earlier, in regard to Mansfield or Cheadle. This was stated by Mr. O ' C o n n o r to have been by reason of the fact that the letter was in a file of documents relating to Mr. Kevin Phelan, which Mr. Kevin Phelan had insisted on retrieving from Mr. O'Connor. However, subsequent evidence showed that the file had not Mr. been given to Mr. Kevin Phelan until in or around August, 2002, whilst O'Connor testified concerning Mansfield and Cheadle in late July, 2001, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 No mention was then made Mr. Page | 315 approximately six w e e k s after the date of the letter. to the Tribunal of the letter, or of Mr. Kevin Phelan's claims, either by O'Connor, Mr. Aidan Phelan, or by Mr. Lowry, w h o had received a copy of the letter at the time it was sent. 10.14 Mr. O ' C o n n o r ' s expressed willingness, in that letter, to volunteer his assistance is s o m e w h a t at odds with his later evidence of having met Mr. Kevin Phelan at the latter's request on a Saturday afternoon at this time. Mr. O ' C o n n o r testified that he formed the impression that Mr. Kevin Phelan was seeking fees from him, to which Mr. O'Connor responded that this was Mr. Aidan problem, and he did not wish to be dragged into it. Phelan's Mr. Denis O'Connor visits UK properties with Mr. Kevin Phelan 10.15 Shortly after sending his letter of 18 th June, 2001, to Mr. Aidan Phelan, Mr. Mr. O'Connor travelled to the UK to meet Mr. Kevin Phelan, and viewed Lowry's properties. S o m e uncertainty arose in evidence between Mr. O ' C o n n o r and Mr. Lowry as to w h o had suggested the trip, with Mr. O'Connor indicating that the idea e m a n a t e d from Mr. Lowry. On a date which could not be established with precision, Mr. O ' C o n n o r travelled to the UK and met Mr. Kevin Phelan, by w h o m he was driven to Mansfield and Cheadle. Then, en route to a property in Wigan, owned by Vineacre Limited, a c o m p a n y of which Mr. Lowry was a codirector, Mr. Kevin Phelan also brought Mr. O ' C o n n o r to the Doncaster Rovers site. In his evidence, Mr. O'Connor said that, at the time, he felt that Mr. Kevin Phelan was endeavouring to demonstrate to Mr. O'Connor that the Doncaster project was the type of deal he could source, and that perhaps he viewed Mr. O'Connor as s o m e o n e w h o could put the other side of the equation together, that is, organising a buyer or raising the finance. According to Mr. O'Connor, Mr. Kevin Phelan particularised the Doncaster project fully, explaining the difficulties that had arisen in the transaction, and showing Mr. O'Connor both the old and new locations of the stadium, despite its s e e m i n g irrelevance. The details even extended to Mr. Kevin Phelan's own fees regarding Doncaster. Mr. Denis O'Connor's initial efforts to reach settlement with Mr. Kevin Phelan 10.16 On 21 s t July, 2001, Mr. O ' C o n n o r and Mr. Christopher V a u g h a n met at According to Mr. O'Connor, this was to discuss issues Birmingham Airport. relating to Catclause, which, it will be recalled, was the c o m p a n y of which Mr. Lowry and his daughter were directors, and w h i c h was initially intended to be the beneficial owner of the Cheadle property. S o m e f e w days thereafter, Mr. O ' C o n n o r testified at the Tribunal's public sittings in relation to the Mansfield and Cheadle properties, on 26 t h and 27 t h July, 2001. Mr. Aidan Phelan's evidence in this regard was also then heard. Later, on 2 n d August, 2001, Ms. Caroline Preston, of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r Messrs. 10 A&L Goodbody, solicitors, and Mr. Denis O'Connor, representing Page | 316 respectively Mr. Aidan Phelan and Mr. Lowry, met Mr. V a u g h a n in Manchester, the stated purpose being to persuade him to testify at the Tribunal, which he declined to do. Mr. Kevin Phelan alleges false and misleading 10.17 with Mr. evidence given to the Tribunal It appears that, following his evidence, Mr. Aidan Phelan's relationship Kevin Phelan further deteriorated. It s e e m s that Mr. Kevin Phelan became angry concerning Mr. Aidan Phelan's evidence, telephoned Mr. Aidan Phelan on 27 t h July, 2001, and also wrote, expressing concern at false and misleading information having been given in evidence regarding his involvement in certain transactions, and stating that the matter was with his lawyers in regard to possible proceedings. He also then d e m a n d e d the return of all documents which he had given to Mr. Aidan Phelan. 10.18 Mr. Kevin Phelan also wrote in August, 2001, to Morton Thornton, accountants, in London, the firm of which Mr. Craig Tallents was a member, which, it will be recalled, was engaged Doncaster project. by Westferry in connection with the In that correspondence, Mr. Kevin Phelan made complaints regarding both Westferry and Gameplan, Mr. Tallents having apparently done some audit w o r k on behalf of the latter also, and requested that Morton Thornton should cease to act, and return all documents. In response, the firm denied the complaints, and forwarded the correspondence to Mr. Peter V a n d e r p u m p , of W a l b r o o k Trustees, acting on behalf of Westferry, stating that Mr. Kevin Phelan had no authority to determine any retainer on behalf of Westferry. Mr. Kevin Phelan also made a formal complaint in relation to Mr. Craig Tallents to the Institute of Chartered Accountants of England and Wales. Mr. Tallents testified to the Tribunal that, although this complaint was never followed up, and was entirely unfounded, it was nonetheless a cause of extreme distress to him. It remained in being until withdrawn as part of a larger settlement between Westferry and Mr. Kevin Phelan, which will be returned to below. 10.19 Further irate correspondence followed from Mr. Kevin Phelan in September, 2001. On 12 th S e p t e m b e r , 2001, he wrote to Mr. Aidan Phelan, stating that he would indicate his concerns to the Tribunal concerning Mr. Aidan Phelan's evidence, and would also withdraw all correspondence and documents sent to the Tribunal, on the basis that his documents had not been returned by Mr. Aidan Phelan on request. On the following day, 13 th S e p t e m b e r , 2001, Mr. Kevin Phelan requested from the Tribunal the return of those documents and correspondence. On 14 th S e p t e m b e r , 2001, he again wrote to Mr. Aidan Phelan, stating that he had had two telephone conversations with Mr. Michael Lowry, w h o had conveyed to him that Mr. Aidan Phelan felt disadvantaged by Mr. O ' C o n n o r ' s REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 317 role in negotiating in relation to property projects, and seeking confirmation from Mr. Aidan Phelan as to whether this information was correct. In the course of his evidence, Mr. Lowry accepted that he had several conversations with Mr. Kevin Phelan around that time, but could not specifically isolate those two particular telephone calls. Who was Mr. Denis O'Connor 10.20 acting for? Profound distrust by then existed between the two Phelans. There was an apparent willingness on the part of Mr. O'Connor to seek to settle differences between them, though it was not clear for w h o m he was acting. In evidence, he stated that he would then have considered that he was looking after Mr. Kevin Phelan's interests, not particularly those of Mr. Michael Lowry. W h e n regarding his previous letter of 18 th queried June, 2001, prioritising Mr. Lowry's interests in Mansfield and Cheadle, he responded that he saw June and S e p t e m b e r of 2 0 0 1 as quite separate, no progress having resulted from his June letter. Agreements negotiated by Mr. Denis O'Connor from intended to benefit to the extent of Stg.?225,000.00 10.21 O'Connor In September, 2001, Mr. O'Connor which Mr. Kevin Phelan negotiated and entered into Mr. agreements with Mr. Kevin Phelan relating to certain UK property projects. felt that he had Mr. Aidan Phelan's authority to negotiate these agreements with Mr. Kevin Phelan, despite the apparently differing view of Mr. Aidan Phelan, who in evidence stated that, although Mr. O ' C o n n o r had signed up on his behalf to s o m e "cobbled-together agreements", his solicitor subsequently informed Mr. O ' C o n n o r that he was not entitled to act as his agent, although Mr. Aidan Phelan accepted that he would have acquiesced in a settlement effort, had it been successful. 10.22 At the time in 2007 w h e n initially evidence was taken concerning the agreements negotiated and entered into by Mr. O'Connor and Mr. Kevin Phelan in September, agreements, transactions. 2001, namely the Tribunal in was aware only the of the existence and of two those connection with Mansfield Cheadle As to the Mansfield agreement, signed by Mr. Kevin Phelan on the one hand, and Mr. O'Connor, on behalf of Mr. Aidan Phelan and Mr. Michael Lowry on the other, on 19 th S e p t e m b e r , 2001, its main provisions were: that Mr. Kevin Phelan was not due any fees; that Mr. Aidan Phelan, Mr. Lowry and Mr. Kevin Phelan agreed "no claims against" each other "in respect of this agreement would or site transaction"; Mr. would that on signing the agreement, Mr. Kevin Phelan to a Mr. purchaser; O'Connor, that and all after signing, would all be the introduce O'Connor communications be through money transferred to the v e n d o r ' s benefit on Mr. O ' C o n n o r ' s instructions; that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 318 vendors were Mr. Aidan Phelan and Mr. Michael Lowry in 9 0 % / 1 0 % proportions; that Mr. Kevin Phelan would sell the site unconditionally for S t g . ? 3 7 5 , 0 0 0 . 0 0 ; that on completion, the vendors would receive Stg.?300,000.00, with the balance going to Mr. Kevin Phelan, and that if completion was not achieved by 21 s t December, 2001, Mr. Kevin Phelan would relinquish the exclusive right to sell, and would receive a reduced s u m o f S t g . ? 5 0 , 0 0 0 . 0 0 on completion. 10.23 As to the Cheadle agreement, again signed by Mr. Kevin Phelan on the one hand and Mr. O'Connor on behalf of Mr. Aidan Phelan on the other hand, also on 19 th S e p t e m b e r , 2001, the substantive provisions were: that Mr. Kevin Phelan would be due S t g . ? 1 5 0 , 0 0 0 . 0 0 fees; that Mr. Aidan Phelan and Mr. Kevin Phelan agreed that there would be "no claims agreement or site transaction"; against" each other or "in respect of this that the vendor was Mr. Aidan Phelan, with 100% of the ownership; that Mr. Kevin Phelan would receive his fees in three stage payments of S t g . ? 5 0 , 0 0 0 . 0 0 each, the final payment to be due on sale or disposal of the premises, and that Mr. Kevin Phelan would provide Mr. O ' C o n n o r with planning permission in relation to a nursing home within fourteen days. 10.24 Accordingly it seems that Mr. Kevin Phelan had a prospective purchaser for S t g . ? 3 7 5 , 0 0 0 . 0 0 for Mansfield, on which basis he w o u l d receive Stg.?75,000.00. Regarding Cheadle, phased fees payable to Mr. Kevin Phelan If both transactions were finalised, Mr. Kevin amounted to S t g . ? 1 5 0 , 0 0 0 . 0 0 . Phelan would be entitled to receive a total o f S t g . ? 2 2 5 , 0 0 0 . 0 0 . 10.25 In evidence, Mr. O ' C o n n o r agreed that, with regard to Mansfield, under the terms of the agreement, it was likely that Mr. Aidan Phelan and Mr. Lowry as vendors would make no profit, and would perhaps make a loss, having paid Mr. Kevin Phelan Stg.?75,000.00. As to Cheadle, Mr. O'Connor testified that Mr. Kevin Phelan s a w high potential in the property, and was also a d a m a n t that he had a buyer, although not willing to disclose his identity. Kevin Phelan was going to walk out of Mr. Queried whether Mr. Phelan's life for Aidan Stg.?225,000.00, Mr. O'Connor responded "I believe so". Put that this was rather exotic, since Mr. Kevin Phelan had invested no money in either transaction, the purchase prices of which amounted in the aggregate to Stg.?775,000.00, but would yet receive Stg.?225,000.00, Mr. O'Connor responded: "[t]hat's what he was demanding, that with you at all." on the one hand. I am not disputing W h e n further asked w h y these agreements were not produced to the Tribunal in the course of its Mansfield and Cheadle inquiries and hearings in 2 0 0 1 , Mr. O'Connor responded that he did not believe they were relevant. As to w h y he had REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 319 not kept a file, or retained the agreements, Mr. O'Connor said that he did not regard Mr. Kevin Phelan as a client, and was in effect doing him a favour in trying to resolve matters, and that therefore normal accountancy procedures did not apply. 10.26 Mr. O'Connor also stated that he had informed Mr. Lowry of the negotiations with Mr. Kevin Phelan in S e p t e m b e r , 2001, and that Mr. Lowry had responded that he should do whatever he could to settle the fee dispute with Mr. Phelan. Mr. O'Connor also stated that Mr. Lowry agreed to the level of fees mentioned above, and that the agreement with Mr. Kevin Phelan at the outset had been that he would be entitled to a 4 0 % uplift on any profits generated in both the Mansfield and Cheadle projects. In his evidence, Mr. Lowry testified that he had been told about the agreements in general terms by Mr. O'Connor, but was not involved in the documents, or provided with copies. His evidence was that he was then primarily worried about Mansfield, although, because he had passed Cheadle onto Mr. Aidan Phelan, he w o u l d have liked to have seen s o m e benefit in that transaction for him. Mr. Lowry himself was satisfied to get his money back, but left the details to Mr. O'Connor. 10.27 W h e n these matters were addressed in evidence by the Tribunal in 2007, the Tribunal was not by then aware of the attachments to a letter dated 8 t h March, 2002, which has already been referred to in preceding chapters, and which had been sent by solicitors acting for Mr. Kevin Phelan to solicitors acting for Mr. Aidan Phelan. The attachments consisted of a number of documents which were all to prove relevant to the Tribunal's inquiries. It will be recalled that this letter and its attachments were kept from the Tribunal until 25 t h June, 2009. A m o n g s t the attachments were two agreements entered into by Mr. Kevin Phelan and Mr. O'Connor, both again dated 19 th September, 2001, and relating respectively to the Altrincham and Doncaster projects. Whilst, in correspondence seen by the Tribunal, Mr. Kevin Phelan repeatedly grouped the Mansfield, Cheadle, Doncaster and Altrincham projects together as related transactions, which he claimed involved the same participants, the Tribunal never ultimately examined the Altrincham transaction in any detail 19 th and, therefore, it is not proposed to set out the terms of the agreement of to Altrincham. S e p t e m b e r , 2001, relating The Doncaster 10.28 agreement negotiated by Mr. Denis O'Connor in September, 2001 As to the Doncaster agreement, described as being between Mr. Kevin Phelan on the one hand, and Mr. Aidan Phelan on the other hand, and signed by Mr. Kevin Phelan, and Mr. O'Connor on behalf of Mr. Aidan Phelan, the substantive terms were: that Mr. Kevin Phelan w a s prepared to settle his existing claim for fees in the order of S t g . ? 1 5 0 , 0 0 0 . 0 0 , on the basis that instead he REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 320 would be paid S t g . ? 4 7 , 5 0 0 . 0 0 in a number of instalment payments; that the two Phelans agreed that t h e y had no further claims against each other in respect of the transaction; that Mr. Aidan Phelan was the 100% owner of the transaction, and that the agreement was to include Westferry; that Mr. O'Connor was to review the file on the project and report back in writing to Mr. Kevin Phelan within twenty one days; that Mr. Kevin Phelan was to advise Mr. O'Connor in writing as to where fees were to be paid, and that Mr. O'Connor w a s to report back in writing as to progress; that Mr. Kevin Phelan was entitled to 4 0 % of profits on the transaction, which entitlement was to be committed to a legal agreement; and finally that Mr. Kevin Phelan would withdraw all claims and allegations in writing, and the agreement would settle all disputes between the parties. 10.29 In November, 2004, the Tribunal wrote to the solicitors acting for Mr. Aidan Phelan arising f r o m documentation that had then only recently come to the attention of the Tribunal, and requesting that Mr. Aidan Phelan would provide the Tribunal with all d o c u m e n t s relating to any disputes or dealings with Mr. Denis O'Connor and/or Mr. Kevin Phelan. In w h a t was stated to be an exhaustive response, the Tribunal w a s provided with certain information and documentation, including the Mansfield and Cheadle agreements of 19 th S e p t e m b e r , 2001. However, the Tribunal was not provided with either the Altrincham or Doncaster agreements of the same date, although it is now clear to the Tribunal that those agreements were in the possession of Mr. Aidan Phelan, as attachments to the letter his solicitors had received f r o m Mr. Kevin Phelan's solicitors on 8 t h March, 2002. Indeed, that letter of 8 t h March, 2002, also fell within the terms of the documentation then sought by the Tribunal, but was not provided at that time. was not ultimately produced until June, 2009. It Mr. Denis O'Connor Kevin Phelan 10.30 O'Connor, denies any involvement in a Doncaster settlement with Mr. In the evidence given in 2 0 0 7 by both Mr. Aidan Phelan and Mr. Denis in connection with the agreements of 19 th September, 2001, the Tribunal was not informed of the additional agreements in relation to Altrincham and Doncaster. In the course of Mr. O ' C o n n o r ' s evidence on 20 t h March, 2007, the following exchange with Tribunal counsel occurred: "Q. ...In relation didn't come to these two agreements of September 2001, when and they so off, remember you said you gave your papers involving Aidan back, forth; were there any other agreements Phelan at that time - - Phelan and Kevin A. Not to my knowledge. or Doncaster? Q. - - to get rid of, we'll say, Altrincham REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 321 A. Not to my knowledge. I mean, Altrincham about. is an absolutely complete blank to me. I don't even know what it's Q. You are sure there were no other Agreements at this time? A. 10.31 To my knowledge, It was Mr. there wasn't, yeah." that he did not retain any O'Connor's evidence documentation concerning his dealings with Mr. Kevin Phelan, including the agreements relating to Mansfield and Cheadle of 19 th September, 2001, and, by extension, the agreements relating to Altrincham and Doncaster, as all such documentation according to Mr. O ' C o n n o r was put into a file which he, at some subsequent stage, handed over to Mr. Kevin Phelan. Even allowing for this, and the passage of time between 2 0 0 1 and the time at which they were evidence, it was nonetheless the case that the Tribunal was misled giving by the responses it received in evidence from Mr. Aidan Phelan and Mr. O ' C o n n o r as to the true extent of Mr. O ' C o n n o r ' s knowledge of, and involvement in, negotiations relating to property transactions with Mr. Kevin Phelan in September, 2001. 10.32 Of course, because the agreements of 19 th September, 2001, relating to the Mansfield and Cheadle transactions were documented after evidence had been given concerning these matters, the transactions were described in terms conforming to the versions of events already given to the Tribunal, including for example the 9 0 % / 1 0 % shareholding as between Mr. Aidan Phelan and Mr. Lowry, in connection with Mansfield, and the exclusive ownership by Mr. Aidan Phelan of the Cheadle property, versions of those transactions which were generated in March of 2001, for the purposes of obscuring the true position. Whilst there was considerable delay before the agreements relating to Mansfield and Cheadle were made available to the Tribunal, it was not until 2 0 0 9 that the Tribunal learned that, at the same time as drafting those agreements, Mr. O ' C o n n o r was involved in drafting agreements relating to Doncaster may and Altrincham. have attached to It is the reasonable to conclude production of the that, whatever and reticence Mansfield Cheadle documentation at the time these matters were first ventilated in evidence, the failure to disclose that at the same time a similar agreement was drawn up by Mr. O'Connor concerning Doncaster betrayed intense sensitivity to the uncovering of the true extent of Mr. O ' C o n n o r ' s dealings with Mr. Phelan in relation to that project. Moreover, given that the Tribunal is satisfied that the agreements relating to Mansfield and Cheadle in September, 2001, did not reflect the true historical position regarding those transactions, little weight can be attached to the Doncaster agreement insofar as it purported to set out the position regarding that transaction. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10.33 10 In any event, the 3rd agreements of September, 2001, were never Page | 322 implemented. By letter of January, 2002, Mr. Kevin Phelan again sought the return of his original files and documents from Mr. Aidan Phelan, and indicated concern that matters. Mr. O'Connor had ceased to be involved in resolving various In response, Mr. Aidan Phelan's solicitors, A & L Goodbody, stated that Mr. O ' C o n n o r in no sense acted on behalf of Mr. Aidan Phelan in relation to any transaction, and that neither Mr. Aidan Phelan nor Ms. Helen Malone had any documents belonging to Mr. Kevin Phelan. Hostile correspondence from Mr. Kevin Phelan 10.34 In the early months of 2001, significant tensions had developed between Mr. Kevin Phelan and Mr. Christopher Vaughan, particularly in respect of a property project known as the Vineacre transaction. This transaction related to a property in Wigan, introduced by Mr. Kevin Phelan to Mr. Lowry and a partner of his, both of w h o m became directors of the c o m p a n y Vineacre Limited. the other properties introduced by Mr. Kevin Phelan, As with the Mr. V a u g h a n was solicitor acting in the transaction. Disagreements arose, resulting in Mr. V a u g h a n informing Mr. Lowry and his partner in Vineacre that he could no longer act in the matter. Tensions had flared further between Mr. Kevin Phelan and Mr. Christopher V a u g h a n concerning transactions other than Vineacre w h e n , by letter of 4 t h October, 2001, Mr. Kevin Phelan made a formal complaint concerning Mr. Vaughan, relaying a number of matters to the Office for the Supervision of Solicitors in England. Mr. Phelan also intimated intended legal proceedings, and indicated that he was considering similar action in respect of Mr. Aidan Phelan. 10.35 Following his exchange of correspondence with Mr. Aidan Phelan's solicitors in early January, 2002, referred to above at paragraph 10-33, Mr. Kevin Phelan instructed Messrs. W o o d c o c k & Sons, solicitors, of Bury in Lancashire, to write again, by letter of 26 t h January, 2002, outlining an intended claim for breach o f j o i n t venture agreements, a letter which was also withheld from the Tribunal by Mr. Aidan Phelan until 25 t h June, 2009, notwithstanding his prior assurances to the Tribunal that all relevant material had been provided. Both this letter, and the other letter referred to previously, dated 8 t h March, 2002, from W o o d c o c k & Sons, were provided to the Tribunal in response to queries raised by it, arising from a d o c u m e n t produced by Mr. Christopher V a u g h a n at the c o m m e n c e m e n t of his evidence to the Tribunal in April, 2009. The d o c u m e n t so produced by Mr. V a u g h a n was a letter from W o o d c o c k & Sons, to Mr. Vaughan, dated 28 t h January, 2002, some two days after the letter sent to Mr. Aidan Phelan, and which indicated that W o o d c o c k & Sons had corresponded with Mr. Aidan Phelan, Mr. Denis O'Brien, Mr. Michael Lowry and Mr. Denis O'Connor. W h e n this letter to Mr. V a u g h a n was raised with A & L Goodbody, acting for Mr. Aidan Phelan, the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 323 letters he had received from W o o d c o c k & Sons on 26 t h January, 2002, and 8 t h March, 2002, were finally provided to the Tribunal. Denials of having received any such correspondence were furnished to the Tribunal on behalf of Mr. O'Brien, Mr. Lowry and Mr. O'Connor. Mr. Mark Weaver's visit to Mr. Christopher Vaughan on 18th February, 2002 10.36 On 19 th February, 2002, Mr. Christopher V a u g h a n wrote a lengthy letter to Mr. Aidan Phelan, setting out the details of a visit paid by Mr. Mark Weaver to Mr. V a u g h a n ' s office on the previous day, 18 th February, 2002. Mr. Weaver was an associate of Mr. Ken Richardson, and an agent of the Doncaster vendors, Dinard and Shelter Trust, in the ongoing litigation against Westferry. Mr. V a u g h a n was not directly involved in the litigation, Messrs. Carter-Ruck, solicitors, having been instructed. Mr. V a u g h a n recounted in his letter to Mr. Aidan Phelan how Mr. Weaver had produced to him a copy of the letter of 23 r d August, 1998, from Mr. V a u g h a n to Mr. Paul May and Mr. Kevin Phelan, referred to in the previous chapter, which letter contained Mr. V a u g h a n ' s advice that Westferry should immediately divest itself of all assets, so that it would become a shell company, from which no funds could be obtained by Mr. Richardson in respect of his claim for S t g . ? 2 5 0 , 0 0 0 . 0 0 , arising from the car park lease at Doncaster. It should be pointed out that, in his evidence, Mr. V a u g h a n explained to the Tribunal that it was only after the completion of the Doncaster transaction that he discovered that the car park lease already had an extension, typed on the reverse side of the document. It appeared to him therefore that the contract s e e m e d to require that Westferry would pay S t g . ? 2 5 0 , 0 0 0 . 0 0 over and above the purchase price for an extension of a lease that they already had, because it was within the assets of Doncaster Rovers acquired by the share purchase. s o m e w h a t peeved and felt, as he put it, that "they Mr. V a u g h a n was this; have lifted our leg over they have Just got one over on us". Given that he believed that the vendors had tactically obscured a vital piece of documentation as to the extension of the lease, he t o o k the view that Westferry was entitled to use similar tactics, and it was for this reason that he advised the divesting of Westferry's assets, so as effectively to avoid liability. 10.37 In the copy of the letter that Mr. W e a v e r produced to Mr. V a u g h a n during his visit on 18 th February, 2002, the passage relating to the divesting of assets was highlighted. Mr. V a u g h a n asked Mr. Weaver how he had obtained the letter, pointing out that it was a confidential letter to his clients, which Mr. W e a v e r should not have had a copy of at all. Mr. W e a v e r responded that it had been sent to him anonymously, but stated that he a s s u m e d that it had come from Mr. Kevin Phelan. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10.38 10 Mr. Weaver also alluded to, but did not produce, another letter which Page | 324 he claimed had been sent to him anonymously, and which likewise he a s s u m e d had come from Mr. Kevin Phelan, which had been written by Mr. V a u g h a n , and indicated that Mr. Lowry was involved in Doncaster Rovers. This was presumably a reference to Mr. V a u g h a n ' s letter to Mr. Lowry of 25 t h S e p t e m b e r , 1998. Mr. V a u g h a n ' s account of Mr. W e a v e r ' s visit, in his letter to Mr. Aidan Phelan, set out his view that, "on balance", was somehow he thought it was "more than likely that Kevin Phelan behind this visit than not". In his evidence to the Tribunal in 2009, Mr. V a u g h a n confirmed that he formed the impression from Mr. W e a v e r ' s visit that Mr. Kevin Phelan was causing trouble, and he felt it worthwhile to prepare a detailed file note, and to inform Westferry of w h a t had happened. 10.39 Upon receiving Mr. V a u g h a n ' s letter, Mr. Aidan Phelan conveyed the position to Ms. Kate Macmillan, of Carter-Ruck, and provided her with a copy of the letter, along with a copy of a letter f r o m Mr. Weaver to Mr. Ned Carroll, of Brian Phelan & Company, accountants, Mr. Aidan Phelan's former firm, in which his brother continued as a partner. The latter d o c u m e n t contained a veiled reference to the existence of a letter connecting "Mr. L" to Doncaster Rovers. Mr. Carroll forwarded a copy o f t h e W e a v e r letter to Mr. Denis O'Brien who appeared to have made it available to Mr. Aidan Phelan. Following a consultation, Ms. Ruth Collard, who was the partner handling the Westferry litigation, wrote to Mr. Reg Ashworth, solicitor for Dinard and Shelter Trust, demanding that his client, Mr. Weaver, immediately cease his behaviour. In evidence, Mr. Aidan Phelan's response to all of this correspondence was to the effect that it was nonsense. Complaints against Mr. Aidan Phelan 10.40 By letter of 4th March, 2002, Mr. Kevin Phelan made a formal complaint to the Institute of Chartered Accountants in Ireland against Mr. Aidan Phelan, citing breaches of undertakings on the part of Mr. Aidan Phelan and Brian Phelan & Company, regarding fees on the UK transactions, and also claiming that Mr. Aidan Phelan had refused to return files to him, which he claimed to require for the purposes of his dealings with the Tribunal. In referring in the letter to Mr. Kevin Phelan as acting as agent for Mr. Denis O'Brien "and another" in respect of four projects, it would appear that Mr. Kevin Phelan was referring to Mr. Lowry as the other party. Four days later W o o d c o c k & Sons also wrote on behalf of Mr. Kevin Phelan to Messrs. DLA solicitors, in Manchester, to w h o m Mr. Aidan Phelan had transferred his legal business. This letter and the attachments included with it have already been referred to, and it will be recalled that the letter was withheld from the Tribunal until June, 2009. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10.41 10 W h e n queried in the course of his 2 0 0 9 evidence as to w h y the letter Page | 325 and its attachments had been withheld from the Tribunal until June, 2009, Mr. Aidan Phelan said that he only read the letter, which he s a w as outrageous and false, and did not examine the attachments. Despite the Tribunal having sought from him all d o c u m e n t s relating to disputes with Mr. Kevin Phelan, Mr. Aidan Phelan said that his motivation had not been to mislead the Tribunal or delay its work. letter. He accepted that he had made a "bad call" in deciding not to produce the 10.42 Mr. Aidan Although the contents o f t h e letter were not opened in public hearings, Phelan confirmed that it contained a claim for fees in respect of Doncaster, for S t g . ? 1 5 5 , 0 0 0 . 0 0 , plus 4 0 % of any profit made on sale of the property, on behalf of Mr. Kevin Phelan. Mr. Phelan acknowledged that, as to his earlier response in evidence of 15 th March, 2007, that Mr. Kevin Phelan had never at any stage told him that Mr. Lowry was involved in Doncaster, it was in fact the case that Mr. Kevin Phelan asserted in the letter of 8 t h March, 2002, that Mr. Lowry had a Doncaster involvement, being an entitlement to a share in the 4 0 % of the profits with Mr. Kevin Phelan. Further, as to Mr. Aidan Phelan's justification for not producing the attachments on the basis that the dispute had been concluded, it was the case that the attachments to the 8 t h March, 2002, letter included several "long form" and "short form" letters, which the Tribunal only saw for the first time in 2009. Nor were other attachments to the letter, being documents which had been removed altogether from the falsified files of Mr. Christopher Vaughan, brought to Tribunal attention at the time of its initial "long form/short form" inquiries in 2002. More of "Long Form" and "Short Form" letters Lying like a trooper 10.43 Details of the letters produced by Mr. Colm Keena of The Irish Times, and which resulted in Tribunal inquiries, have been set out in a previous chapter. The Tribunal also obtained, as part of the file of Mr. Christopher Vaughan exhibited in Mr. O'Brien's Judicial Review proceedings instituted in S e p t e m b e r , 2004, the final page of a letter dated 21 s t March, 2002, from W o o d c o c k & Sons, on behalf of Mr. Kevin Phelan, to Mr. Christopher Vaughan. This referred to altered correspondence having been furnished to the Tribunal, referring in particular to five letters dating from 1999 and 2000, including the letter of 12 th July, 2000, produced by Mr. Keena, and examined in Chapter 8. W h a t was there stated by Mr. Kevin Phelan's solicitors to Mr. V a u g h a n differs diametrically from w h a t Mr. Kevin Phelan apparently conveyed to Mr. V a u g h a n a mere month later, in a letter dated 23 r d April, 2002, and previously referred to in Chapter 8. In that letter Mr. Kevin Phelan purported to explain the "long form" and "short form" REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 326 letters by reference to Mr. V a u g h a n ' s t e n d e n c y to confuse clients and projects. Insofar as the letter stated that Mr. Kevin Phelan had no idea where the form" versions of the letters had come from, it is hard to disagree with "long Mr. V a u g h a n ' s counsel, w h e n he stated in the course o f t h e Tribunal's sittings that, in the letter which was forwarded by Mr. V a u g h a n to the Tribunal as his explanation for the existence o f t w o versions of his letters, Mr. Kevin Phelan was "lying like a trooper" and that it was "blindingly obvious" that the "long forms" of the letters came f r o m Mr. Kevin Phelan's own files. 10.44 solicitors, In his 2 0 0 2 response to the Tribunal, Mr. V a u g h a n also withheld two The first was a letter to him from Mr. Kevin Phelan's of 26 t h March, 2002, referring to an outline further critical documents. Woodcock & Sons, agreement having been reached in regard to an overall settlement for Mr. Kevin Phelan, to be crystallised upon the return of Mr. Denis O'Connor f r o m the USA, and also stating that despite earlier threats of complaint, in fact no professional complaint had been made against Mr. Vaughan, concluding that: "we trust however that this matter can be brought to an to amicable leaving settlement, matters and in those circumstances our client is agreeable be." The second d o c u m e n t withheld by Mr. V a u g h a n was a letter of 19 th April, 2002, also from W o o d c o c k & Sons to him. Referring to earlier allegations and requests, the letter indicated agreement that there was no requirement to respond to any of those matters, that Mr. Kevin Phelan had been acting as agent either for a disclosed or undisclosed principal, that the professional complaint against Mr. V a u g h a n was unreservedly withdrawn, that no claim for negligence w a s being made, and that no return of files was sought. This letter only came to light as part of the file produced to the Tribunal by William Fry in late 2004, concerning the fee dispute between Mr. Kevin Phelan and Westferry. Charade 10.45 In essence, w h a t the matters set out in paragraph 10-40 to 10-44 above indicate is that W o o d c o c k & Sons, as solicitors for Mr. Kevin Phelan, in correspondence with both Mr. V a u g h a n and Mr. Aidan Phelan, conveyed the apparent alteration of five "long form" and "short form" letters concerning Mansfield and Cheadle, together with, in regard to Mr. Aidan Phelan, a contention that Mr. Lowry had a Doncaster involvement to the extent of an entitlement to split 4 0 % of the Doncaster profits with Mr. Kevin Phelan. The documentation REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 327 conveyed a totally different picture of Mr. Lowry's involvement from w h a t had been conveyed to the Tribunal. Whilst all these matters were afoot, including the sensitive documentation held by Mr. Weaver, progress was being made towards a settlement in favour of Mr. Kevin Phelan, to be finalised through Mr. Denis O'Connor, and a picture of events that was little more than a charade was being conveyed to the Tribunal. 10.46 In this regard, it was ascertained by the Tribunal, although only after the conclusion of Doncaster hearings in 2007, that Mr. Kevin Phelan was paid a total of S t g . ? 6 5 , 0 0 0 . 0 0 remuneration in relation to a property project in Wigan in the name o f V i n e a c r e Limited, a c o m p a n y of which Mr. Lowry was a director. S t g . ? 5 6 , 0 0 0 . 0 0 of this s u m was paid to Mr. Phelan on 22 n d Over April, 2002, the day before he provided his letter to Mr. Vaughan, which Mr. V a u g h a n subsequently forwarded to the Tribunal, setting forth a contrived and untrue explanation in relation to the "long form" and "short form" letters. At the same time, the parallel and entirely contradictory course of correspondence from W o o d c o c k & Sons was concealed from the Tribunal. The Tribunal has received correspondence from an English solicitor instructed by Vineacre at the time that the payments were made, and has been informed that the fees paid to Mr. Kevin Phelan were intended to draw a line under Mr. Kevin Phelan's involvement in the Vineacre project, and that the amount paid was reasonable in light of the w o r k that Mr. Kevin Phelan had undertaken. Whatever the position may have been regarding those fees paid by Vineacre, having regard to the timing of the payment of those fees, the Tribunal is satisfied that the exchange of correspondence between Mr. V a u g h a n and Mr. Kevin Phelan, which was provided to the Tribunal, was a choreographed falsehood in which Mr. Kevin Phelan would not have agreed to participate, but for the payment of those fees. 10.47 Much of Mr. Vaughan's evidence in this regard was wholly unsatisfactory and self-serving, including contentions that at the time he did not see the W o o d c o c k & Sons correspondence as being relevant to the Tribunal, and that w h a t was being done by Mr. Kevin Phelan was no more than typical tactical manoeuvring. He testified that initially he did not view the allegations made by W o o d c o c k & Sons on behalf of Mr. Kevin Phelan as a serious matter. As has previously been set out in Chapter 8, the Tribunal is satisfied that Mr. Christopher V a u g h a n was fully aware of the circumstances in which his files were falsified prior to being submitted to the Tribunal in 2001. In those circumstances, it is hard to imagine a more serious turn of events than the discovery by the Tribunal of two such falsified letters. The Tribunal considers the entirety of Mr. V a u g h a n ' s evidence on this matter to be unreliable. Conclusions are unavoidable that he was well aware o f t h e falsification of his files, that he prevented the Tribunal from having timely awareness of many other "long form" and "short form" documents, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 328 and that he advanced to the Tribunal a basis of events that he knew to be groundless. 10.48 The Tribunal is further of satisfied that, in participating Mr. in the choreographed exchange misleading correspondence, Vaughan "long understood that a request to Mr. Kevin Phelan for an explanation for the form" and "short form" letters would elicit a response incorporating an innocent In this regard, there is a character of the explanation, for onward transmission to the Tribunal. striking contrast between the aggressive and threatening previous correspondence from W o o d c o c k & Sons, and the amicable and civil tone of the subsequent exchange of correspondence between Mr. V a u g h a n himself and Mr. Kevin Phelan. Having regard to the fact that Mr. Denis O ' C o n n o r was involved in negotiating the terms of settlement with Mr. Kevin Phelan, as he was compelled to accept in his evidence, and which was confirmed by the belatedly produced correspondence from W o o d c o c k & Sons to Mr. V a u g h a n referred to above, and having regard to the fact that Mr. Lowry had knowledge of the status and progress of the Vineacre payment, the Tribunal is satisfied that the clearance provided to Mr. V a u g h a n to write to Mr. Kevin Phelan came from Mr. O'Connor, acting as agent for Mr. Lowry. 10.49 The Tribunal is accordingly satisfied that these elements of choreographed falsehood were negotiated and orchestrated by Mr. O ' C o n n o r and Mr. Lowry, in the knowledge that the effect would be to mislead the Tribunal, and that the purpose was to ensure that Mr. Kevin Phelan's co-operation would be obtained in matters relating to the Tribunal's inquiries, and in particular with a view to obscuring the true position pertaining to the "long form" and "short form" correspondence, which the Tribunal was examining at the time. The ultimate intention can only have been to preclude the Tribunal from discovering the true facts surrounding the full extent of Mr. Lowry's ownership of the Mansfield and Cheadle properties. Mr. Kevin Phelan's dispute and settlement over Doncaster Rovers Getting Mr. Kevin Phelan on side 10.50 A telephone attendance of 2nd May, 2002, made by Ms. Kate latter Macmillan of Carter-Ruck, on Mr. Aidan Phelan, to the effect that the thought he might be able to get Mr. Kevin Phelan "on side", and that he might provide a witness statement and evidence at the trial of the pending litigation, seems extremely surprising in the light of w h a t is now known of the acrimony between both Phelans. T h a t the attendance also recorded that Mr. Aidan Phelan "might know what the position was regarding KP [Kevin Phelan]" within the following four days suggests, as was in fact the case, that someone else was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 and not, as Mr. Aidan Phelan Mr. Kevin Phelan Page | 329 endeavouring to get Mr. Kevin Phelan "on side", claimed in evidence, that he was considering telephoning himself to ask him to give evidence. Mr. Denis O'Brien 10.51 his son, Doncaster. Senior takes over In or around spring of 2 0 0 2 , Mr. Denis O'Brien Senior, at the request of took over Mr. Aidan Phelan's former responsibilities in regard to Mr. Denis O'Brien himself viewed the project as one of no great significance, with the main matters entrusted to his father being the resolution of the acrimonious dispute with the vendors in regard to retention monies, and the further issue of Mr. Kevin Phelan's claim for fees, and his entitlement to 4 0 % of the profits realised. Mr. O'Brien Senior confirmed that these were the only issues He also stated that, despite the difficulties relating with which he was concerned. to both matters, and the extent of other business interests with which he was occupied, he managed to resolve both within a period of approximately months. four 10.52 Mr. O'Brien Senior testified that, soon after taking over these matters, he made contact with Mr. Denis O'Connor, with w h o m he said he had become acquainted in the course of attending earlier Tribunal hearings w h e n his son, Mr. Denis O'Brien, was testifying. In conversations that developed between them, it emerged that Mr. O ' C o n n o r knew Mr. Kevin Phelan, w h o was claiming monies for Doncaster, and Mr. O'Brien Senior believed that he asked Mr. O'Connor to let Mr. Kevin Phelan know that Westferry would pay s u m s properly due, w h e r e u p o n Mr. O'Connor offered to assist in whatever w a y he could. Their conversations also touched upon the rumour that Mr. Lowry had a Doncaster involvement. 10.53 Mr. Aidan Phelan always regarded Mr. Kevin Phelan as having no fees entitlement regarding Doncaster, but merely a right to a 4 0 % uplift or profit share, if and w h e n the property was sold on. Although he testified in 2 0 0 7 that he did not inform Mr. O'Brien Senior that Mr. Kevin Phelan was seeking S t g . ? 1 5 0 , 0 0 0 . 0 0 fees, it is now known that he had received a letter of 8 t h March, 2002, from W o o d c o c k & Sons, which included a claim by Mr. Kevin Phelan for S t g . ? 1 5 5 , 0 0 0 . 0 0 in respect of Doncaster. In evidence, he further accepted that he had received the earlier letter of Mr. O ' C o n n o r of 18 th June, 2001, which included a Doncaster invoice in approximately the same amount. Regency Airport Hotel meeting of 27 t h However, at the March, 2001, he recalled that all that Mr. Kevin Phelan had sought was S t g . ? 5 , 0 0 0 . 0 0 expenses regarding Mansfield and Cheadle, which he duly paid. Accordingly he felt it improbable that he w o u l d have told anyone that S t g . ? 1 5 0 , 0 0 0 . 0 0 was due for Doncaster to Mr. Kevin Phelan. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r Payment 10.54 10 to a potential witness might be misconstrued Page | 330 Mr. O'Brien Senior instructed William Fry to act in relation to any claims of Mr. Kevin Phelan, and documents were furnished and dealings had with Mr. Owen O'Connell and Mr. Owen O'Sullivan of that firm. Knowing that Mr. Kevin Phelan was a potential Tribunal witness hostile to the O'Brien interests, and having been told by Mr. O'Brien Senior of his intention to settle all claims by paying a lump sum, Mr. O'Connell was concerned that any such payment to a potential witness might be misconstrued. His view was that it would have to be established that any proposed payment was properly due to Mr. Kevin Phelan from Westferry, so that, if it ever came to light, it could be shown that Mr. O'Brien Senior was not paying for some other reason. It appeared, from an attendance note on the relevant William Fry file, that Mr. O'Connell may have spoken to Mr. Denis O ' C o n n o r in relation to ownership of Westferry, that Mr. V a u g h a n had also been mentioned by Mr. O'Brien Senior as a possible source of information, and, extraordinarily, that it was Mr. O'Connor, ultimately, w h o suggested that inquiries should be directed to W a l b r o o k Trustees. Mr. O'Connor testified that Mr. O'Brien Senior had requested that he get ownership information from Mr. Vaughan, on foot of which Mr. O ' C o n n o r had contacted Mr. V a u g h a n who, he confirmed in evidence, had no difficulty in discussing knowing that matters relating to Doncaster and Westferry with However, Mr. him, although O'Connor him to he was be Mr. Lowry's not involved representative. as Mr. Lowry's testified representative, but was merely responding to Mr. O'Brien Senior's request. 10.55 Mr. V a u g h a n in evidence confirmed having met Mr. O'Connor on 30 t h May, 2002, in a London restaurant, following telephone conversations; that he had then provided contact details concerning individuals involved in Westferry and Doncaster; that it had appeared to him that Mr. O ' C o n n o r was acting in negotiating a whole series of settlements by w a y of "shuttle he needed information in order to bring parties together. 10.56 diplomacy", and that On 31 s t May, 2002, Mr. O'Connor, w h o was not either an agent for or connected with Westferry, faxed details of the individuals involved in Westferry and Doncaster Rovers to both Mr. O'Sullivan of William Fry, and to Mr. O'Brien Senior, respectively solicitor for, and representative of, Westferry. Mr. Owen O'Connell then received a m e m o from Mr. O'Brien Senior, summarising details of Doncaster, including the dispute with the vendors, and enclosing a copy of the letter, faxed at the end of February, 2002, by Mr. Weaver to Mr. Ned Carroll of Brian Phelan & Company, containing the oblique reference to a "Mr. context of Doncaster Rovers, as referred to above. L" in a 10.57 On 11 th June, 2002, Mr. Owen O'Connell noted an attendance on Mr. O'Brien Senior, expressing his concern regarding the latter making p a y m e n t to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 331 Mr. Kevin Phelan, in the circumstances of the Tribunal's inquiries, particularly in the context of apparent collaboration with Mr. Lowry, or a Lowry adviser, in making a larger payment. In evidence, Mr. O'Connell stated that he thought the context of this was that Mr. O'Brien Senior had been pressing William Fry to get the matter with Mr. Kevin Phelan resolved, and was also in communication with Mr. O'Connor, an apparent intermediary between Mr. O'Brien Senior and Kevin Phelan. Mr. Mr. O'Connell's testimony was that Mr. O'Brien Senior had told him that Mr. O'Connor had been in touch with Mr. Kevin Phelan, primarily to negotiate fee claims by Mr. Kevin Phelan against Mr. Michael Lowry for other UK property transactions, but arising from discussions between Mr. O'Brien Senior and Mr. O'Connor, the latter proposed that an overall global settlement, as Mr. O'Connell described it, might be concluded with Mr. Phelan for a single payment in satisfaction of all UK property claims; of this, Mr. Denis O'Brien w o u l d bear his proportion, and Mr. Lowry his. Mr. O'Connell testified that he had advised against such a course on the basis that anything which suggested connections between Mr. Denis O'Brien and Mr. Michael Lowry was sensitive in the context of the Tribunal's inquiries, and should not be promoted. He further testified that he had known for quite s o m e time that Mr. O'Connor w a s acting for Mr. Lowry, but was never very clear as to Mr. O ' C o n n o r ' s connection to the O'Brien interests. At the time Mr. O'Connell gave this evidence, he believed that his advice had been followed, and that he had effectively "scotched" such a collaborative approach. 10.58 The Tribunal had no knowledge, during Mr. O'Connell's evidence, o f t h e Vineacre fee settlement, and obviously there w a s a clear difference between w h a t might have s e e m e d a situation of Mr. Lowry and Mr. O'Brien both contributing to a Doncaster payment, as opposed to a Lowry payment in respect of a different transaction. In any event, w h a t neither the Tribunal nor Mr. O'Connell knew, at the time he testified in regard to his advice that a global settlement be avoided, was that Mr. Lowry had in reality already made his contribution to such a settlement, in the form of the Vineacre payment, the final portion having been paid on 22 n d April, 2002, the day prior to Mr. Kevin Phelan's contrived and untruthful letter to Mr. Christopher V a u g h a n as to the circumstances of the "long form" form" and "short correspondence, being the letter then submitted by Mr. V a u g h a n to the Tribunal as an explanation for those letters. 10.59 It seems the case that Mr. Owen O'Connell w a s correct in supposing that the proposal for a global settlement came from Mr. O'Connor. Neither Mr. Aidan Phelan nor Mr. O'Brien Senior then had any contact with Mr. Kevin Phelan, and Mr. O'Brien Senior in evidence stated that, apart from knowing Mr. Aidan Phelan, he had no relationship with any of the other persons involved. W h e n noting his advice to Mr. O'Brien Senior concerning the proposed payment, Mr. O'Connell had also prepared a draft letter to be sent to Mr. Kevin Phelan, seeking a note of all claims made, and all supporting evidence in relation to any REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 332 entitlement. This was returned with minor a m e n d m e n t s by Mr. O'Brien Senior on the same day, who then also indicated to Mr. O'Connell that he had spoken to Mr. V a u g h a n to make sure there were no "loose ends", and that Mr. V a u g h a n had sent him a copy of the W o o d c o c k & S o n s ' letter of 19 th April, 2002, in which all allegations and claims against Mr. V a u g h a n had been withdrawn by Mr. Kevin Phelan. Mr. Kevin Phelan prepared 10.60 Sons. to settle Doncaster for Stg.?150,000.00 On 11 th June, 2002, Mr. O'Brien Senior informed Mr. O'Connell, in a telephone message, that he could expect a follow-up letter f r o m W o o d c o c k & Such a letter duly arrived the following day, stating that W o o d c o c k s acted on behalf of Mr. Kevin Phelan, who represented the Glebe Trust, and that they were instructed that there were outstanding fees and costs in relation to Doncaster Rovers, and also an agreed uplift of 4 0 % o f t h e profits. The letter then stated that their client w a s prepared to accept S t g . ? 1 5 0 , 0 0 0 . 0 0 in settlement of any claim for outstanding fees or uplift. Bank account details were provided, and it was stated to be a condition of the offer that the s u m would be paid into the specified account by 4 : 0 0 p m on the following Monday, 17 th June, 2002. 10.61 sheet. W o o d c o c k & Sons also copied that letter to Mr. Denis O'Connor, who in in the fax cover have had a turn forwarded it to Mr. O'Brien Senior, writing "as discussed" Mr. O'Connor testified that he believed that he must discussion with Mr. Kevin Phelan prior to receiving the letter in relation to the latter's willingness to compromise the claim for Stg.?150,000.00. At different times during his evidence, Mr. O'Connor described his role as liaising with Mr. Kevin Phelan, acting as a link between Mr. Kevin Phelan and the deal, and conveying messages between Mr. Kevin Phelan and William Fry and others. He testified that he did not know of any negotiations before a figure was arrived at, but he thought that at s o m e stage he would have conveyed a message f r o m Mr. Kevin Phelan that a payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 would be sufficient to settle the matter. It should be observed that no witness heard by the Tribunal other than Mr. O'Connor s e e m s to have had a role in arriving at that settlement figure. 10.62 Although Mr. O'Connor testified that these matters were occupying a tiny proportion of his professional time, it nonetheless appears that he had: (i) met Mr. Kevin Phelan in his own office in Foxrock, before writing to Mr. Aidan Phelan on 18 th June, 2001; (ii) travelled to England to a meeting with Mr. Kevin Phelan in June or July, 2001, and to view the various UK properties; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r (iii) met 10 Mr. V a u g h a n on two occasions at Birmingham and Manchester Page | 333 Airports; (iv) had a number of meetings with Mr. Kevin Phelan at a Dun Laoghaire hotel prior to signing the agreements in S e p t e m b e r , 2001, in connection with the Mansfield, Cheadle, Doncaster and Altrincham properties; (v) been involved in negotiations with Mr. Kevin Phelan in March and April, 2002, which led to the withdrawal of all claims against Mr. Vaughan; (vi) met Mr. V a u g h a n for dinner in London on 30 t h May, 2002, at which matters relating to Doncaster were discussed, resulting in Mr. V a u g h a n ' s letter of the next day giving contact details for various persons involved, for the assistance o f t h e O'Brien interests; (vii) conveyed to Mr. O'Brien Senior that a payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 would settle Mr. Kevin Phelan's outstanding claim for fees together with his 4 0 % profit claim. He also testified that he had been asked by Mr. O'Brien Senior to intervene with Mr. Kevin Phelan in connection with his professional complaints against Mr. Aidan Phelan, Mr. Bryan Phelan and Mr. Craig Tallents, and that he had taken some limited steps in that regard. 10.63 On 17 th June, 2002, Mr. Owen O'Connell prepared a draft response to the settlement offer, sending a copy to Mr. Peter V a n d e r p u m p of Westferry, f r o m w h o m he had received formal instructions on 11 th June, 2002. This confirmed that his client would discharge the S t g . ? 1 5 0 , 0 0 0 . 0 0 payment in full and final settlement of all fees and expenses arising out of Doncaster, including the 4 0 % share of any uplift. This was approved the next day by Mr. V a n d e r p u m p , who referred to the ongoing litigation and requested that Mr. O'Connell would keep Carter-Ruck informed of developments, to ensure against any prejudice to Westferry's case, as was later done. 10.64 It also appears that the solicitor to the vendors in the litigation, Mr. Reg seeking Ashworth, had written on 13 th February, 2002, to Mr. Kevin Phelan information, from which it may be inferred that the vendors wished to ascertain whether Mr. Kevin Phelan could be called as a witness in support of their case. On 20 t h June, 2002, Mr. O'Brien Senior telephoned Ms. Ruth Collard of CarterRuck, and informed her that he w a s in possession of Mr. A s h w o r t h ' s letter of 13 th February, 2002. She expressed concern that he should be in possession of such a document, stating that she did not wish to see a copy of it, w h e n Mr. O'Brien Senior offered to send it. She also expressed concern regarding the proposed REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r payment 10 to Mr. Kevin Phelan, indicating made that could it be made her extremely to be in Page | 334 uncomfortable, as any such payment represented connection with his evidence in the litigation, and therefore as an impropriety. Ms. Collard had noted contact with Mr. Kevin Mr. O'Brien Senior Phelan informing her that, t h o u g h not in an himself, there had been contact through intermediary. Her evidence accorded with the note kept by her. Mr. O'Brien Senior testified that the intermediary in question was Mr. Denis O'Connor, and Mr. O'Connor also accepted this in evidence, although stating he had never seen the Ashworth letter until made available to him by the Tribunal. 10.65 Over ensuing days, Mr. O'Brien Senior queried with William Fry whether or not settling with Mr. Kevin Phelan could complicate the ongoing English High Court litigation. There appeared to be a view that Mr. Kevin Phelan would not complete the resolution of all other outstanding disputes, until it s e e m e d that Westferry was ready to settle in relation to Doncaster. In an internal William Fry m e m o r a n d u m of 24 t h June, 2002, reference was made to a phone conversation had by Mr. O w e n O'Connell with Mr. O'Brien Senior, in which the latter had suggested that the letter to be sent to W o o d c o c k & Sons should require, as part of the overall settlement, a written account from between Mr. Kevin Phelan of the negotiations leading up to the dispute Westferry and the vendors. William Fry in consequence wrote that day to W o o d c o c k & Sons, stating that the proposed settlement was now subject to such a narrative account being furnished. Also on that day, Mr. Aidan Phelan telephoned Ms. Ruth Collard, she having previously failed to reach him, being anxious to discuss with him her recent dealings with Mr. O'Brien Senior. The proposed payment to Mr. Kevin Phelan was discussed, and Ms. Collard again expressed concern over any such payment being linked to his testimony in the litigation, which, she stated, could amount to a criminal offence. This was dismissed by Mr. Aidan Phelan, w h o said they were simply paying him a fee to go away, and Mr. O'Brien Senior wanted to sort the matter out. Mr. Aidan Phelan later testified that, although told of this course, he was always opposed to it, and felt that Mr. Kevin Phelan w a s owed nothing, as it was his view that no fees were due to him for Doncaster, and that any entitlement he had was contingent on a profit being realised on resale of the property. "ML" in the context of 10.66 Doncaster In their response to William Fry on 28 t h June, 2002, W o o d c o c k & Sons stated their client would indeed provide a narrative, but that much documentation would be involved, and it would be costly and time-consuming. It was also stated that Mr. Kevin Phelan had no precise knowledge of the ongoing dispute with the vendors. of 11 th Two items of correspondence were enclosed, the second being the fax August, 1999, examined in the previous chapter, from Mr. Kevin Phelan to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 335 Mr. Aidan Phelan, by which it was sought to demonstrate that f r o m that date, Mr. Aidan Phelan had fully taken over the project f r o m Mr. Kevin Phelan. In that fax was contained the "ML" reference, in an apparent Doncaster context. Mr. Owen Kevin O'Connell testified that, having until then sought a narrative from Mr. Phelan solely to protect the Westferry position in the impending litigation, they had now received an apparent Doncaster reference to Mr. Michael Lowry, which required clarification. 10.67 Disclosures Much of w h a t then followed is set forth in the chapter "Delays, and Lawyers". Non- Mr. O'Brien Senior scented intimidation or blackmail, stating that he wanted a proper explanation before paying money. He testified that he could not be faulted for his failure to produce that "ML" document to the Tribunal at the time, in 2 0 0 2 or at any time prior to the issue of proceedings by Mr. Denis O'Brien; that he was a lay person, and that it was up to William Fry to advise him in that regard. 10.68 On the 11 th July, 2002, William Fry duly sought clarification, from W o o d c o c k & Sons, of the identity of "ML", repeating their request for a narrative, and stating that the proposed settlement figure would include and cover any costs incurred in preparing it. Yet on 16 th July, 2002, Mr. Richard Breen of William Fry made an attendance note headed "DOB. SnrWestferry", which recorded that he was to ring W o o d c o c k & Sons to inform t h e m that they could for the time being disregard the request for confirmation of the identity of " M L " . Mr. O'Brien Senior testified that the note had nothing to do with him, and that he had never had such a conversation. 10.69 On 24 t h July, 2002, W o o d c o c k & Sons sent some limited particulars by letter as to the background to the Doncaster transaction, indicating anxiety to finalise the settlement. Also on that day, Mr. O w e n O'Connell recorded in a file note that the O'Brien interests had been put on inquiry by reason of the reference in the fax of 11 th August, 1999, to "ML" in the context of Doncaster, and that appropriate inquiries would have to be pursued in relation to it. Accordingly, the following day, William Fry wrote to Mr. O'Brien Senior, had been agreed with reference issue would Mr. O'Brien Senior the be reviewed by them, referring to the fact that it "ML" been make previous w e e k that the and the matter having discussed with Mr. Owen O'Connell, they were satisfied of the need to appropriate inquiries, with W o o d c o c k & Sons, with Mr. Denis O'Connor, with Mr. Denis O'Brien and Mr. Aidan Phelan, adding that they regretted that they had all been put to this trouble, but hoped Mr. O'Brien Senior appreciated that there was no alternative in the circumstances. none were made of Mr. Aidan beyond Mr. Denis O'Connor's S u c h limited inquires as followed, although nothing a Phelan or Mr. Denis O'Brien, elicited suggestion that the "ML" reference was to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r "Michael 10 Lloyd", and W o o d c o c k & S o n s ' later explanation that the reference was Nor did it seem that the content Page | 336 to Mr. Michael Lowry, but in a Mansfield context. of the fax had been in any w a y queried at the time of its receipt in 1999. 10.70 Also on 25 t h July, 2002, Mr. O'Connor travelled to England to attend a meeting with Mr. Kevin Phelan and his solicitors, W o o d c o c k & Sons, in Bury, Lancashire. In a letter to William Fry five days later, on 30 t h July, 2002, W o o d c o c k & Sons indicated that overall agreement had not proved possible with Mr. O'Connor and Mr. Lowry, w h o apparently required further a m e n d m e n t s to protect themselves in relation to future claims. Mr. O'Connor testified that it had been a very hostile meeting, Mr. Kevin Phelan believing that his Westferry settlement was being unfairly delayed. Regarding discussion of the "ML" reference at the meeting in Bury, clearly the new sticking-point to agreement, Mr. O'Connor first testified that it was not discussed, then changed his evidence to the effect that it had been, but that Mr. Kevin Phelan and his solicitor had said that they would sort out. it 10.71 Mr. O'Connor testified that he would have found it hard to believe that he had not, at this time, mentioned to Mr. Lowry that there was a possible reference to him in connection with Doncaster Rovers, arising from the " M L " fax, but declined a suggestion that he should have asked William Fry for a copy of the document, stating that he would have been "told Fry had t e n d e d to use him as a messenger where to go", and that William boy, whenever difficulties were encountered, due to his acquaintance with Mr. Kevin Phelan. 10.72 Despite the Bury meeting, there was clearly no progress on the matters Indeed, hostility on the part of Mr. Kevin Phelan appears, if In this regard, then still in dispute. anything, to have been amplified by the failure to resolve matters. it is noteworthy that the copy of Mr. V a u g h a n ' s critical letter to Mr. Michael Lowry of 25 t h S e p t e m b e r , 1998, referring to Mr. Lowry's "total involvement" in the Doncaster Rovers project, which came into the possession of Mr. Mark Weaver and Mr. Ken Richardson, carried on it a fax banner indicating that it was received by t h e m at 0 0 : 5 9 a m on 26 t h July, 2002, that is, late into the night following the Bury meeting. Whilst the fax banner does not identify the sender, it s e e m s highly probable that the source of the letter was Mr. Kevin Phelan. If the time and date on the fax banner is correct, then it would appear that Mr. Kevin Phelan was so angered by the outcome of his meeting with Mr. Denis O ' C o n n o r earlier on the previous day, that he faxed this private and highly sensitive letter to Mr. W e a v e r and Mr. Richardson, w h e n he must have known that in doing so, they were likely to use the letter in an attempt to embarrass and to d a m a g e Mr. Lowry and Mr. O'Brien, which, as will be seen, they duly did. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 a simple statement that Mr. Michael Lowry had no Doncaster Page | 337 Had to have involvement 10.73 During July, 2002, contact between W o o d c o c k & Sons and William Fry was characterised by the former pressing for payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 , the latter responding that they were working toward concluding the matter, but that the " M L " reference had created concern, and required an explanation that "ML" was not Mr. Michael Lowry, or confirmation that Mr. Lowry was not in any w a y involved in the Doncaster transaction. A William Fry attendance note around this time recorded Mr. O'Brien Senior as having informed Mr. Denis O'Connor, presumably with the intent that it be conveyed to W o o d c o c k & Sons, that they had to have a simple statement that Mr. Lowry had no Doncaster involvement. Being asked to provide 10.74 the impossible However, in the further course of their letter to William Fry of 30 t h July, 2002, the earlier portion of which has already been referred to, W o o d c o c k & Sons stated that their client had done all that was possible to agree satisfactory terms, that matters were being delayed for no good reason, that in the context of the explanation sought for the "ML" provide the impossible", reference, their client was now being asked "to serious implications" of the and that due to the "very request made, W o o d c o c k & Sons had been specifically instructed to terminate negotiations. 10.75 W h a t was not known to the Tribunal at the time of that 2 0 0 7 evidence was that, in the correspondence provided latterly to it by Mr. Aidan Phelan, was a letter of 8 t h March, 2002, from W o o d c o c k & Sons which, as confirmed by Mr. Phelan in his 2 0 0 9 evidence, contained an assertion that Mr. Michael Lowry did have an involvement in the Doncaster transaction, and was entitled to split a 4 0 % profit uplift with Mr. Kevin Phelan. Having so written, less than five months prior to their letter of 30 t h July, 2002, it would patently have been impossible for W o o d c o c k & Sons to accede to the request of William Fry, hence their references to being asked "to provide of the request. the impossible", and to the "very serious implications" Settlement negotiations 10.76 in train while evidence being taken at Tribunal hearings In order to put these events in late July, 2002, in their proper context, it should be pointed out that at the very time that this correspondence was being exchanged between William Fry and W o o d c o c k & Sons, and some four days following the crucial meeting in Bury between Mr. O'Connor, Mr. Kevin Phelan and his solicitor, the Tribunal was hearing evidence in the course of 29 t h and 30 t h July, 2002, from witnesses, including Mr. Denis O'Brien, Mr. Michael Lowry and Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 form" letters, Page | 338 Denis O ' C o n n o r himself, concerning the two "long form" and "short that were then the totality of w h a t was known to the Tribunal concerning alteration of documents to remove references to Mr. Michael Lowry. No witness brought to the attention of the Tribunal the fact that ongoing negotiations were at a critical stage with Mr. Kevin Phelan, and that in the course of those negotiations, a d o c u m e n t containing an apparent reference to Mr. Michael Lowry in connection with another UK property transaction, with which the Tribunal had previously been told in evidence Mr. Lowry had no connection, had come to light, and was at that very time causing the negotiations with Mr. Kevin Phelan to collapse, in circumstances where Mr. Kevin Phelan was not prepared to provide the assurance sought that Mr. Lowry had no involvement in that transaction. Furthermore, as has previously been set out, the Tribunal was not told at the time of that evidence, or at any time, that the dealings then ongoing with Mr. Kevin Phelan had included payment to him of S t g . ? 6 5 , 0 0 0 . 0 0 in March and April, 2002, referable to another Michael Lowry property interest, more than S t g . ? 5 6 , 0 0 0 . 0 0 of which was paid the day before a letter was written to Mr. Christopher V a u g h a n , which had been produced to the Tribunal as an apparent explanation for the existence of the "long form" and "short form" letters then being examined, but which has been s h o w n to be a complete misrepresentation of the true facts. Nor was the Tribunal told that it was intended for Mr. Denis O'Brien to make a further payment to Mr. Kevin Phelan of Stg.?150,000.00, but that payment had been delayed, pending the provision of a satisfactory explanation in relation to the " M L " reference. 10.77 had, The Tribunal had no knowledge of the events then occurring in the The Tribunal "short form" background, w h e n taking evidence on 29 t h and 30 t h July, 2002. since being made aware of the "long form" and correspondence, continued efforts to persuade Mr. Kevin Phelan to attend as a witness at Tribunal hearings. The then most recent letter to Mr. Kevin Phelan in that regard was written on 12 th July, 2002, to which he responded by letter dated 29 t h July, 2002. With the benefit of hindsight, and with the knowledge of w h a t was in fact occurring in the background, the letter makes interesting reading, although it was of course the case that the Tribunal was not in a position to appreciate the true context in which it had been written. In his letter, Mr. Kevin Phelan stated that any issue concerning the validity of correspondence from Mr. Christopher V a u g h a n w a s a matter that the Tribunal should address with Mr. Vaughan, and he pointed out that it was for the Tribunal to come to its own conclusions concerning the validity or otherwise of that correspondence and that any questions in that regard had been wrongly addressed to Mr. Kevin Phelan. He also stated that he had instructed solicitors in England to act on his behalf in relation to issues that had arisen, to which Mr. V a u g h a n was connected, and that, at that stage, it w a s his priority to resolve ongoing disputes, and that he did not wish to prejudice his position in relation to those matters by divulging information REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 He concluded his letter by stating that no inference could be assertions as put Page | 339 to the Tribunal. drawn, from his failure to agree with or to contradict "the forward by the Tribunal in relation to Christopher Vaughan's correspondence". William Fry press for an explanation of the "ML" reference; Michael Lowry was involved or confirmation that he was not 10.78 on 2nd confirmation that Mr. William Fry responded to W o o d c o c k & S o n s ' letter of 30 t h July, 2002, August, 2002, pointing out that they had sought the narrative from Mr. Kevin Phelan as a matter of prudence, in order to have an appropriate record of his activities as their agent, and that they did not regard it as unduly difficult or controversial. The letter w e n t on to state that they had interpreted the "ML" reference as a possible indication that Mr. Lowry was involved in s o m e w a y in the Doncaster transaction, and they had felt it incumbent upon t h e m to seek an explanation, which could have been confirmation that Mr. Lowry was involved, or confirmation that he w a s not, perhaps a c c o m p a n i e d by an explanation that the initials referred to s o m e o n e other than Mr. Lowry, or that the reference was added in error, or some other appropriate explanation. T h e y stated that they did not believe that they acted unreasonably in seeking such confirmation, and could not understand the letter under reply, where it stated that the giving of such a confirmation or explanation was considered unreasonable or impossible. William Fry repeated the willingness of their client to pay the s u m of S t g . ? 1 5 0 , 0 0 0 . 0 0 , provided such an explanation was furnished, and pointed out that they could not c o m m e n t on or be responsible for the progress of any discussions in which W o o d c o c k & Sons might be engaged with other parties for w h o m they did not act. Mr. O'Connell testified that, in respect of this latter aspect of the letter, in c o m m o n with his earlier advice that no global settlement be attempted involving Mr. Lowry, he was anxious to make it clear that no other negotiations were of any concern to Westferry, and in so doing, he was seeking to avoid "the creation mare's nest ofdisputes". of a 10.79 frenetic Thereafter, at least insofar as can be discerned from the William Fry files, there was an apparent lull in w h a t had been, up to that time, a relatively period of activity directed to the settlement. On 6 t h August, 2002, W o o d c o c k & Sons sent a brief a c k n o w l e d g e m e n t of William Fry's letter of 2 n d August, 2002, indicating that they were taking instructions. Despite the absence of recorded activity on the William Fry file, it s e e m s that Mr. Denis O'Connor for his part continued to pursue the Accordingly, on 13 th matter in contacts with Mr. Kevin Phelan. August, 2002, Mr. O w e n O'Connell kept a note of a telephone conversation which, as he informed the Tribunal in evidence, he had with Mr. O'Connor, in the course of which the latter enquired whether it would be possible for William Fry to meet with W o o d c o c k & Sons on the following Monday afternoon in Dublin, to finalise the settlement, and indicated that there would be a REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 full' retraction". Mr. Denis O ' C o n n o r had enquired whether any Page | 340 "...'practically such meeting could be off the record, to which Mr. O'Connell replied that it could be "without prejudice", which was not the s a m e thing. Mr. O'Connell testified that he was always unclear as to w h a t Mr. Denis O ' C o n n o r ' s position was, or for w h o m he was speaking, so he tended to receive information from him w h e n proffered, but rarely questioned it or gave information back. He was aware that Mr. O'Connor represented Mr. Lowry, and he was never entirely relaxed concerning Mr. O'Brien Senior's involvement with Mr. O ' C o n n o r in relation to the dispute with Mr. Kevin Phelan, and was accordingly always cautious. 10.80 Mr. O ' C o n n o r did not have a clear recollection of any such conversation with Mr. Owen O'Connell, but testified that he did recall at some stage telling William Fry that he was "sick of this", together themselves and indicating that the parties should get If he telephoned anyone on in order to resolve the matter. the other side, it was Mr. Kevin Phelan, and not W o o d c o c k & Sons. 10.81 On the following day, 14 th August, 2002, Mr. Denis O'Brien Senior left a telephone message for Mr. Owen O'Connell, indicating that he had arranged for W o o d c o c k & Sons to contact Mr. O'Connell in order to make an appointment for a meeting, with a view to finding an acceptable wording regarding the retraction of the "ML" reference. He also indicated that he had learned that an A m e r i c a n lawyer had approached W o o d c o c k & Sons seeking the release, for a fee, of all papers concerning the dispute, and requesting that Mr. O'Connell would indicate to W o o d c o c k & Sons, in the course of the intended meeting, that, as part of the settlement, Westferry w o u l d take possession of all Mr. Kevin Phelan's relevant files. As matters transpired, there appears to have been no such meeting between Mr. Owen O'Connell and W o o d c o c k & Sons, and the settlement was ultimately concluded by correspondence. 10.82 On 19 th August, 2002, there was an exchange of "without prejudice" letters between W o o d c o c k & Sons and William Fry. The first letter was from W o o d c o c k & Sons, and indicated that the respective clients were close to terms of settlement. Mr. Owen O'Connell testified that, whilst he had no involvement in any negotiations leading to that position, he w o u l d have been aware that such an agreement had been reached, because the funds to make the payment to Mr. Kevin Phelan had been received into William Fry's client account a few days previously. W o o d c o c k & S o n s ' letter indicated that the terms of settlement were that Westferry would pay to Mr. Kevin Phelan S t g . ? 1 5 0 , 0 0 0 . 0 0 in settlement of all monies due, arising out of the Doncaster project, and that the payment would cover not only Mr. Kevin Phela n, but also their clients, M&P Associates, G a m e p l a n International Limited and the Glebe Trust. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10.83 August, 10 The letter also set out that the reference to "ML" 1999, from Mr. Kevin Phelan to Mr. Aidan in the fax, dated 11 th indeed a Page | 341 Phelan, was reference to Mr. Michael Lowry, but that it related to a project in Mansfield, in which Mr. Lowry was a shareholder. Also enclosed with the letter was a short additional letter, purporting to satisfy the requirement by Westferry for a narrative account from Mr. Kevin Phelan. That attached letter recorded that Mr. Kevin Phelan at all times received direct instructions from Mr. Aidan Phelan to manage and promote the Doncaster venture, and reported solely to Mr. Aidan Phelan. also stated that, at all times, Mr. Kevin Phelan dealt with matters in It a professional and c o m p e t e n t fashion, and was satisfied that the actions that he took, and his view in relation to the retention sums, were correct. No confirmation 10.84 "ML" that Mr. Michael Lowry had no involvement in Doncaster It is abundantly clear that neither the explanation in respect of the reference contained in the letter itself, nor the purported narrative contained in the attached letter, were anywhere near w h a t was envisaged or initially required by Westferry. In particular, earlier correspondence f r o m William Fry had indicated that they wished to receive a confirmation that Mr. Lowry had no involvement in the Doncaster project, and it is clear that no such confirmation was provided. In his evidence, Mr. Owen O'Connell said that he did not feel reference, but he felt terribly happy about the purported clarification of the "ML" that it was all he was going to get, and it was probably at, or close to, the bare minimum necessary. It was very much the case that Mr. O'Brien Senior w a n t e d William Fry to get on with the settlement, and Mr. O'Connell felt that they had gone as far as they could go. Mr. O'Connell faxed a copy of the W o o d c o c k & S o n s ' letter to both Mr. Denis O'Brien and Mr. Denis O'Brien Senior. 10.85 On the same day, 19 th August, 2002, Mr. O'Connell responded, again prejudice" basis, to W o o d c o c k & Sons, confirming Westferry would on a "without offer to pay the s u m of S t g . ? 1 5 0 , 0 0 0 . 0 0 in full and final satisfaction of all fees due to Mr. Kevin Phelan, of his claim to be entitled to a 4 0 % share of any profits, and also of all other claims by Mr. Kevin Phelan of any nature whatsoever and howsoever arising against Westferry, its shareholders, directors, employees and other consultants relating to the project. The letter also sought confirmation that, unless compelled by law, neither Mr. Kevin Phelan nor W o o d c o c k & Sons would release their files relating to the project to any third party without Westferry's prior written consent. Finally, Mr. O'Connell requested that the confirmation concerning the "ML" reference w o u l d be given in a separate and open letter, at the time the settlement was concluded. 10.86 On the following day, 20 t h August, 2002, W o o d c o c k & Sons responded, In relation to the contention that a taking issue with two of the points raised. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 payment would settle all claims against Westferry's Page | 342 Stg.?150,000.00 shareholders, directors, employees and other consultants, it was indicated that Mr. Kevin Phelan was not prepared to compromise any claims he might have against specific individuals w h o s e individuals were identities were to be covered not known, and by the requested that, if they should be agreement, identified. Further, Mr. Kevin Phelan would require a reciprocal agreement with any individual so identified, in order to ensure that no claims could be brought against him. Handover 10.87 of files to Mr. Denis O'Connor W o o d c o c k & Sons indicated that they would discuss the matter of the release of files with Mr. O w e n O'Connell. Mr. Kevin Phelan's stated concern was that documentation was held by a number of people, and he could not be held responsible for disclosure by a third party; that the burden would be on Westferry to s h o w that any disclosure which occurred had come from Mr. Kevin Phelan after the date of settlement. It appears that Mr. O'Connell spoke to Mr. David McCann, of W o o d c o c k & Sons, on that day, 20 t h August, 2002, in connection with those two points. Mr. O'Connell informed Mr. McCann that he would provide him with a list of names, and w o u l d confirm that he had the authority to furnish reciprocal waivers on their behalf. In relation to the issue concerning the release of files, Mr. O'Connell recorded Mr. McCann as saying that there had been discussions with Mr. Denis O'Connor, to w h o m Mr. Kevin Phelan would hand over his files. Mr. McCann enquired whether Mr. O'Connell was aware of those discussions, which Mr. O'Connell testified he was not. 10.88 Immediately following that conversation with Mr. McCann, Mr. Owen O'Connell set about compiling a list of people to be included in the terms of the settlement. These included Mr. O'Brien, Mr. O'Brien Senior, and the directors of Westferry acting on behalf of W a l b r o o k Trustees. Mr. O'Connell also appears to have made inquiries in respect of Mr. Aidan Phelan, and Mr. O'Brien Senior in turn made contact with Mr. Aidan Phelan, who responded that his solicitor was away at the time, and he would revert on his return. As has already been pointed out, at the time the Tribunal was examining these events in the course of its public hearings in 2007, it was unaware of the extent of the claims and allegations that had been made by Mr. Kevin Phelan against Mr. Aidan Phelan in the W o o d c o c k & S o n s ' letter of 8 t h March, 2002, which w a s withheld from the Tribunal until June, 2009. Withdrawal of request for files 10.89 As regards the issue of the release of files, a William Fry file note of a telephone message left by Mr. Denis O'Brien Senior, on the following day, 21 s t REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 343 August, 2002, recording that Mr. McCann, of W o o d c o c k & Sons, had stated that no assurances could be given if Westferry were to hold the files, noted that Mr. O'Brien Senior had asked Mr. O ' C o n n o r to "withdraw his request" for the files. Ultimately, the handover of files did not form part of the settlement and it s e e m s reasonable to assume therefore that Mr. O ' C o n n o r agreed that any stipulation regarding the transfer of files would no longer have to form part of the settlement. In evidence, it was denied by Mr. O ' C o n n o r that he had had any role in relation to these files. However, his denials of the extent of his involvement in brokering this, and related settlements, is unconvincing in the teeth of a number of William Fry m e m o r a n d a and in the teeth of further evidence, which did not become available until 2009, f r o m which his overall role in dealing with Mr. Kevin Phelan in connection with Westferry and related matters, including Cheadle, Mansfield and Altrincham became apparent. The Tribunal is satisfied that Mr. Denis O'Connor was the only person in direct contact with Mr. Kevin Phelan in connection with these matters. From William Fry memoranda, it is clear that he had a significant role in relation to the question of the release of files, in as m u c h as the m e m o r a n d a a c k n o w l e d g e d that the waiver of a condition regarding the transfer of files was effectively a matter to be cleared by him. Mr. O ' C o n n o r ' s disowning of his involvement in these settlements, and of his overall role in various agreements between Westferry, Mr. Kevin Phelan, Mr. Lowry and others, including Messrs. Richardson and Weaver, betrays a sensitivity that suggests he w a s in fact the key linkage in this aspect o f t h e Westferry settlement. 10.90 without In the file note of 21 s t August, 2002, Mr. O'Brien Senior stated that he was happy to settle on that day and to furnish the cheque for S t g . ? 1 5 0 , 0 0 0 . 0 0 , further & assurances by being of given. 21 s t William Fry, accordingly, offering the wrote sum to of Woodcock Sons letter August, 2002, S t g . ? 1 5 0 , 0 0 0 . 0 0 in full and final satisfaction of all fees and profit claims by Mr. Kevin Phelan in connection with Doncaster, either against Westferry Limited or against Mr. O'Brien, Mr. O'Brien Senior, the directors of Westferry, and W a l b r o o k Trustees. The letter also confirmed that Westferry, and the also other persons identified, agreed that any claims arising from the project that they might have had against Mr. Kevin Phelan were also fully and finally satisfied by the settlement. As regards the issue of the release of files, William Fry sought confirmation that files would not be released, unless compelled by law, as had previously been suggested in their "without prejudice" letter. The requirement for the handing over o f f i l e s was, accordingly, abandoned. 10.91 Woodcock & Sons accepted those terms of settlement in their response of the same day, and enclosed a copy of the "narrative" letter, which had been previously furnished in draft form. Curiously, no separate letter was provided explaining the issue of the "ML" reference as requested. The transfer of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 344 funds from Westferry to W o o d c o c k & Sons to complete the settlement then proceeded on the following day, 22 n d August, 2002. Mr. Denis O'Connor's continuing involvement in promoting settlements Mr. Denis O'Connor 10.92 was "sick truly fed up with the whole affair Mr. O ' C o n n o r ' s evidence to the Tribunal was that, by August, 2002, he of" the negotiations between Westferry and Mr. Kevin Phelan, and him. He also testified that he [him] crazy". wished that the parties would cease "tormenting" had become "truly fed up" with the whole affair, which was "driving Nonetheless, the Tribunal heard evidence that Mr. O'Connor continued to have dealings with Mr. Kevin Phelan after the conclusion of the Westferry settlement on 22 n d August, 2002, including in relation to a settlement of Mr. Kevin Phelan's separate complaint with Brian Phelan & Associates, which entailed Mr. O'Connor apparently liaising with Messrs. LK Shields acting for the firm, in relation to an exchange of settlement documents in early S e p t e m b e r , 2002. 10.93 the Further evidence of Mr. Denis O ' C o n n o r ' s wide-ranging involvement in of settlements was given in 2009. This appeared from the brokering testimony, only belatedly given by Mr. Aidan Phelan, in relation to the involvement of Mr. O ' C o n n o r in the settlement of Mr. Aidan Phelan's dispute with Mr. Kevin Phelan, arising from claims made by Mr. Kevin Phelan in his withheld letter of 8 t h March, 2002. As has previously been mentioned, whilst the contents o f t h e letter were not opened fully in the course of Tribunal hearings, nonetheless, Mr. Aidan Phelan testified that one o f t h e contentions made in the letter was that Mr. Lowry had an involvement in the Doncaster transaction, to the extent that it was asserted that he was entitled to a share of 4 0 % of the profits on the project with Mr. Kevin Phelan. From the evidence of Mr. Aidan Phelan, it was apparent that Mr. O ' C o n n o r was a pivotal intermediary in securing a settlement between Mr. Kevin Phelan and Mr. Aidan Phelan. Really interesting 10.94 stuff Even more surprising than Mr. O ' C o n n o r ' s continuing involvement in those existing disputes was the fact that in early September, 2002, as touched upon in the previous chapter, Mr. O ' C o n n o r involved himself again in matters in connection with Westferry, in w h a t he claimed w a s an entirely new matter for him, namely the litigation between that c o m p a n y and the Doncaster vendors. Mr. O'Connor testified that his involvement in that issue was entirely separate from the Westferry/Mr. Kevin Phelan fees dispute. In evidence, both Mr. O'Connor and Mr. O'Brien Senior stated that, following a meeting they had in late August or early September, 2002, Mr. O'Connor offered to meet Mr. Richardson and Mr. Weaver, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 345 representing the Doncaster vendors, to explore the possibility of resolving the issues in the litigation, and also offered to review the relevant files held by CarterRuck in London, the solicitors acting for Westferry, so that he could give his opinion as to the extent of Westferry's liability. Mr. O ' C o n n o r ' s explanation for his involvement in the Westferry litigation was that the dispute was the type of matter which he had handled many times before, that he found it to be "really stuff", 10.95 and "it was an opportunity to do something positive in this whole interesting thing." In a letter from Mr. O'Connor to Mr. Craig Tallents, the accountant acting for Westferry in the litigation, dated 2 n d September, 2002, Mr. O'Connor wrote that Mr. O'Brien Senior had "authorised "trying to settle the position between all parties, this approach", including and that he was and other the retention claims issues, with the vendors". It was in this letter that Mr. O'Connor suggested that he should meet with Mr. Tallents in London, on 10 th September, 2002, in order to get an overview of w h a t had happened in the litigation over the previous two years. 10.96 On the following day, 3rd September, 2002, Mr. John Ryall, an accountant employed by Mr. Denis O'Brien, sent an email to Ms. Ruth Collard of Carter-Ruck, w h o was also due to attend the meeting scheduled for the following w e e k with Mr. O'Connor, informing her that Mr. O'Connor was not representing either Westferry or the Doncaster vendors, but might be able to assist in resolving matters. There was s u b s e q u e n t confusion on Ms. Collard's part in that regard, as, following the meeting of 10 th S e p t e m b e r , 2002, both she and Mr. Tallents were mistakenly of the belief that Mr. O ' C o n n o r had in fact been representing Westferry, despite that earlier email of Mr. John Ryall. Maximum 10.97 chapter. embarrassment for Mr. Michael Lowry Ms. Collard's attendance of the meeting with Mr. O'Connor and Mr. Tallents on 10 th September, 2002, is included in the Appendices to the previous It records that Mr. O ' C o n n o r had been in contact with Mr. Kevin Phelan, who had suggested that a settlement of the matter might be possible, w h e r e b y the Doncaster vendors would drop their claim for S t g . ? 2 5 0 , 0 0 0 . 0 0 of the retention fund which related to the car park lease, provided Westferry agreed to pay over the remainder of the retention monies to them. Mr. O ' C o n n o r endeavouring to arrange a meeting with Mr. Richardson and Mr. was Weaver, although it appears that, following concerns that arose after his dealings with Carter-Ruck as to Mr. O ' C o n n o r ' s precise role, ultimately no such meeting ever took place. Ms. Collard's attendance also records Mr. O'Connor as stating that, if a settlement failed, the vendors would cause "maximum Michael Lowry and Mr. Denis O'Brien. embarrassment" for Mr. The Tribunal is satisfied that this was Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 346 O ' C o n n o r ' s primary concern in involving himself in the litigation, and not, as he had testified, that it was something which he found to be "really interesting". Mr. Denis O'Connor 10.98 impending frozen out On 16 th S e p t e m b e r , 2002, Mr. Tallents met with Mr. John Ryall and Mr. at C o m m u n i c o r p ' s Following and offices in Dublin, in order to discuss the Ms. she O'Brien Senior mediation. their meeting, Mr. Tallents telephoned Collard from Dublin Airport, it appears, from her attendance, that recorded Mr. Tallents as informing her that he had learned from Mr. Ryall and Mr. O'Brien Senior that Mr. O'Connor was not in fact acting for the O'Brien interests. He informed Ms. Collard that Mr. O'Brien Senior had asked him w h a t he thought Mr. O'Connor was trying to get out of the whole thing. This was of s o m e concern to Ms. Collard and to Mr. Tallents, as they had imparted very sensitive confidential material to Mr. O'Connor at the meeting on 10 th S e p t e m b e r , 2002. Whilst Ms. Collard, in her evidence, accepted that she should have realised that Mr. O'Connor was not acting for Westferry, from Mr. Ryall's email to her of 3 r d September, 2002, she wrote to Mr. Ryall on 17 th S e p t e m b e r , 2002, outlining her concerns about Mr. O ' C o n n o r ' s involvement. S h e also stated her preference that any proposed meeting between Mr. O ' C o n n o r and the v e n d o r s ' representatives should be cancelled, unless it was established w h a t his role was, and w h a t he hoped to attain, and that, in any case, undertakings to protect the interests should be obtained from him in advance of any such O'Brien meeting. Subsequently, at Mr. Ryall's request, Ms. Collard drafted such an undertaking, but it does not appear that the matter was pursued. Mr. O'Brien Senior stated in evidence that he accepted Ms. Collard's advice to the effect that it would be preferable that Mr. O ' C o n n o r did not become involved in dealings with the vendors, and therefore the proposed meeting between Mr. O ' C o n n o r and the vendors did not proceed. Mr. O'Connor testified that he believed that he was eventually "frozen out" or "sidelined", but that this was because those dealing with the matter did not agree with the figures he came up with w h e n he analysed the files, following his meeting with Ms. Collard and Mr. Tallents on 10 th September, 2002. Ms. Collard told the Tribunal that this was not the case, as she felt that Mr. O ' C o n n o r ' s figures were broadly similar to her own, and that his analysis was impressive. Mr. Denis O'Connor's knowledge of Mr. Christopher Michael Lowry's "total involvement" in Doncaster 10.99 Vaughan's description of Mr. The mediation between Westferry and the Doncaster vendors took place in London on 27 t h S e p t e m b e r , 2002. As previously mentioned, in the letter to Lowry's Mr. "total course of that mediation, a copy of Mr. Christopher V a u g h a n ' s Michael Lowry, dated 25 t h September, 1998, recording Mr. involvement" in Doncaster, was produced by Mr. Ken Richardson and Mr. Mark REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 347 Weaver, resulting in Mr. O'Brien Senior making a blackmail complaint to the London Metropolitan Police shortly after the mediation. Mr. O'Brien Senior prepared a witness statement to support his complaint, the first draft version of which, prepared in November, 2002, set out as follows: "In the week prior to the mediation copy of a letter from Christopher Westferry Michael Michael in the acquisition Lowry dated 25 on 2T September (the solicitor Rovers 2002 I was faxed who had acted Club Limited) suggests a for to Vaughan of Doncaster September Football letter 1998....The that Lowry was connected with the DRFL transaction, which is untrue. ...I received which a message via Michael from Lowry's the accountant, Denis of O'Connor, Ken I was told originated representatives Dinard, Richardson to people and Mark Weaver, that a copy of this letter would find its way the litigation in respect this Denis from I would not want to see it unless I settled of DRFL on terms which were very favourable to mean O'Connor Kevin that the letter would be sent to Dinard. I understood Tribunal. had come to the Moriarty about this matter informed me that information Phelan." 10.100 Whilst Mr. O'Connor denied in evidence ever having passed on such a message to Mr. O'Brien Senior, that passage in Mr. O'Brien Senior's draft witness statement, prepared a short time after the events described in it, is consistent with the information imparted by Mr. O'Connor to Ms. Collard on 10 th September, 2002, that the Doncaster vendors were intent on causing e m b a r r a s s m e n t for Mr. Lowry and Mr. O'Brien. On the basis of both of those documents, it is clear that Mr. O'Connor was aware, at around the same time that he involved himself in the Westferry litigation, apparently from Mr. Kevin Phelan, that Mr. Ken Richardson and Mr. Mark W e a v e r had in their possession a copy of Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998, to Mr. Lowry, and that they intended to make use of the letter to cause difficulties for Mr. Lowry and Mr. O'Brien, if their d e m a n d s were not met. 10.101 Mr. O'Connor repeatedly denied in the course of his evidence that he ever had sight of the letter of 25 t h September, 1998, before such time as it became public, by reason of the articles published in The Irish Times in January, 2003. As regards Mr. O'Brien Senior's witness statement, Mr. O'Connor indicated that at some time in or around September, 2002, whilst he was out of his office and away on business, he was telephoned by his secretary, who indicated that a d o c u m e n t had been received from Mr. Mark Weaver. Mr. O'Connor testified that he at that time w a n t e d nothing to do with Mr. Weaver, and therefore instructed his secretary to forward the d o c u m e n t to Mr. O'Brien Senior by fax. W h e n asked REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 348 whether he then saw a copy o f t h e document, which Mr. O'Brien Senior confirmed in evidence was a copy of the letter of 25 t h S e p t e m b e r , 1998, Mr. O'Connor denied that he had seen it, and speculated that his secretary may have binned the document, after putting it through the fax machine to Mr. O'Brien Senior. Mr. O ' C o n n o r ' s evidence, that he wanted nothing to do with Mr. Weaver at that time, is entirely at odds with the fact that, as he acknowledged, he was then endeavouring to arrange to meet with him and Mr. Richardson, with a view to trying to resolve the Westferry litigation. The only conclusion that can be drawn from the evidence, and in particular the available documents, 10 th including specifically Ms. Collard's attendance note of the meeting of September, 2002, and Mr. O'Brien Senior's first draft witness statement, is that Mr. O'Connor, despite his denials, w a s fully aware of the existence of Mr. V a u g h a n ' s letter of 25 t h S e p t e m b e r , 1998, and its contents, and also of the fact that it was in the possession of Mr. Richardson and Mr. Weaver. It was for that reason that Mr. O'Connor involved himself in the Westferry dispute, in the hope that he might resolve the matter, so that the contents of the letter of 25 t h September, 1998, recording Mr. Lowry's "total involvement" in Doncaster, would not become public, either by being provided to the Tribunal, or to the media. 10.102 It will be recalled from the previous chapter that, after the letter of 25 t h 1998, was produced by Mr. Richardson and Mr. W e a v e r at the September, mediation meeting with Mr. O'Brien Senior, contact was made by a number of people with Mr. Christopher V a u g h a n , the author of the letter, to ascertain the circumstances in which he had recorded an involvement on the part of Mr. Lowry in Doncaster in 1998. 18 th It will also be recalled that Mr. Weaver visited Mr. V a u g h a n ' s office on October, 2002, and furnished him with a faxed copy of Further, Mr. O'Connor then arranged to travel to Mr. Mr. he his original signed letter of 25 t h S e p t e m b e r , 1998. made telephone contact with Mr. V a u g h a n and V a u g h a n ' s office in Northampton to discuss the matter with him directly. O'Connor attended at Mr. V a u g h a n ' s office on 23 r d October, 2002, and testified that, by reason of there being w h a t he stated was a state of chaos in Mr. V a u g h a n ' s office on that day, Mr. V a u g h a n was unable to locate any copy of the letter, and that accordingly, Mr. O'Connor did not have sight of it. 10.103 In effect therefore, it was Mr. O ' C o n n o r ' s evidence that, although he had been the source of the provision of a copy of the letter of 25 t h September, 1998, to Mr. O'Brien Senior, and upon hearing of Mr. W e a v e r ' s visit and of his furnishing Mr. V a u g h a n with a copy of it, he had travelled to Northampton to meet Mr. Vaughan, he had never seen a copy of the letter himself. T h a t aspect of his testimony is also at variance with information which Mr. V a u g h a n had at the time provided to Ms. Kate Macmillan of Carter-Ruck solicitors, to enable her to draft a witness statement for the purposes of Mr. O'Brien Senior's police against Mr. Weaver and Mr. Richardson. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 complaint Chapter 10.104 10 On 22 n d October, 2002, the day before Mr. O'Connor's trip to Page | 349 Northampton, Mr. Vaughan informed Ms. Kate Macmillan of his impending visit, and told her that Mr. O'Connor had in his possession a copy of the letter with which Mr. Vaughan had been furnished by Mr. Weaver, that is, a faxed copy o f t h e original signed version. Some five days after Mr. O'Connor's visit, on 28 th October, 2002, Mr. Vaughan informed Ms. Macmillan that, on the day of that visit, he had given Mr. O'Connor copies o f t h e same paperwork that he had previously provided to her, which included a copy of that letter, as received from Mr. Weaver. and confirmed their contents when she subsequently gave evidence. Ms. Macmillan had recorded that information in her contemporaneous attendances, 10.105 could When Mr. Vaughan attended in 2009, and Mr. O'Connor's evidence and suggested that the Tribunal should draw its own was brought to his attention, he testified that, due to the passage of time, he not comment, 25 t h conclusions. letter of Vanderpump He confirmed on that occasion that he had forwarded copies of that September, of 1998, to both Ms. Kate Macmillan, and Mr. Peter at that 23 rd time. Indeed, he had furnished Mr. October, 2002, the same day that Mr. Westferry, Vanderpump with a copy of it on O'Connor attended at his offices. 10.106 The Tribunal is satisfied that Mr. O'Connor had sight of the letter of 25 th September, 1998, at the latest, by September, 2002, and regards it as highly probable that he was familiar with its contents at a much earlier stage, either through information imparted to him by Mr. Lowry, or by Mr. Kevin Phelan, who was in possession of it, and with w h o m Mr. O'Connor had been engaged in intense negotiations from March, 2002. Mr. O'Connor was the source of the letter to Mr. O'Brien Senior, and was recorded as having been furnished with it by Mr. Vaughan. His evidence of the letter having been destroyed by his secretary in his absence, and of Mr. Vaughan having been unable to locate it on 23 rd October, 2002, due to what was stated was the "chaos" contrived, at variance with the in his office, even though Mr. records, and wholly Vaughan had sent a copy to Mr. Peter Vanderpump on that same day, was contemporaneous unconvincing. OVERVIEW O F MR. DENIS O'CONNOR'S ROLE Intermediary in payments of Stg.?215,000.00 to Mr. Kevin Phelan 10.107 In the course of the private phase of its inquiries concerning the Doncaster transaction, and in preparation for the commencement of initial public sittings in September, 2004, the Tribunal pursued inquiries with a large number of persons, who it appeared to the Tribunal might be in possession of material REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 350 information, and who had expressed themselves willing to assist the Tribunal. These included inquiries made of Mr. Denis O'Connor, which were largely prompted by the contents of documents produced by Ms. Ruth Collard to the Tribunal in April, 2004. In particular, Ms. Collard's attendance of her meeting with Mr. O'Connor and Mr. Craig Tallents in London, on 10 th September, 2002, suggested a significant degree of involvement on the part of Mr. O'Connor, not only in relation to the Westferry litigation, but in other dealings with Mr. Kevin Phelan, as did earlier attendances of Ms. Collard recording her unease At surrounding dealings with Mr. Kevin Phelan, and the role of an "intermediary". the time of making its inquiries of Mr. O'Connor, the Tribunal knew nothing of the following: (i) That payments totalling S t g . ? 2 1 5 , 0 0 0 . 0 0 were m a d e t o Mr. Kevin Phelan: (a) a payment of S t g . ? 6 5 , 0 0 0 . 0 0 in instalments, in March and April, 2002, by Vineacre, a c o m p a n y in which Mr. Lowry had an interest; (b) a payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 made in August, 2002, by Westferry; (ii) that Mr. O'Connor had been instrumental in the terms on which both payments had been made, and in negotiating earlier settlements with Mr. Kevin Phelan in relation to the Mansfield, Cheadle, Altrincham and Doncaster transactions; (iii) that Mr. O'Connor had been instrumental in securing the withdrawal of complaints or threatened complaints made by Mr. Kevin Phelan against Mr. Christopher V a u g h a n , Mr. Aidan Phelan, Brian Phelan & C o m p a n y and Mr. Craig Tallents, to their respective professional bodies; (iv) that Mr. O'Connor had been instrumental in the withdrawal of allegations made by Mr. Kevin Phelan against Mr. Christopher V a u g h a n , including allegations o f t h e provision offalsified correspondence to the Tribunal; (v) that Mr. O ' C o n n o r had been instrumental in the provision of a false "long be explanation by Mr. Kevin Phelan to Mr. Christopher V a u g h a n of the form" and "short form" letters, with the intention that it would transmitted by Mr. V a u g h a n to the Tribunal. Denials of Mr. Denis O'Connor's 10.108 role a number of requests for information which yielded no positive response. and In The Tribunal addressed to Mr. O'Connor, documentation accordance with its usual practice, in advance of its scheduled public sittings in REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 351 September, 2004, the Tribunal converted those responses into draft statements, and submitted t h e m to Mr. O'Connor for his approval. Those statements were duly approved and confirmed by him. The statement which relates to his knowledge of the Westferry dispute, and its resolution, is characteristic of the responses received and statements made by Mr. O'Connor concerning these matters. That statement, apart from informing the Tribunal that: "Mr. O'Connor was aware in a general way from Mr. Kevin Phelan and time spent on that he had a fees dispute in relation to expenses Doncaster", recorded that Mr. O'Connor had no knowledge of the dispute, or its resolution, and had no role in it. 10.109 That and other statements in the same vein were drawn to Mr. O ' C o n n o r ' s attention in the course of his evidence in 2007. He acknowledged that the information with which he had provided the Tribunal, in relation to the Westferry dispute, was incorrect, as was the statement which he had approved. He also accepted that, at the time statement, the Tribunal to which was not in he furnished those possession was made of the during responses greater the and of of that the his part documentation reference course examination in 2007. Mr. O ' C o n n o r testified that, at the time he had furnished his solicitors with instructions to respond in those terms to the Tribunal's queries, he had been on holidays in Italy, and that he responded as he had out of frustration and annoyance at w h a t he felt was further intrusion on his time by the Tribunal. Mr. O'Connor informed the Tribunal that he had no documentation in his possession in relation to any of his related interactions, efforts and dating from March, 2001. documents in a "drop down" dealings He had, according to his evidence, placed all of the file. Mr. Kevin Phelan had it s e e m s d e m a n d e d that Mr. O'Connor furnish all of those documents to him, and Mr. O'Connor had done so, without retaining any copies. He was unsure whether he had so furnished the file to Mr. Kevin Phelan in 2 0 0 1 or 2002. 10.110 At the conclusion of Mr. O ' C o n n o r ' s 2 0 0 7 evidence, it was suggested to him that it would have been more prudent to have avoided any involvement in the Doncaster Rovers dispute, having regard to his known position as Mr. Michael Lowry's adviser. Mr. O ' C o n n o r ' s response was that this did not occur to him, referring to his disposition to be a workaholic, and stating that he sometimes ended up in difficult cases through not thinking matters out in time. As to the fact that Mr. O ' C o n n o r received no payment from Mr. O'Brien Senior or Westferry for any of the w o r k he carried out in the course of 2002, even though Mr. O'Brien Senior invited him to provide of the an invoice, following his involvement and the in the attempted settlement dispute between Westferry Doncaster vendors, Mr. O'Connor said that he felt annoyed, having done a good j o b on the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 352 retention issue, but it appeared not to suit the other professionals, and that they had turned on him. Indeed, he felt that Mr. O'Brien Senior's parting remark w a s to a multi-millionaire. not, according to his virtual sarcasm, and he was not going to go "begging" However, it remains the fact that Mr. O'Connor was testimony, remunerated for any of the extensive w o r k he carried out in connection with the various disputes with Mr. Kevin Phelan. 10.111 Despite having heard lengthy evidence from a number of witnesses, no explanation was provided for Mr. O ' C o n n o r ' s central and extensive involvement in the various disputes with Mr. Kevin Phelan, other than the unconvincing one that he had an insignificant prior business contact with Mr. Kevin Phelan. There was extensive concealment, both by Mr. O'Connor, and others, of the nature and extent of Mr. O ' C o n n o r ' s involvement in settling disputes with Mr. Kevin Phelan, and the material and documentation that came to light in the course of those disputes and settlements. In this regard, the Tribunal is satisfied that both the fax of 11 th August, 1999, from Mr. Kevin Phelan to Mr. Aidan Phelan, containing a reference to "ML" in the context of Doncaster Rovers, and the letter of 25 t h September, 1998, from Mr. Christopher V a u g h a n to Mr. Michael Lowry recording the "total involvement" of the latter in Doncaster, and both of which arose in the course of disputes in which Mr. O ' C o n n o r had played a role, were concealed from the Tribunal, in circumstances where the Tribunal is satisfied that Mr. O ' C o n n o r was fully aware of the existence particularly striking in light of and contents Mr. O'Connor's of both documents. previously stated This is position concerning documentation, namely, that "if in doubt, bring it in" to the Tribunal. Further, given the inherent folly in O'Brien interests retaining Mr. O'Connor, Mr. Lowry's primary adviser, in connection with matters relating to Doncaster, and given Mr. O ' C o n n o r ' s obvious extreme sensitivity in revealing the extent of his involvement, can any coherent rationale for that involvement, other than attending to Mr. Lowry's interests, be entertained? Role in neutralising 10.112 risk of information coming to the attention of the Tribunal efforts, The Tribunal is satisfied that Mr. O ' C o n n o r ' s activities and dating from March, 2001, were directed to neutralising the risk of d a m a g i n g information coming to the attention of the Tribunal as a result of the actions of Mr. Kevin Phelan. The latter's actions flowed directly f r o m the strategy, initially devised, without input from Mr. O'Connor, which was further developed at the gathering which Mr. O ' C o n n o r attended at the Regency Airport Hotel on 27 t h March, 2001, of providing the Tribunal with an untruthful account of Mr. Lowry's involvement in the UK property transactions, including his involvement in the Doncaster transaction, and in pursuance of which the files produced to the Tribunal were sanitised and falsified. Mr. O'Connor, who had by 2 0 0 1 developed a positive professional relationship with the Tribunal, abused that relationship, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 353 and the Tribunal is satisfied deliberately provided false responses and false statements to the Tribunal in 2004, in the belief that the Tribunal did not have available to it information or documentation from which those falsehoods would be apparent. His explanation for the provision of that false information was without foundation in fact, and his refusal to acknowledge in evidence in 2007 that he had deliberately sought to mislead the Tribunal, and even at that late point, to give a truthful account of his role in seeking to preserve and protect the false version of events with which the Tribunal had been furnished, was regrettable and reprehensible. 10.113 It must however be acknowledged that Mr. O'Connor was not, in the actions which he took, acting on his own account, but rather was acting as a facilitator for, and an agent of, his client, Mr. Michael Lowry. To the extent that he assisted in the implementation of the strategy devised in March, 2001, he was doing the bidding and seeking to serve the interests of others, and the Tribunal is in no doubt that those others were, primarily, Mr. Michael Lowry, and secondarily, Mr. Denis O'Brien, the latter through his various representatives, including his father, Mr. Denis O'Brien Senior, and his accountant and adviser, Mr. Aidan Phelan. CONCLUSIONS 10.114 The Tribunal is satisfied, as previously found, that the timing of the payment of Stg.?65,000.00 to Mr. Kevin Phelan in March and April, 2002, made by reference to Vineacre, in which Mr. Lowry had an interest, was for the principal purpose of presenting a contrived falsehood to the Tribunal. This was effected by the withdrawal of allegations which had been made by Mr. Kevin Phelan against Mr. Christopher Vaughan, in connection with the provision to the Tribunal of altered correspondence, and at the same time, the provision by Mr. Kevin Phelan to Mr. Christopher Vaughan of a false but purportedly innocent explanation for the existence of the altered That "short form" was versions of the to genuine the "long by form" Mr. correspondence. explanation forwarded Tribunal Christopher Vaughan, in circumstances where it was known to be untrue. 10.115 The Tribunal is further satisfied that the payment of Stg.?150,000.00 made to Mr. Kevin Phelan by Mr. Denis O'Brien, referable to Westferry, was primarily intended to ensure that Mr. Kevin Phelan, by his actions, would not further undermine the false version of Mr. Lowry's involvement in the UK properties already tendered in evidence to the Tribunal in 2001, and the false explanation already presented, with the complicity of Mr. Kevin Phelan, for the existence and provision to the Tribunal of the altered "short form" correspondence. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10.116 10 In making Findings in relation to any interest of Mr. Michael Lowry in Page | 354 the Doncaster Rovers transaction, the Tribunal has had regard to the fact that, unlike the Mansfield and Cheadle properties, Mr. Lowry did not acquire any legal title to Doncaster at any time after the share transfer in August, 1998. It has also had regard to the fact that, again unlike Mansfield and Cheadle, there was no evidence of a m o v e m e n t of funds connecting Mr. Lowry to the Doncaster project. Furthermore, all of those w h o testified denied that Mr. Lowry had any involvement in the Doncaster transaction, however questionable and self-serving s o m e such denials may have been. Those denials must of course be w e i g h e d in the context o f t h e extent of falsehoods, concealment and suppression which emerged. w h a t was colourfully described by Mr. O'Connor in his evidence as Also, "devilment" Mr. was undeniably apparent in conduct on the part of Mr. Richardson and Weaver, on behalf of the Doncaster vendors, not least in their unannounced attendance at the Tribunal's offices in Dublin Castle, in possession of a clearly forged letter, purportedly written by solicitors acting for the Tribunal. 10.117 evidence Yet it is not from adversaries of either Mr. Lowry or Mr. O'Brien that emerged w h i c h appeared to implicate Mr. Lowry in the Doncaster project, but from persons bound by the closest ties of friendship or professional association. Mr. Denis O'Connor is not only Mr. Lowry's accountant and adviser, but has demonstrably s h o w n his loyalty and c o m m i t m e n t to Mr. Lowry's interests. Mr. Christopher V a u g h a n acted as solicitor to both Mr. Lowry and to Mr. Denis O'Brien, and as regards the latter remains, possibly to this day, retained by the O'Brien interests. Likewise, Ms. Ruth Collard and Ms. Kate Macmillan, of Carter- Ruck, were solicitors to Westferry, and owed their allegiance to Mr. O'Brien. Furthermore, the Tribunal must have regard to the fact that the reliability and credibility o f t h e evidence of Mr. V a u g h a n and Mr. O'Connor on pivotal aspects of evidence heard by the Tribunal have been anything but persuasive or impressive. 10.118 Phelan The Tribunal is also mindful that, in circumstances where Mr. Kevin has refused to by attend him as must a be witness, treated statements with the contained in correspondence written utmost caution, However, amounting, as they do, in evidential terms, to no more than hearsay. the Tribunal has had regard to the manner in which those statements were dealt with by others, particularly where inquiries were made, as in the case of the fax containing the correspondence "ML" Doncaster reference from of Mr. 11 th August, Kevin Phelan 1999, and was where which emanated deliberately concealed from the Tribunal. 10.119 As regards Mr. Kevin Phelan, the Tribunal is satisfied that, whilst refusing to attend as a witness, he nonetheless sought to engage directly and indirectly with the Tribunal, and in doing so, provided untruthful and misleading REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 355 information so as to secure advantage for himself in his dealings with Mr. Lowry and Mr. O'Brien, under threat that his attendance as a witness, or further disclosure of documents, would expose the extent o f t h e false evidence provided to the Tribunal by Mr. Lowry, Mr. O'Brien, and their associates. In doing so, Mr. Kevin Phelan sought to undermine the w o r k of the Tribunal for his own gain. 10.120 Having regard to all of the matters examined both in this, and other chapters, and in particular the following: (i) that Mr. Christopher Vaughan, an experienced and astute solicitor, f r o m w h a t Mr. Lowry told him, and from interactions which he had with Mr. Lowry over 23 r d and 24 t h S e p t e m b e r , 1998, formed an impression that Mr. Lowry had a "total involvement" in the Doncaster transaction, and concluded that it was in order for him to correspond with Mr. Lowry as a principal to that transaction, and furnish him with confidential information and documents of the highest degree of sensitivity concerning that transaction; (ii) the concealment of key matters, including in particular the payments made to Mr. Kevin Phelan in 2 0 0 2 amounting to Stg.?215,000.00, the extent of Mr. Denis O ' C o n n o r ' s involvement in efforts to negotiate with and appease August, Mr. Kevin Phelan, and the existence of both the fax of 11 th 1999, containing the "ML" reference in connection with Doncaster, and Mr. V a u g h a n ' s letter to Mr. Lowry dated 25 t h S e p t e m b e r , 1998, which recorded his total involvement in Doncaster Rovers, w h e n they first emerged; (iii) the concealment from the Tribunal of inquires undertaken 11 th at the instigation of William Fry, solicitors, w h e n the fax of containing the "ML" August, 1999, reference in connection with Doncaster first came to light, and the further concealment of the unsatisfactory outcome which emerged from such inquiries as were pursued, and specifically the fact that Mr. Kevin Phelan, despite a request, was not prepared to confirm that Mr. Lowry had no involvement in Doncaster; (iv) that Mr. Denis O'Brien made a payment to Mr. Kevin Phelan of had Stg.?150,000.00 in August, 2002, where Mr. Aidan Phelan, who managed the Doncaster project on behalf of Mr. O'Brien, w a s satisfied that no monies were due to Mr. Kevin Phelan by Westferry, and in particular having regard to the timing of that payment, which followed upon actions taken by Mr. Kevin Phelan to undermine, for his own ends, the false account of Mr. Lowry's involvement in the UK properties, and the false testimony presented to the Tribunal in that regard; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 10 Page | 356 (v) that the payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 made by Mr. O'Brien was part of a larger payment made to Mr. Kevin Phelan, which included payment of S t g . ? 6 5 , 0 0 0 . 0 0 referable to one of Mr. Lowry's property interests, likewise made at a time w h e n it was clear that Mr. Kevin Phelan, by his actions, had already sought to undermine the false account, documents and testimony tendered to the Tribunal; (vi) the concealment by Mr. Aidan Phelan until June, 2009, o f t h e letter dated 8 t h March, 2002, from W o o d c o c k & Sons, on behalf of Mr. Kevin Phelan, and its attachments, which letter contended that Mr. Lowry was entitled to a share of Mr. Kevin Phelan's entitlement to 4 0 % of profits realised on a sale of Doncaster; (vii) that Mr. Denis O ' C o n n o r told Ms. Ruth Collard and Mr. Craig Tallents at a meeting on 10 th S e p t e m b e r , 2002, that Mr. Lowry did have a connection with the Doncaster Rovers transaction, the Tribunal is satisfied that Mr. Lowry did have an involvement in the Doncaster Rovers transaction, w h i c h it was intended would entail a payment to, or the conferral of a pecuniary advantage on, Mr. Lowry by Mr. Denis O'Brien. 10.121 On the basis of the inquiries undertaken and evidence heard, the Tribunal is unable to determine the precise nature of Mr. Lowry's interest in the Doncaster Rovers transaction, or the extent to which it was intended that he would benefit from it. There are further lines of inquiry which the Tribunal could have pursued but, having regard to the extent of the concealment, suppression and deliberate falsehoods encountered by the Tribunal in endeavouring to conduct its inquiries into all of the UK properties, both on the part of the principals, and on the part of their associates and representatives, the Tribunal is doubtful that any such further inquiries would elucidate matters. Whilst the Tribunal could c o m m e n t on w h a t it believes may have been the nature of Mr. Lowry's interest with and all involvement, of the central having figures regard on to the fact that side he of was the acquainted the purchasing transaction, at a time prior to Mr. Aidan Phelan's or Mr. Denis O'Brien's initial involvement, and having regard to the fact that Mr. Aidan Phelan was unable to explain satisfactorily how it was that he first encountered Mr. Kevin Phelan, to do so would be unduly speculative. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 P a g e | 357 DELAYS, NON-DISCLOSURE A N D LAWYERS INTRODUCTION 11.01 In an article in The Bar Review, shortly prior to his appointment as Attorney General, the distinguished lawyer, Mr. Paul Gallagher S C drew attention to the thinking of the noted American academic, Mary Ann Glendon, Learned Hand Professor of Law at Harvard Law School, concerning ethical issues in the legal profession. In her ground-breaking analysis, "A Nation Under Lawyers" (1994), (Farrar, Strauss and Giroux, New York) regarding ethical problems facing lawyers in the United States where ethical codes and aspirations to professional ideals had come under attack, she observed that it is precisely because most of us need lots of help and support in finding an upright path, that the exercise of stating professional ideals serves an important function. Continuing in chapter 4 of her book, she states: "...today's world, lawyers wander in an increasingly impersonal, bureaucratized systems seem and legal to be schools where neither honesty-based nor loyalty-based operating that once very well. The families, served as seedbeds communities, and anchors disarray. maladies... neighbourhoods for personal Client's and professional corporate or virtues are themselves individual, in considerable same whether are in the grip ofthe The legal ethos that is emerging lawyers were at least orientated degree is very different toward visions from the world in which of lawyering most a that demanded or considerable variety." of self-subordination, whether of the guardian trader She goes on to point out that: "'lawyers' client self interest profit is apt to run amok when anyone a hypocrite or a chump. who places Moreover, seriously Many court a and above is branded lawyer be are said, who takes his duties to the court and the legal system at a disadvantage against a less scrupulous environment, business." will often lawyers adversary. contrary fearful that in today's competitive to what Lincoln good ethics may not make for good She observes that many lawyers s e e m to have concluded that the best survival strategy is not ethical adaptability, but mere ethical agility. 11.02 Although it is well settled law that Tribunals of Inquiry are not engaged in the administration o f j u s t i c e , it is equally so that the findings of such Tribunals, in addition to w h a t may transpire in the course of evidence at public sittings, may REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 It Page | 358 significantly impact upon the reputations and fortunes of affected persons. can accordingly scarcely be doubted that practising lawyers, whether barristers or solicitors, appearing before or having dealings with a Tribunal of Inquiry are bound by ethical principles and duties not dissimilar to those referred to in the article cited in the preceding paragraphs. 11.03 the documents Despite being vested by Statute with all the powers and entitlements of as compelling the production of its High Court, in respect of such matters or the attendance of witnesses, this Tribunal has throughout duration operated on a basis of a clear preference for procuring voluntary cooperation from affected persons and their legal advisers. The positive outcome of this policy has been that, in a clear majority of instances, affected persons and their legal advisers have afforded such voluntary co-operation, so that only a very limited number of Witness S u m m o n s e s and Orders for Production of documents have been required to be made. However, there have to this been a minority of exceptions, but significant exceptions nonetheless, in which, often a c c o m p a n i e d in correspondence by effusive protestations of an anxiety on behalf of their clients to co-operate with the Tribunal's inquiries and comply with its requests, legal advisers have sought and contrived to deprive the Tribunal of, or withhold from it, documentation that was palpably relevant to ongoing inquiries, have delayed its proper and timely progress, and generally have sought to render more difficult and arduous the Tribunal's discharge of its proper functions. 11.04 The Tribunal is neither entitled to nor does it contend for any unrealistically arduous or untenable duty towards it on the part of legal advisers to affected persons, and appreciates and is conscious of the duty of lawyers to protect the best interests of their clients. Nor, with significant matters at stake for those clients, does the Tribunal expect other than that there will on occasion be vigorous and robust expressions in support of those interests in the course of both correspondence and public hearings. W h a t this chapter seeks to address, in as truncated a f o r m as can convey the essence of related dealings, is a number of significant instances in which it has appeared to the Tribunal that the course of conduct adopted by legal advisers on behalf of their clients has materially impacted upon the Tribunal's capacity to advance and resolve specific areas of inquiry properly adopted by it. For the purposes of this chapter, the emphasis with regard to the matters being addressed will be upon communications had between the Tribunal and a number of solicitors, and the substantive evidence heard in relation to the particular matters under investigation is set forth more fully earlier in this Volume. examined with promoting the In this chapter, three instances of delays and non-disclosure are reference to the extent to which interests of their clients by lawyers were or implicated delay in in the non-disclosure production of palpably relevant materials. These instances will be examined under three separate headings: relating to the dealings between Messrs. William REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 359 Fry and the O'Brien interests and specifically Mr. O'Brien Senior; between Messrs. LK Shields and Mr. Denis O'Brien Senior and Westferry; and between Mr. Duncan Needham and Mr. Christopher Vaughan. THE BLACKMAIL COMPLAINT T O T H ECITY O F LONDON POLICE The mediation and The Irish Times article 11.05 The mediation formed a material part of Tribunal investigations into detailed w h a t has been referred to as the Doncaster Rovers transaction. As elsewhere, the interest of Mr. Denis O'Brien in this venture derived from a purchase transaction concluded in August, 1998, w h e r e b y Westferry Limited, a company incorporated in the Isle of Man and ultimately acquired by an O'Brien family trust company, concluded the purchase o f t h e shares in Doncaster Rovers Football Club Limited, a c o m p a n y owning the leasehold interest in the former Doncaster Rovers Football Club ground at Bellevue Stadium in Doncaster, from Dinard Trading Limited and another. to Some defy outstanding resolution matters a however remained unresolved, and appeared over considerable period. Towards the middle of 2002, Mr. Denis O'Brien asked his father, Mr. Denis O'Brien Senior, to become involved in, and if possible to resolve these remaining aspects. One in particular was a set of legal proceedings that had been instituted in the High Court in London against Westferry Limited by Dinard Trading Limited. 11.06 Both Messrs. O'Brien and Westferry Limited had at this time retained In London, William Fry, solicitors in Dublin as their solicitors in an Irish context. Messrs. Carter-Ruck, solicitors, had been instructed to defend the proceedings instituted against Westferry by Dinard. Ms. Ruth Collard and Ms. Kate Macmillan In late s u m m e r of 2002, preparations were the solicitors involved in that behalf. were underway for a mediation hearing to be held with a view to resolving the matters at issue in the proceedings. This duly t o o k place on 27 t h September, 2002, in Littleton Chambers in London, before Mr. Michael Kallipetis QC, as Mediator. 11.07 From the evidence of witnesses associated with Westferry, it s e e m s that in the course of the mediation Mr. Ken Richardson and Mr. Mark W e a v e r of Dinard requested, through the mediator, a private meeting with Mr. Denis O'Brien Senior. Whilst agreeable to meeting with t h e m , Mr. O'Brien Senior insisted that the mediator and Mr. John Ryall, who had attended on behalf of Westferry, should also be present. In his evidence, Mr. O'Brien Senior stated that it had been suggested to him by the representatives of Dinard that Westferry should purchase Dinard for approximately Stg.?2.5 million, in order to stop various parties gaining REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter access to the files of Dinard. 10 From this, it appeared to Mr. O'Brien Senior that he Page | 360 was being blackmailed, and having received advice from Carter-Ruck as to how best to address this complaint, he subsequently attended S n o w Hill Police Station in London with Ms. Ruth Collard, on 12 th November, 2002, for the purposes of making a formal complaint, and provided a draft Witness S t a t e m e n t to the City of London Police. by the Following certain matters of clarification requested of Ms. Collard amended draft Witness Statement was provided on 27 t h police, an November, 2002. 11.08 These developments first came to the attention of the Tribunal on Saturday, 11 th January, 2003, through being reported by The Irish Times, which had earlier brought to attention w h a t have c o m e to be referred to as the and short form letters" "long of Mr. Christopher V a u g h a n , solicitor, relating to other Tribunal inquiries. In the latter publication in The Irish Times, it was conveyed that the basis for the complaint to the police had been the production, at the mediation meeting, of a letter of Mr. V a u g h a n , to Mr. Michael Lowry and dated 25 t h September, 1998, referring to involvement of Mr. Lowry in the Doncaster transaction, during negotiations between representatives of the respective sides. Whilst the letter itself may not have been produced at the mediation, as is suggested in The Irish Times article, its production prior to the mediation and the references to the Dinard file at the mediation were clearly all related to the threat to disclose material suggesting a connection between Mr. Michael Lowry and the Doncaster transaction. The Tribunal's complaint 11.09 article request for documentation relating to blackmail Following publication of this article, the Tribunal wrote on Monday, 13 th January, 2003, to William Fry, seeking confirmation as to the accuracy of the and other information, in addition to seeking copies of all relevant documentation in relation to any such complaint. After provision by William Fry of certain documentation, including a copy draft Witness S t a t e m e n t of Mr. O'Brien Senior, the Tribunal sought further assistance and documentation, including a copy of the relevant file of Carter-Ruck, and any additional statements made in support of the complaint, whether by Mr. O'Brien Senior or otherwise. 11.10 On Monday, 27 t h January, 2003, five days after that further request for assistance, it later e m e r g e d in evidence that Ms. Kate Macmillan of Carter-Ruck telephoned and spoke with Detective Kieran McNinch, of the City of London Police. She inquired of him as to the police view on the matter of releasing the blackmail complaint file to the Tribunal. comments following: to her in her attendance Ms. Macmillan recorded the Detective's note of the same date, including the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 11 Page | 361 "KMc [Detective Kieran McNinch] said that the police to PCR&P's had no control KMc over said the what happened [Peter Carter-Ruck & Partners] file. that he would have thought file to the Moriarty anything Tribunal. that very little would be at risk in releasing He could not see any problem It was a matter with disclosing family. had to the Moriarty Tribunal. for the O'Brien KMc said that it was not as if one had an ongoing to act fast or something would be lost. situation where one KM [Kate be Macmillan] done said that might PCR&P's prejudice principal or concern was the that police file nothing which Jeopardise investigation. KMc said that he did not think the release the investigation at all." of PCR&P's would Jeopardise A copy of this attendance can be found in the Appendix to this chapter. 11.11 On Wednesday, 29 t h January, 2003, William Fry, replied to the Tribunal, indicating that they had corresponded with Carter-Ruck, and that their client, Mr. O'Brien Senior, w h o was specifically dealing with this matter on behalf of Westferry, was abroad, but would be returning the following week, at which time they expected to meet with him. William Fry informed the Tribunal that they would revert to it on all of the queries, w h e n they were in a position to do so. Legal advice provided to Mr. Denis O'Brien Senior, and his response 11.12 12 th It also later emerged in evidence that, some two w e e k s thereafter, on Ms. Ruth Collard wrote directly to Mr. John Ryall, an February, 2003, accountant in the employment of the O'Brien family interests entrusted with liaising with the solicitors in regard to the Doncaster Rovers transaction, including the blackmail complaint. S h e advised Mr. Ryall in relation to the request for further assistance from the Tribunal. Having stated that, although the material sought by the Tribunal w a s subject to legal professional privilege, she continued: "Having said that, the privilege belongs to Denis as the client and if he wishes to waive it, then he is able to do so." She further advised that: "It seems are those to me that the documents relating that the Tribunal is really interested Again, in to our communications to legal professional the Tribunal then with the police... privilege. all of this material that you is subject If, however, I believe it is felt can be wish to assist this material REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter made available 10 and in fact as I understand been handed over." it the statement in its various Page | 362 drafts has already Her conclusion was that: "In summary, Moriarty police." 11.13 I believe the best way forward may be to make available our communications to the with the Tribunal the material I hold concerning On 14 th February, 2003, Ms. Collard wrote, at Mr. Ryall's request, directly to Mr. O'Brien Senior, identifying w h a t documentation and information the Carter-Ruck file held, and advising Mr. O'Brien Senior that, although the material requested by the Tribunal was subject to legal professional privilege: "Having said that, the privilege belongs to you as the client and if you wish to waive it, then you are able to do so." She then reiterated her earlier advice to Mr. Ryall, stating that, whilst legal professional privilege applied to communications with the police, if it was wished to assist the Tribunal, then that material could be made available. She added: "We have spoken to the police about their view of the statement domain. As a being result handed over and potentially being put into the public the suspects (although are likely to be alerted to the investigation and it is possible have by the that, matter eventual unlikely) that they could flee the Jurisdiction. a defence and their response have been They will also more time to prepare police than would to an approach Having said have otherwise the case. the police say that the disclosure of the statement is very much a effect on any for you and that it is unlikely prosecution." to have a significant She concluded: "In summary, the Moriarty with the I believe Tribunal the best way forward the material may be to make available our to I hold concerning communications police." On the same day, Ms. Collard also wrote to William Fry, in substantially similar terms. A copy of each of the three letters referred to above can be found in the Appendix to this chapter. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 11.14 10 Having received copies of both Ms. Collard's letters of 14 th February, Page | 363 2003, Mr. O'Brien Senior wrote to Ms. Collard on Monday, 17 th February, 2QQ3. Under cover of this letter, which was marked "URGENT" Mr. O'Brien Senior by his assistant, a Ms. and signed on behalf of Mr. O'Brien Senior Prendergast, returned to Ms. Collard copies of both of her letters, and requested that she alter the content of both, to incorporate certain deletions and insertions, which he forwarded to her. A copy of that letter can be found in the Appendix to this chapter. What cannot realistically be doubted, and appears to have been acknowledged by all material witnesses who testified, is that the effect of these alterations was to change very significantly the content of the advice given, to the extent that an unsuspecting third party receiving only the altered advices would form the view that Ms. Collard's advice in both letters was that the police had a very real concern about providing the copy of the Carter-Ruck blackmail complaint file to the Tribunal. Altered legal advice provided to Mr. Denis O'Brien Senior at his request 11.15 Ms. Collard complied with the request of Mr. O'Brien Senior, On the following day, 18 th and altered both letters of advice as requested. February, recipients, 2QQ3, she sent the letters in their altered form to their intended Mr. O'Brien Senior and William Fry. In addition, Mr. O'Brien Senior also received a copy of the altered letter of advice addressed to William Fry. On receipt of those altered letters, both Mr. O'Brien Senior and William Fry had possession awareness of two mutually incompatible communications from Mr. and O'Brien's London solicitors, each reflecting significantly different positions. In the case of Mr. O'Brien Senior, this state of things had of course been effected at his own instigation. A copy of both letters referred to above and a fax cover sheet can be found in the Appendix to this chapter. 11.16 William At this time, the Tribunal was entirely unaware of that correspondence from was between Mr. O'Brien Senior and his advisers, was awaiting a response Fry to its request for access to the police complaint file, and proceeding with lengthy public sittings over ensuing months. It was only on 25 t h Fry September, 2003, prompted by a written Tribunal reminder, that William informed the Tribunal in writing that they would no longer be dealing with this matter, and that all issues "relating to the acquisition and management" of the interest of Mr. Denis O'Brien in Doncaster Rovers were being dealt with by his father. The Tribunal was also then informed that a new firm of solicitors, LK Shields, would represent Mr. O'Brien Senior and Westferry in relation to the Doncaster Rovers matter thereafter. The following day, 26 t h S e p t e m b e r , 2003, LK Shields confirmed to the Tribunal that they were acting in the matter and would revert to the Tribunal "in early course". REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 11.17 10 It subsequently emerged in evidence that, on 3Q t h September. 2QQ3. Page | 364 Mr. Owen O'Sullivan, solicitor, of William Fry, faxed a communication to Mr. Hugh Garvey, solicitor, of LK Shields, enclosing a copy of both the original and altered letters of advice o f t h e previous February, sent by Ms. Ruth Collard to William Fry. He referred to a related voicemail sent to Mr. Garvey the previous day, and appeared to be anxious to ensure that LK Shields were aware of the position. O'Sullivan stated: Mr. "Hugh, I refer to my voicemail received yesterday evening and enclose copies of two in case letters these I also from Ruth Collard in Peter Carter-Ruck from Denis. Collard. & Partners are not among enclose what you received For completeness, one email received from Ruth Regards. Yours Owen William sincerely O'Sullivan Fry Solicitors" A copy of the fax referred to above can be found in the Appendix to this chapter. 11.18 course", Despite the assurances of LK Shields that they would revert "in it was necessary for the Tribunal to write to t h e m on 27 t h early November, 2QQ3, over ten months after the initial request for further assistance, and nine months after Mr. O'Brien Senior and his then Dublin solicitors had been informed by Ms. Collard that it w a s a matter for Mr. O'Brien Senior to assist the Tribunal, should he have chosen to do so. In response to an intimation from the Tribunal in that letter of 27 t h November, 2QQ3 that "an alternative if the further assistance was not forthcoming, course" could be pursued responded on 3 r d LK Shields December, 2QQ3, indicating that their client was addressing the further queries, and that they expected to be in a position to furnish certain information to the Tribunal the following over week. the Nevertheless, two in further although exchanges some of correspondence ensuing months, other documentation was provided to the Tribunal, and further excuses and assurances advanced, no progress was made with regard to the provision of the blackmail complaint file. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 1 0 Page | 365 The Tribunal is misled 11.19 On 4 t h February, 2004, LK Shields wrote to the Tribunal, raising with it for the first time concerns that they stated were held by the City of London Police, regarding the release or provision o f t h e blackmail complaint file to the Tribunal. In this letter it was stated: "Messrs. Peter Carter-Ruck is shared & Partners have expressed about that a concern material (which we understand coming by the police) potentially of the to the attention in question. of the parties who are the subject concern." matter complaint My clients share that A copy of that letter can be found in the Appendix to this chapter. Not wishing in any w a y t o j e o p a r d i s e a potential prosecution, the Tribunal accepted in good faith and at face value w h a t had been stated by LK Shields as set out above, concerning the attitude of the City of London Police, and did not press the request for provision of the blackmail complaint file, although it continued to seek other information dealings and documentation that were long outstanding. This course of in persisted over the following months, with LK Shields reiterating correspondence to the Tribunal their understanding of the concerns of the police that had previously been expressed. It was added in a letter dated 21 s t April, 2004, that their clients were anxious to continue to co-operate with the Tribunal but that: "In the circumstances will appreciate of the legal advice Limited which it has received to do the Tribunal that Westferry complaint is reluctant anything that that might put the police in Jeopardy. vis-a-vis You will appreciate with the this causes my client some difficulties and its desire to continue to co-operate its dealing Tribunal with the Tribunal." 11.20 The Tribunal proceeded to public sittings into the Doncaster transaction on 15 th S e p t e m b e r , 2004, without having had access to the police complaint file. issued High Following delivery of its Opening Statement, Mr. Denis O'Brien proceedings to restrain the Tribunal from proceeding to Court investigate the transaction. Notwithstanding the concerns twice expressed to the Tribunal in relation to fears of jeopardising a possible prosecution, this concern did not seem to have been shared by Mr. O'Brien, as he exhibited, in the course of his grounding Affidavit, a draft of a Witness S t a t e m e n t made by Mr. Christopher Vaughan, the solicitor w h o had acted on behalf of Westferry in the Doncaster Rovers acquisition, to the City of London Police which contained new information which was highly significant to the Tribunal's inquiries. W h e n the Tribunal thereupon renewed its request for files of Westferry and Carter-Ruck in relation to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 366 the blackmail complaint, all that was elicited was a reply of 23 r d September, 2004, from LK Shields, reiterating the concerns already expressed. On 24 t h September, 2004, the Tribunal informed LK Shields that, in the circumstances it proposed taking the matter up directly with the police in London, and for that purpose sought the name and contact details of the officer in overall charge of the investigation, stating that the Tribunal would need this information by return so that its efforts to advance its inquiries were not delayed further. The Tribunal discovers the true position 11.21 On 8 t h November, 2004, the Tribunal wrote to the City of London Police directly, inquiring of Detective Constable Richard Gordon o f t h e Central Detective Unit as to whether or not there were concerns regarding information pertaining to the blackmail complaint coming into the public domain in the course of public hearings of the Tribunal, and whether he had at any time expressed any such concerns to legal advisers dealing with the blackmail complaint. Detective Constable Gordon responded on 9 t h December, 2004, stating that: "With respect to information draft concerning statements may this allegation, or any to in at other the the this information Tribunal course (including prepared and presented by the Tribunal concern domain of by Mr O'Brien), of its deliberations, which be required does this office not express into the public time, that this information Tribunal contacted (with the obvious by Police). may be brought exception by the of any personal details witnesses O'Brien's This fact has previously Messrs. Carter-Ruck& been relayed Ptns." to Mr legal representatives, He then further stated: "At this time I do not anticipate either previously under investigation or in future, that any enquiries or hinder Police." made by the [sic] Tribunal, currently will hamper mattes by the City of London A copy of both letters referred to above can be found in the Appendix to this chapter. 11.22 It is unnecessary to detail the entirety of the subsequent correspondence between the Tribunal and LK Shields. Despite pointing out that the City of London Police did not share the concerns repeatedly ascribed to t h e m in correspondence on behalf of Mr. O'Brien Senior it was not until 8 t h February, 2005, over two years after its initial request, that the Tribunal actually received a copy of the blackmail complaint file of Carter-Ruck. It was noteworthy that the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 367 documentation then provided did not include the exchange of correspondence in February, 2003, that led to the alteration of the advice letters to Mr. O'Brien Senior and William Fry. Notwithstanding requests for an explanation in respect of matters which had occasioned the Tribunal extensive delay and cost, none was provided. Reliance was, on 11 th April, 2005, placed by LK Shields on their awaiting the outcome o f t h e Judicial Review proceedings brought by Mr. O'Brien: "..before involving taking any further steps in the Tribunal's inquiries particularly the issue ofDoncaster Rovers." Following the granting of leave, on limited grounds, to institute the Judicial Review proceedings by the S u p r e m e Court on Appeal, those matters were heard and determined in favour of the Tribunal by the High Court on 24 t h August, 2005, an outcome appealed to the S u p r e m e Court. Following renewed correspondence, LK Shields wrote to the Tribunal on 13 th October, 2005, stating that: "In circumstances where the proceedings understand, referred currently to in previous to the taken correspondence Supreme are, our clients under appeal Court, our clients believe it inappropriate that any step be in the matter until that appeal has been determined." 11.23 16 th W h e n the S u p r e m e Court gave j u d g m e n t in favour of the Tribunal on February, 2006, the Tribunal again drew the attention of LK Shields to clear inconsistencies between w h a t had been contended for by them, and w h a t had been elicited f r o m the City of London Police directly. Shields responded, stating: On 3 r d October, 2006, LK "The clear implication mislead the Tribunal. from your Our clients letter utterly is that our clients have set out to Previous of of the that reject that implication. clients' understanding had been correspondence position of the accurately Metropolitan recorded Police. our Our clients understanding & Partners as a result of their dealings who, Police. as the Tribunal is with Messrs dealt Peter directly Carter-Ruck with the aware, Metropolitan material recorded For the avoidance the position enclosed of doubt our clients did not, at any of the Metropolitan Police to be as time, understand in the attendance with your letter." 11.24 Given the absence of any explanation for what were patent inconsistencies, the Tribunal wrote directly to Carter-Ruck on 2 n d February, 2007. It was stated in that letter that the Tribunal might be obliged to draw conclusions concerning the role of their firm in w h a t the Tribunal was concerned may have been a misrepresentation of the views of the City of London Police, and that the Tribunal wished to have the benefit of their views on the matter. In replying on REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 12 th February, 2007, Carter-Ruck 2nd 10 denied what they termed the Tribunal's Page | 368 "suggestion" in its letter of February, 2007. They also responded with a further letter to the Tribunal on 19 th February, 2007, stating: "You should have now received solicitors. a letter dated 16 February Further to our letter dated with enclosures we from L.K. Shields, repeat contains 11.25 12 February, that the 'suggestion' of this firm that your denied." letter dated 2 February is flatly and categorically Only on 26 t h February, 2007, j u s t two days before the resumption of been the Tribunal's public sittings into the Doncaster transaction, which had delayed for approximately two and a half years by Mr. O'Brien's unsuccessful litigation, did the Tribunal actually become aware of the original advice of 14 th February, 2003, and the altered advice of 18 th February, 2003, that had been given by Carter-Ruck to Mr. O'Brien Senior and to William Fry, w h e n copies of that exchange of correspondence were forwarded to the Tribunal f r o m Carter-Ruck, via LK Shields. Evidence of solicitors 11.26 It is now proposed to review the evidence that was given to the Tribunal by Ms. Ruth Collard, of Carter-Ruck, and Mr. Hugh Garvey, of LK Shields, who each testified at a late stage of Tribunal sittings. false starts, involving the provision of a waiver After various delays and indemnity, and other and difficulties, Ms. Collard gave evidence on Commission in Middle T e m p l e , London, on 17 th April, 2007, and her colleague at the time of relevant events, Ms. Kate Macmillan, also then testified. Mr. Garvey sought to testify in person, s u b s e q u e n t to service of Provisional Findings, and his evidence was given on 21 s t July, 2009. 11.27 In addition to dealing with other matters relating to the Doncaster transaction, Ms. Collard addressed the question of her initial letters to Mr. O'Brien Senior and William Fry, her subsequent instructions from Mr. O'Brien Senior, and the resultant altered letters written by her in response. At page 74 of the transcript of the evidence on Commission, she was asked by Tribunal counsel whether she was happy to make the a m e n d m e n t s on foot of her client's letter of 17 th February, 2003. Her response in the context of her dealings with Mr. O'Brien Senior was as follows: "I decided about that I would make them. I remember thinking Mr. O'Brien quite was carefully seeking achieved in my it and I remember by making thinking that whatever I didn't had to achieve because, the amendments, his solicitors believe the could be information in particular, had REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter previous 10 letter and he had had that information and the fact that they had it. and nothing could change that the have his Page | 369 that information someone approach decided solicitors 11.28 I think that I thought about this and I should I thought had to have a conversation perhaps that that he was seeking have that with Mr. O'Brien to take. In hindsight, but I think I would conversation with would have that conversation him." S h e then confirmed that it was William Fry that she was referring to as and w h e n asked w h a t she felt Mr. O'Brien Senior was seeking to "his solicitors", achieve, responded: "...I believed police's couldn't that he was trying to the matter. to minimise what I had said about the approach But when I say what I thought anything with my letters he could - I in that they see how he could achieve were my letters to him and his solicitors. not letters to the They were not letters to a third party, in particular Tribunal." She acknowledged that her original letters correctly reflected the view of the City of London Police, to the effect that it was a matter for Mr. O'Brien Senior, and that the police had no problem if he gave the material to the Tribunal. S h e further agreed that her a m e n d e d letters: "certainly gave a very different impression", but added that she did not see how they could be used, stating that it would not have been open to Mr. O'Brien Senior, or anyone else who had all o f t h e letters, to misrepresent the true position. Whatever restriction or limitations Ms. Collard believed was placed on the use which Mr. O'Brien Senior could make of her altered advices, cannot detract from the fact that she permitted her client to dictate to her the revision of her letters to give, as she recognised, " a different impression." very 11.29 In Mr. Garvey's evidence, he acknowledged that he had received both forms of the relevant correspondence, and also Mr. Owen O'Sullivan's fax to him, when receiving documentation for the purpose of taking up representation of Mr. O'Brien Senior and Westferry. But he stated that he did not know how much he went back to those letters w h e n corresponding with the Tribunal. He further, on a number of occasions, sought to suggest that, if any culpability arose in relation to the misrepresentation of the matter to the Tribunal, it should rest with Ms. Collard of Carter-Ruck, who he said had set out to him in correspondence s u b s e q u e n t to those letters a particular position, which he had understood to be correct, and that in none of his dealings with that firm in the subsequent year was it indicated to him that that was not the correct position. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 11.30 10 As regards Mr. Garvey's letter to the Tribunal of 3 r d October, 2006, Page | 370 utterly rejecting w h a t he said w a s the clear implication from the Tribunal that his clients had set out to mislead it, he stated that in writing that letter on behalf of Mr. O'Brien Senior and Westferry, he thought and assumed it was Mr. John Ryall who had given him the relevant instructions in relation to that response. Mr. Garvey also stated that the note made by Ms. Kate Macmillan of her initial telephone conversation with Detective Kieran McNinch of the City of Police, in which he had made it clear that the police had no London reservations surrounding the production of the police complaint files to the Tribunal, had not been furnished to him at the c o m m e n c e m e n t of his instructions to act for Mr. O'Brien Senior and Westferry, but had reached him only at a later stage, on approximately 15 th February, 2005. 11.31 provision Tribunal counsel put the matter to Mr. Garvey querying how he could have written to the Tribunal indicating that the police had concerns regarding the of confirmation to the Tribunal in the circumstances of the documentation then available to him, namely: (i) a letter from a solicitor, Ms. Ruth Collard of Carter-Ruck, correctly indicating that the City of London Police had no concerns regarding the making available of the material; (ii) a faxed letter from his client, Mr. O'Brien Senior, instructing Ms. Collard that the l e t t e r j u s t mentioned should be altered; (iii) a further letter reflecting the alteration sought by his client from which it was clear that the alterations indicated that the police did have such concerns. Mr. Garvey's response w a s that w h a t was written by his firm to the Tribunal was on the basis o f t h e instructions he had received. 11.32 As stated, Ms. Kate Macmillan also testified on the day o f t h e London evidence on Commission, including confirmation of the accuracy of the telephone note made by her of her conversation with Detective McNinch of the City of London Police. Conclusions: role of LK Shields and Carter-Ruck in misrepresentation of views of City of London Police 11.33 Before dealing with the involvement of individual legal practitioners, it is beyond doubt, as acknowledged by Mr. O'Brien Senior in evidence, that he directed the relevant changes to the correspondence in question, that the revised REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter versions set forth a markedly different 10 representation of the views of the Page | 371 investigating City of London Police that was at variance with the facts, and that the Tribunal, having placed reliance on that revised version, as conveyed to it by Mr. Garvey of LK Shields as being true and accurate, was thereby occasioned needless difficulties, lengthy delays and significant expense. 11.34 Reference is made elsewhere in this and in the previous Part of the Report to the device or concept of a Chinese Wall, often invoked in business as a possible means of avoiding conflicts of interest and insider trading, but loosely of potential application in the present instance as a barrier that separates two or more groups, usually as a means of restricting the flow of information. Whilst the solicitors who testified on this matter did not place any explicit reliance on such a concept, their evidence nonetheless adverted to deficiencies of actual information, absence of or shortcomings in mutual consultation, and individual inability to affect ongoing events. In this regard, it is significant that all or virtually all significant and relevant information appeared to pass freely between the three firms of solicitors involved, and there s e e m e d to have been no restrictions on any flow of information. Ms. Collard appears to have conveyed all relevant documents and information to Mr. O'Sullivan in William Fry. He in turn, w h e n instructed to transfer Doncaster-related matters affecting Mr. O'Brien Senior and Westferry to LK Shields, appears to have adopted a similar course in relation to Mr. Garvey, specifically adverting in his voicemail and fax to the dual forms of the relevant correspondence as a material matter, w h e n handing over w h a t was scarcely an inordinately detailed or complex part of overall representation in respect of the O'Brien family interests. It was also the case that the same barristers, Mr. Eoin McGonigal SC, Mr. Gerry Kelly SC, Mr. Jim O'Callaghan SC, and latterly Mr. Darren Lehane BL were retained by both William Fry, and LK Shields. 11.35 There s e e m e d to be a tendency in the evidence heard to suggest that, if any blame or culpability arose, it should relate to s o m e other solicitor. Ms. Collard sought to rationalise w h a t was plainly a portion of her evidence that she found uncomfortable, by saying that, once Mr. O'Sullivan in William Fry had been furnished by her with the dual versions, responsibility effectively rested with him. Mr. Garvey on a number of occasions in his evidence sought to assign any blame that arose to Ms. Collard. Mr. O'Sullivan did not testify, but presumably, if he had done so, he would have understandably stated that he specifically drew Mr. Garvey's attention to the two versions in his voicemail and fax. buck-passing that emerged, particularly as regards Mr. The element of was not Garvey, particularly edifying. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 11.36 The Tribunal finds it extremely 10 difficult to accept that Mr. Garvey Page | 372 overlooked or failed to appreciate the significance of w h a t had been stressed to him by Mr. O'Sullivan in the course of transferring documents, particularly as it was on three separate occasions that Mr. Garvey conveyed in broadly identical terms a position according only with Ms. Collard's altered advice. If so, He he also certainly ought to have read and appreciated w h a t had transpired. disclaimed knowledge of Ms. Macmillan's attendance upon Detective until about 15 th McNinch February, 2005, but on any appraisal of the evidence was aware of, and had knowledge of this prior to 3 r d October, 2006, being the date of his somewhat instructions strident of Mr. further John letter Ryall. of denial all written the to the Tribunal on the his Given circumstances, including protestations of anxiety to co-operate with the Tribunal on the instructions of his client, the Tribunal finds it incomprehensible that a senior commercial solicitor then wrote in these terms. T h a t the instructions for this course were furnished by his clients, w h o were privy to, and involved in, all material events pertaining to the blackmail complaint, including being present at the mediation meeting, confirms that a course of misleading and delaying the Tribunal was consciously e m b a r k e d upon and persevered with. 11.37 As the solicitor primarily involved in Carter-Ruck, Ms. Collard, however she rationalised her compliance with the instructions of Mr. O'Brien Senior in generating the altered letters, must have known that the latter form materially misrepresented the true situation. Given her extensive ongoing dealings thereafter with the Tribunal, and with both the Dublin firms of solicitors involved, it is difficult to surmise that she gained any grounds for reassurance that her correct, rather than incorrect letters, had formed the basis of subsequent representations to the Tribunal regarding the views of the City of London Police, all of which caused lengthy delay and significant expense to the Tribunal. A FACSIMILE BETWEEN PHELANS 11.38 W h a t is involved in this instance is a d o c u m e n t sent by Mr. Kevin Phelan, a Northern Ireland businessman who operated as agent in relation to the UK properties examined by the Tribunal, to his unrelated namesake Mr. Aidan Phelan, August, Mr. O'Brien's then accountant and financial adviser, by fax on 1999, which contained an extract of potential significance to 11 th the Tribunal's inquiries into the Doncaster transaction. In w h a t was a m e m o r a n d u m of matters undertaken or requiring attention in respect of a number of UK property transactions, one of the extracts referable to Doncaster Rovers was set out under a heading of the initials "ML". Tribunal obviously prompted Awareness of this on the part of the have an inquiry into whether or not this could referred to Mr. Michael Lowry, and if so, in w h a t context. Yet again, the Tribunal's REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 373 actual knowledge of this d o c u m e n t was acquired only after a very considerable lapse of time, and it is necessary to examine as succinctly as possible the circumstances in this regard. As in relation to the blackmail complaint, details relating to the substantive evidence are more fully set forth in the portions of this Volume dealing specifically with the Doncaster transaction. It is the belated circumstances of disclosure that are the primary concern of this chapter. Further, the procedural background permits of a s o m e w h a t greater abbreviation, as it overlaps to a considerable degree with matters already alluded to in the context o f t h e blackmail complaint. The background to the faxed document 11.39 The background to the sending of the faxed document, and what transpired on foot of it, is detailed elsewhere, but may be s u m m a r i s e d briefly. W h e n Mr. O'Brien Senior took over m a n a g e m e n t o f t h e Doncaster Rovers project at the request of his son, the difficulties that he was required to address were not confined to the litigation and other controversies with Dinard and its personnel, but also included the matter of seeking to negotiate and finalise whatever outstanding payments might be due to Mr. Kevin Phelan, w h o had sourced and managed the project in its early years, until replaced by Mr. Aidan Phelan. It will be recalled that Mr. Kevin Phelan, a businessman whose interests included finding and managing UK property ventures for Irish clients, appears with relative frequency in that behalf in a number of chapters of this Volume; despite having been a native of Ireland and having, for some time, an office in the State, he has for several years carried on business and resided in England and Northern Ireland, and accordingly has not been compellable as a witness at public sittings of the Tribunal. 11.40 In early s u m m e r of 2002, William Fry, then representing the extended O'Brien family interests in relation to the Doncaster project, were engaged in s o m e w h a t intricate negotiations with a view to effecting a final settlement of Mr. Kevin Phelan's financial claims with solicitors retained Messrs. W o o d c o c k & Sons, the English was by Mr. Kevin Phelan and his companies. The matter fraught with difficulties, not the least of which related to a degree of involvement on the O'Brien side on the part of Mr. Lowry's accountant and adviser, Mr. Denis O'Connor, a connection which Mr. O'Brien Senior testified had originated from his meeting and becoming acquainted with Mr. O'Connor, in the course of earlier Tribunal hearings, at which his son had testified. William Fry, gave further evidence on 27 t h W h e n Mr. Owen O'Connell, of March, 2007, he acknowledged that unease and caution, in view of Mr. this involvement had caused him some O ' C o n n o r ' s known and long-standing association as a friend and accountant to Mr. Lowry. By June of 2002, matters in correspondence had reached the stage of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 374 being close to a settlement on a basis of a final payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 to Mr. Kevin Phelan by Westferry. However, ongoing complications and difficulties in Dinard and and around the existing English litigation then pending between Westferry were such that, by letter of 24 t h June, 2002, to W o o d c o c k & Sons, it was stipulated by William Fry that, although they were in a position to make the S t g . ? 1 5 0 , 0 0 0 . 0 0 settlement as a full discharge of any entitlements due to Mr. Kevin Phelan and his associate companies, they first required a narrative account of Mr. Kevin conclusion Phelan's position regarding the and negotiations the leading up to the and ongoing of the Doncaster transaction, subsequent dispute between Westferry and Dinard. 11.41 Woodcock Further & Sons correspondence taking issue between with the the solicitors for proceeded, a full with requirement narrative statement on a basis of being inordinately time-consuming, and in part beyond his clients means of knowledge, and threatening to terminate negotiations. context of demonstrating that Mr. Kevin Phelan had at latter stages In a been replaced by Mr. Aidan Phelan, W o o d c o c k & Sons later sent to William Fry copies of correspondence that their client had had with Mr. Aidan Phelan, and included in this was Mr. Kevin Phelan's fax to Mr. Aidan Phelan of 11 th August, 1999. A copy of the fax referred to above can be found in the Appendix to this chapter. 11.42 Doncaster In that document, following initial references to matters relating to Rovers, some later paragraphs addressed aspects of other UK projects, but then reverted to the former at item number 7, stating as follows: "ML Kevin Phelan 11.43 to refer all queries regarding Doncaster to Aidan Phelan." Receipt of this communication caused predictable concerns. Mr. O'Brien Senior immediately identified it as a possible reference to Mr. Michael Lowry, acknowledged that it created a lot of problems, and stated that he was most upset about it. He testified that he was "completely were Fry's". despite dumbfounded by it. So It s e e m e d to him that it had been sent completely out of the blue, a narrative having been sought, although Mr. O'Connell only acknowledged that there had been s o m e logic in W o o d c o c k & Sons sending him correspondence relating to responsibilities having moved from Mr. Kevin Phelan to Mr. Aidan Phelan. Overall, Mr. O'Brien Senior felt that behind this, there or blackmail". "had to be some form of intimidation 11.44 Following s o m e further correspondence, matters eventually appeared to be resolved between William Fry and W o o d c o c k & Sons, and the payment of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Stg.?150,000.00 entitlements. was duly made in 10 settlement of Mr. Kevin Phelan's Page | 375 But the reference to "ML" in an apparent Doncaster context had remained a matter of concern, and the view taken by Mr. O'Connell, following discussions with his colleague in the firm, Mr. O w e n O'Sullivan, w a s to the effect that, having been put on inquiry as to the "ML" reference, appropriate related inquiries had to be made in this regard on the O'Brien side. Reference was made to such inquiries having to be made of W o o d c o c k & Sons, and also of Mr. Denis O'Connor. In his latter evidence, Mr. O'Connell acknowledged that this development was one which could have proved to have significance in relation to operations before this Tribunal. Internal inquiries regarding "ML" 11.45 "satisfied reference On 25 t h July, 2002, Mr. O'Sullivan wrote to his client, Mr. O'Brien Senior, referring to having discussed the matter with Mr. O'Connell, and being that, having been put on notice of the reference, appropriate enquiries have to be made". He then referred to his view that these inquiries should extend to W o o d c o c k & Sons, to Mr. Denis O'Connor, to Mr. Aidan Phelan, and to Mr. O'Brien, and concluded the letter by expressing his regret that " w e have all put to this trouble circumstances". but hope you appreciate that we have no alternative been in the A copy of the letter referred to above can be found in the Appendix to this chapter. 11.46 It s e e m s that the inquiries pursued elicited, by way of possible explanation, an observation from Mr. Denis O ' C o n n o r that the "ML" reference was to a Mr. Michael Lloyd, being a person with w h o m Mr. Kevin Phelan had had business dealings for a number of years, and also a communication from W o o d c o c k & Sons that the reference to "ML" was indeed to Mr. Michael Lowry, but was solely in relation to the Mansfield property transaction. This followed upon an initial response from W o o d c o c k & Sons on behalf of their client, w h e n asked to confirm that Mr. Lowry had no involvement in the Doncaster transaction, that this was asking the impossible, and that they had done all legally within their power to finalise the matter. 11.47 Since it was only at a very belated stage of public hearings that it was conveyed to the Tribunal that W o o d c o c k & Sons had, shortly prior, written on behalf of Mr. Kevin Phelan to Mr. Aidan Phelan setting out references to the alleged involvement of Mr. Lowry in the Doncaster transaction, it is not difficult to see how the request effectively amounted to asking the impossible. Mr. O'Connell, It also appears that Mr. Denis O'Connor telephoned possibility of a "practically referring to the reference being "tended full" retraction in relation to the "ML" to Mr. Lowry, but this did not proceed, and Mr. O'Connell testified that he REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter to receive question information it or respond from him when 10 it was proffered, back. but rarely, if ever, to in Page | 376 or give information dealings I was generally quite reserved my dealings - my very occasional with Mr. O'Connor". Nothing came of this communication. 11.48 Although matters dragged on between William Fry and W o o d c o c k & Sons, with the terms of the settlement only being finalised in the latter days of August, 2002, no further information appears to have come to hand of substance which might have enabled clarification of the identity of " M L " . Mr. O'Connell was not enthused about the level or quality of information that the inquiries elicited, stating that he "wouldn't was probably "wasn't at or close happy. assert that it was entirely minimum necessary", satisfactory", had that "it to the bare and later that he I'd particularly There were more elaborate getting". or other explanations have preferred, but I felt it was all we were Non-disclosure to the Tribunal 11.49 The matter of notifying the Tribunal of the content of the fax, and further related information, was raised in evidence with both Mr. O'Brien Senior and Mr. O'Connell. As the client, Mr. O'Brien Senior acknowledged that the matter was not brought to the Tribunal's attention. He then continued: "...But that has nothing to do with me. Fry's I was taking advice from William Fry's...Surely given it was for William to say 'Mr. O'Brien, this has to be have said, 'of to the Tribunal'. Had they said that to me I would course'...Don't give me the responsibility of not telling the Tribunal. solicitors." It was not me who did not tell it. I was in the hands of my 11.50 W h e n the same inquiry was made of Mr. O'Connell, he responded that, although he did not recall ever discussing it with Mr. O'Brien Senior, he had little doubt that he discussed it with his colleague Mr. O'Sullivan. The outcome of that discussion was that they should not refer the matter to the Tribunal. They discussed formally advising Mr. O'Brien Senior to notify the matter, but decided against doing so. Asked why, he responded as follows: "A. For a number of reasons. position One was, that we have, and for many vis-a-vis this Tribunal, that pretty years, been in the unusual our advice much all of of to our clients comes to the Tribunal, our advice and the consequence that is that our client position consider O'Brien a client receiving in this situation is not in the accept advice, normally is in, in which to it. he can privately Formal advice it and act on it or contrary from us to Mr. from us to in this case would have been tantamount to a direction REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter notify the Tribunal. 10 In our view, right or wrong, Now, it was clear but I think right, he would to Page | 377 have had no alternative. receive that advice. to us that he didn't want He was absolutely adamant. Q. Could you say that again, he didn't want to receive that advice? A. that He didn't he took want to receive us aside that advice. 'Don't By that I don't mean to you tell me so and so'. suggest It was and said entirely apparent from the context were adamant, of everything that we had done, he and that Mr. it, Mr. The Denis O'Brien Junior Lowry and had been so throughout, So had, as I understand had no involvement in Doncaster. Lowry been adamant, only contrary matters evidence and others had similarly made that statement. of which we were in possession to Aidan Phelan' was this 'ML - refer in the letter we took the matter did." to of regarding Doncaster reference 1999, and we took the view, and maybe that giving formal advice to Mr. we were wrong, to bring view the O'Brien that attention ofthe Tribunal was not Justified, and that's what we 11.51 Continuing his evidence, Mr. O'Connell said that he was not directly involved in the circumstances w h e r e b y William Fry ceased to act for Westferry and handed over the papers to LK Shields, learned about it only subsequently, but believed it occurred about mid to late s u m m e r of 2003, and he did not know of the circumstances that occasioned this. Whilst not a litigation lawyer, and uninvolved in the proceedings brought by Mr. O'Brien, he was aware of the Judicial Review proceedings instituted in relation to the Tribunal's inquiries into Doncaster. He acknowledged that, when seeking equitable relief such as the injunctions sought by Mr. O'Brien in regard to Doncaster, lawyers were required to make all available information known to the High Court by w a y of full disclosure, but stated that he was not aware that the existence of the "ML" reference was not brought to the attention of the Court when the application was made. He also indicated that he had not been aware that no inquiry had been made of Mr. Aidan Phelan in relation to any knowledge that he might have had of the "ML" reference, notwithstanding this having been one o f t h e aspects of inquiry initially decided upon by Mr. O'Sullivan and himself. Procedural sequence 11.52 As earlier indicated, the dealings between the Tribunal and legal advisers to the O'Brien interests, which led to the Tribunal's belated awareness of the faxed document, moved largely in t a n d e m with overall Tribunal inquiries into the Doncaster transaction. W h e n , in the aftermath of the matters published by REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 378 The Irish Times of 11 th January, 2003, the Tribunal raised more detailed inquiries of William Fry by letter of 22 n d January, 2003, the request included the following: "The Tribunal wishes to obtain copies of all documents in relation in the power, possession funding or procurement of your clients to the including acquisition, copies of and holding of the Doncaster Rovers property, advisers." the files ofall 11.53 of your client's professional Despite reminder by the Tribunal, the preponderance of the queries raised remained outstanding, and on 25 t h September, 2003, William Fry informed the Tribunal that LK Shields were taking over representation on behalf of Mr. O'Brien Senior and Westferry. On 27 t h November, 2003, the Tribunal took the outstanding queries up with LK Shields, indicating that it had been ten months since the matters had first been raised with their clients. An apology was conveyed to the Tribunal on behalf of Mr. O'Brien Senior and Westferry by letter from LK Shields dated 12 th December, 2003, in particular with regard to the provision of a narrative statement, as requested from Mr. O'Brien Senior, which it was indicated would be given priority in January, 2004. 11.54 Between the months of December, 2003, and April, 2004, some documentation referable to Westferry and other matters was provided by LK Shields, but from February, 2004, onwards the misrepresentation, as already found by the Tribunal, that the City of London Police had concerns about the release of documentation pertaining to the blackmail complaint was adopted as stated. Since the Tribunal had been anxious to meet with Ms. Ruth Collard, of Carter-Ruck, waivers were provided by Westferry and both Messrs. O'Brien, but the intended meeting was initially delayed as a result of the intervention of Mr. John Ryall, who appeared to have concerns relating to confidentiality in regard to the mediation process. It was not until mid-March, 2004, that it was possible for Tribunal counsel to meet with Ms. Collard, and shortly thereafter the Tribunal received from Carter-Ruck, via LK Shields, four folders of correspondence relating to Westferry and the Doncaster Rovers matter, including the litigation with Dinard. 11.55 It was not until those documents were received from Carter-Ruck that the Tribunal became aware of an attendance made by Ms. Collard of a meeting between her, Mr. 10 th Denis O'Connor and Mr. Craig Tallents, another Westferry adviser, on S e p t e m b e r , 2002, in which Mr. O'Connor was recorded as saying that Mr. Michael Lowry did have a connection with the Doncaster transaction. 11.56 On 11 th May, 2004, the Tribunal wrote to LK Shields at some length, referring to the delay occasioned up to that time, and seeking assistance on a number of matters. In particular, the following was set forth at bullet point seven: REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter "It appears from the information to the acquisition and Westferry and 10 and documents available to the Tribunal Mr. have the Page | 379 that subsequent Kevin related project. Phelan of DRFC, a dispute its representatives arose between may from which arising to fees which It appears Mr. Phelan claimed he was owed that this dispute was resolved at some time prior to the to an attendance O'Brien, of mediation. In this regard, of Carter I would draw your attention Ruck on your client, Ms. Ruth Collard 20th June, on 10th 2002 Mr. Denis dated O'Connor and to Ms. Collard's 2002. attendance on Mr. Denis September, The Tribunal the above wishes matters to obtain and in the comments particular of your to clients obtain in relation the to wishes following information: (a) Details of the dispute with Mr. Kevin Phelan related. to include when the dispute arose and to what it (b) When the dispute was resolved and the terms on which it was resolved. (c) If the resolution compensation payment source of the dispute involved the making of any payment the amount of and or such the to or for the benefit the of Mr. Phelan, in which utilized. or compensation, or sources ofthe manner it was paid funds which were (d) The identity conversation ofthe 'intermediary' to whom Mr. O'Brien 20th June, 2002. was referring in his with Ms. Collard on (e) The identity capacity dispute of all representatives of your clients' or indirectly, or persons in whatsoever of the who were involved, with Mr. Kevin directly in the resolution Phelan. (f) The role, ifany, ofMr. Denis O'Connor in the resolution ofthe dispute. (g) Details of all information provided by your clients in relation or their representatives matters. to your client's son, Mr. Denis O'Brien to these The Tribunal possession Mr. Phelan, also wishes or procurement the resolution to obtain of your ofthe copies clients of all documents in relation in the power, with to the dispute of any dispute and the provision Phelan." payment or compensation to or for the benefit of Mr. Despite assurances from LK Shields to the Tribunal that the queries raised would be responded to promptly, and a number of reminders sent by the Tribunal, such REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 380 responses, in particular with regard to the fees dispute with Mr. Kevin Phelan, were not in fact furnished. 11.57 As stated, the intended c o m m e n c e m e n t of public sittings in relation to Doncaster Rovers did not proceed beyond an Opening Statement, by reason of the Judicial Review proceedings instituted by Mr. O'Brien. On 4 t h October, 2004, the day prior to w h e n Ms. Collard was due to appear as a witness before the Tribunal in Dublin Castle, Ms. Collard informed the Tribunal that she would be unable to attend, as she had not been provided with a waiver or authorisation by her clients. This was taken up with LK Shields, and an Order for Production was threatened in respect of Ms. Collard's statement and any draft statements, which were then awaited. Those statements were t h e n provided on 5 t h October, 2004, without such an Order having to be made. 11.58 Having thus received the witness statements of Ms. Collard in both draft and final form, it became clear to the Tribunal, that a number of documents were there referred to which had not been included in the Carter- Ruck folders provided to the Tribunal in April, 5th 2004. The Tribunal accordingly wrote immediately to LK Shields, on October, 2004, seeking such outstanding documents, and also that a further full copy of the relevant Carter-Ruck files be provided to the Tribunal. 11.59 proved A further reminder and threatened Order for Production in this regard necessary, by letter of 12 th October, 2004, from the Tribunal to LK Shields. It was then that, on 14 th October, 2004, LK Shields responded that, since the unsuccessful High Court application was under Appeal to the S u p r e m e Court, their clients were advised to reserve their position in relation to addressing the balance of matters outstanding on foot of correspondence received from the Tribunal, p e n d i n g t h e conclusion o f t h a t Appeal. 11.60 Shields, On the following day, 15 th October, 2004, the Tribunal responded to LK seeking the balance of Ms. Collard's file including the documents referred to in her statements not previously produced to the Tribunal. On foot of the further intimation that an Order for Production would promptly be made, if these were not produced, those documents were produced on 19 th October, 2004, with LK Shields indicating that those d o c u m e n t s had not been on the files received by t h e m from Carter-Ruck. By w a y of immediate response, the Tribunal indicated that they would wish to receive an entire copy of all relevant files of Carter-Ruck, and further to reiterated the its request with Mr. of 11 th Kevin May, 2004, for all an documentation relating dispute Phelan. Despite indication from LK Shields that such d o c u m e n t s would be produced on 21 s t October, 2004, they were not forthcoming, and following another abortive REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 381 reminder from the Tribunal, notice of the Tribunal's intention to make an Order for Production, returnable for 4 t h November, 2004, was on 29 t h October, served on LK Shields. 11.61 2004, On 1 s t November, 2004, LK Shields indicated by letter that the documents would be made available voluntarily, and two folders were provided on 3 r d November, 2004. It was within the documents then provided that the fax, including the reference to "ML" in connection with the Doncaster transaction, w a s contained, which was the first time the Tribunal had sight of that document. The foregoing s u m m a r y of relevant communications may be s o m e w h a t turgid, but its inclusion is felt necessary to demonstrate the nature and extent of as delay being occasioned to the Tribunal in acquiring a d o c u m e n t acknowledged material to its inquiries. correspondence During this period, the Tribunal was urged in other public hearings in relation to the Doncaster evidence seeking to desist from transaction on various grounds, including an insufficiency of linking between Mr. Lowry and the transaction, and High Court proceedings similar relief were instituted, all without disclosure of the relevant document. Conclusions: role of William Fry in non-disclosure of fax 11.62 The principal matter to be considered is the absence of disclosure of the faxed d o c u m e n t to the Tribunal until the very belated stage w h e n it was finally produced. As already noted, the recollections of Mr. O'Brien Senior and Mr. O'Connell in evidence were divergent: Mr. O'Brien Senior said that he relied on his solicitors, and would readily have produced the d o c u m e n t to the Tribunal, if advised to do so; on the other hand, Mr. O'Connell felt that most advice given to his client t e n d e d to come to the attention of the Tribunal and, having discussed the position with Mr. O'Sullivan, they formed a view that Mr. O'Brien Senior would clearly not wish to receive advice from them that he should disclose the d o c u m e n t to the Tribunal, that formal advice to that effect would have been tantamount to a direction to notify the Tribunal, and that, having decided against giving such advice, t h e y concluded on their own account that the should not be referred to the Tribunal. document 11.63 Before the matter of referral o f t h e d o c u m e n t w a s considered, the first question that arose was whether or not an internal inquiry should be conducted in relation to the identity of "ML" and related circumstances; in that instance, Mr. O'Brien Senior was properly and fully advised that, having been put on notice of the matter, there was no alternative to investigating it, and the various courses necessary in this regard were outlined in the letter then written to Mr. O'Brien Senior. From the s o m e w h a t apologetic tone of the letter written in this regard by Mr. O'Sullivan to Mr. O'Brien Senior on 25 t h July, 2 0 0 2 ( " I regret that we have all REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter been put to this trouble, the circumstances"), 10 but hope you appreciate that we have no alternative in Page | 382 it is reasonable to infer that Mr. O'Brien Senior had made it apparent that he was far from pleased with the development, had made this clear to his solicitors, and that their feeling that he would not be readily disposed to making the d o c u m e n t available to the Tribunal w a s well-founded. 11.64 which Having quite properly directed an internal inquiry in the first instance, it forthcoming and the was nonetheless the case that, w h e n the only two explanations purported to negative came any to connection hand, neither between of Mr. Lowry were Doncaster transaction which particularly persuasive or satisfactory, the decision was then taken by William Fry not to refer the document, without consulting or advising Mr. O'Brien Senior further. 11.65 scrutiny. The reasoning behind this decision does not withstand serious It has never been the contention or understanding of the Tribunal that, in being vested with the powers of the High Court in relation to production of documents, it has any entitlement whatsoever to override legal professional privilege. Advices falling within that category would clearly be protected f r o m disclosure and it is unclear to the Tribunal how it can realistically be contended that advices between solicitor and client in relation to Tribunal matters in s o m e way came automatically to Tribunal attention. But even apart from that consideration, it can scarcely be a tenable course of dealings that, because it is felt that a client is reluctant to receive and act on particular advice, no advice is in effect given, and a course adopted which accords with the client's preference. perceived 11.66 It is also the case that, whilst aware of the document, its troublesome potential, and the s o m e w h a t unsatisfactory inquiries conducted into it, the legal advisers in question proceeded on a basis, not merely of withholding disclosure from the Tribunal, but of urging in repeated correspondence that no sufficient basis for embarking upon public sittings in relation to Doncaster existed, and then making application to the High Court without disclosure in that regard. That last factor is of course a matter for the Court itself, but it accords with a regrettable pattern, w h e r e b y disclosure was lacking, and unwarranted delay was occasioned. 11.67 O'Brien At one point in his evidence, Mr. O'Connell remarked that he was unaware of the reason w h y LK Shields were separately engaged on behalf of the interests. Having regard to the absence of any apparent conflict of interest, as evident from the continued retention of the same counsel, and the fact that LK Shields were not on record in any related proceedings, it is difficult to see w h a t apparent purpose that separate representation served, other than to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter facilitate a course of unwarrantedly 10 delaying and obfuscating the Tribunal's Page | 383 inquiries into the Doncaster transaction. 11.68 The Tribunal has received written submissions on behalf of William Fry, Whilst which it has considered carefully, and found useful and constructive. allowing for all the matters contained in those submissions, it nonetheless is the view of the Tribunal that in failing to make the d o c u m e n t available until so extended a period of delay had passed, urging the Tribunal to desist f r o m public sittings in relation to Doncaster in the manner and for the reasons advanced, and bringing and maintaining the Judicial Review proceedings without such disclosure, the solicitors fell short of the level of cooperation with the Tribunal professed by them, and contributed to the significant delays occasioned. It should however be said that, j u s t as Mr. Owen O'Sullivan had diligently and correctly drawn the attention of LK Shields to the two forms of advices from Ms. Collard when handing over relevant papers, (and to hold that he should thereafter have checked or ascertained from LK Shields that this had been acted upon would be excessive and unwarranted), so also Mr. O'Connell, in the course of his dealings with the Tribunal both in evidence and in correspondence, but more particularly in the context of the G S M competition, in general terms fairly equated his duties to his clients with a significant level of cooperation with the Tribunal, that was helpful and constructive. LATE LETTERS ABOUT THE UK PROPERTIES 11.69 The disposition to delay and withhold documentation of clear and manifest relevance to Tribunal inquiries into the UK property transactions was by no means confined to the early years of investigations, but continued right up to the latter days of public sittings in 2009. It will suffice to set forth only a limited s u m m a r y o f t h e principal, although not exclusive, instance in this regard. 11.70 attention The principal instance only of crucial documentation generated coming and to the of of the Tribunal in 2009, although capable production previously, relates to Mr. Christopher Vaughan, solicitor, w h o was represented at all times by Mr. Duncan Needham, of Messrs. Max Engel solicitors, who like their client were based in Northampton, England. 11.71 For much of the period of the Tribunal's inquiries into UK property transactions, and particularly since the disclosures by The Irish Times of matters relating to his correspondence as a solicitor, Mr. V a u g h a n has been a highly significant potential witness. Extensive dealings were had in correspondence between him and the Tribunal, in addition to which he met with Tribunal counsel on two occasions, the former in Dublin Castle and the latter in London. But REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 384 despite the pivotal importance of hearing his testimony at public sittings, an aspect c o m m e n t e d upon by the S u p r e m e Court in the course of the Judicial Review proceedings in regard to Doncaster Rovers instituted by Mr. Denis O'Brien, Mr. V a u g h a n for several years resisted repeated requests to attend as a witness. That state of things only altered w h e n he was in receipt of certain Provisional Findings notified to him by the Tribunal in late 2008: following notification from Messrs. Meagher, solicitors for Mr. Denis O'Brien in succession to William Fry, that Mr. V a u g h a n would be attending in Dublin to consult with them, an arrangement was made w h e r e b y Mr. V a u g h a n attended at Dublin Castle, was served with a Witness S u m m o n s , and later attended with his solicitor and counsel to testify over four days in April, 2 0 0 9 , and three s u b s e q u e n t days in June, 2009. 11.72 In c o m m o n only with Mr. Denis O'Connor, the role of Mr. V a u g h a n as a matters professional adviser w a s so extensive and wide-ranging in relation to inquired into by the Tribunal, that he falls into a separate category beyond that of undertaking professional duties for a client, which requires to be set forth and considered elsewhere. All that arises for purposes of this chapter are the dealings had with him and his solicitor, Mr. Needham, after Mr. V a u g h a n had made himself amenable to testifying. Given the extensive history of correspondence and meetings had with him over several years, and the fact that the Tribunal had no alternative but to undertake to discharge his reasonable legal costs and expenses of attending as a witness, it might be thought that the cooperation afforded in relation to his testimony would have been full and whole-hearted. This would seem particularly so, since the focus of a great deal of prior testimony had been upon Mr. V a u g h a n ' s correspondence as a solicitor, in a context of making full and prompt disclosure of all such additional correspondence as was clearly material, and relevant to the investigations of the Tribunal. 11.73 During the period between Mr. V a u g h a n ' s two attendances at Dublin Castle for testimony, approximately four w e e k s before he resumed evidence on 23 r d June, 2009, it appears that Mr. Oliver Roche, solicitor, of Strabane, County Tyrone, then acting on behalf of Mr. Kevin Phelan, furnished to Mr. N e e d h a m a considerable amount of documentation. A m o n g this there was in particular a significant number of copy letters written by Mr. Vaughan, primarily referable to the Mansfield and Cheadle transactions, but also touching upon the Doncaster transaction. In several of these letters, as is detailed elsewhere, the content diverged from versions that had already been made available to the Tribunal, insofar as references t h e n set forth to involvement on the part of Mr. Michael Lowry had been deleted, in a manner s o m e w h a t akin to w h a t has earlier been described Vaughan. as having occurred in the "long form/short form" letters of Mr. The matter s e e m s to have arisen in a context of Mr. Roche protesting REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 385 on behalf of Mr. Kevin Phelan at certain reported references to his client by Mr. V a u g h a n in the course of his earlier evidence. 11.74 It was accepted by Mr. V a u g h a n w h e n he resumed evidence in June, 2009, that the copy correspondence furnished in the interim by Mr. Roche were true copies of letters actually written by him. Mr. S t e p h e n Nathan, QC, as counsel for Mr. V a u g h a n acknowledged that the material furnished was "obviously relevant" to the Tribunal. Further, at the conclusion of his evidence, Mr. V a u g h a n accepted that, had not the further documentation come to light, he would have been inviting the Tribunal to draw important conclusions from portions of his earlier evidence that he had to accept, in the context of the further documentation, would have been entirely incorrect. 11.75 As was indicated in the course of Mr. V a u g h a n ' s latter evidence, Tribunal, certain communications took place between Mr. Needham and the during the period after Mr. N e e d h a m had received the further documentation from Mr. Roche, but before Mr. V a u g h a n resumed his evidence on 23 r d June, 2009. In a telephone conversation on 2 n d June, 2009, Mr. N e e d h a m raised a query with the Tribunal solicitor, Mr. Brady, as to whether or not the Tribunal had received any correspondence, or been in communication with the solicitors to Mr. Kevin Phelan, since Mr. V a u g h a n ' s earlier evidence. Mr. Brady responded that he could not confirm or deny this, as the Tribunal was unable to c o m m e n t on its dealings with other affected persons. Mr. Needham stated that he appreciated the position, and also referred to having received complaints from Mr. Kevin Phelan's solicitor in respect of Mr. V a u g h a n ' s earlier evidence in respect of Mr. Kevin Phelan. In this regard, Mr. N e e d h a m said that his response had been that his client could not c o m m e n t , as he w a s giving evidence, and any queries should be taken up with the Tribunal directly. 11.76 Also on 2 n d June, 2009, Mr. N e e d h a m wrote to the Tribunal in broadly had similar terms, referring to his request as to whether any correspondence been received from Mr. Roche, Mr. Brady's reply, and enclosing a copy of Mr. Roche's letter of complaint ten to Mr. later. Needham Mr. of 1st May, 2009, his that and letter he Mr. by had Needham's referring to response an days Needham from concluded Mr. Roche indication in the said letter c o m m u n i c a t e d with the Tribunal, and renewing in that context his request for provision of copies of any letters or enclosures which the Tribunal had received from Mr. Roche, so that he might consider matters. 11.77 Two further letters, dated 12 th and 16 th June, 2009, were written by Mr. N e e d h a m to Mr. Brady, on each occasion seeking in more urgent terms a response as to whether any letters or correspondence had been furnished to the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 386 Tribunal by Mr. Roche, and, if so, that they should be provided forthwith to Mr. Needham. The matter was again reverted to in a telephone conversation of 17 th Mr. N e e d h a m and Mr. Brady, with a repetition of Mr. June, 2009, between N e e d h a m ' s request and a similar response from Mr. Brady. 11.78 Notwithstanding all of those communications, it was not until the late afternoon of Monday, 22 n d June, 2009, the day prior to the resumption of Mr. V a u g h a n ' s evidence, that the Tribunal received the relevant documentation. was delivered in hard copy under cover of a letter dated Mr. Needham, in the course o f w h i c h he stated: 19 th It June, 2009, from "I enclose a further witness statement and exhibits which have resulted & Co. to My the to from further client communications that this that I received correspondence from Oliver Roche should be brought believes attention of the Tribunal. Apart from the documents documents already produced the Tribunal statement by my client, none ofthe referred files." to in the witness can be found by my client in his current Conclusions: late disclosure by Mr. Christopher Vaughan of highly relevant letters 11.79 Stephen Regarding the delay in furnishing to the Tribunal what were undoubtedly material and important documents, the Tribunal was informed by Mr. Nathan QC, who acted for Mr. Vaughan, that his professional commitments abroad retarded the holding of a consultation with Mr. V a u g h a n and Mr. Needham, to enable Mr. Nathan to provide Mr. V a u g h a n with the advice he deemed necessary in order to consider whether the documentation in question ought to be furnished to the Tribunal. The delay, by reason of Mr. Nathan's absence abroad was significant and it was in that period that the various queries were addressed to the Tribunal concerning the reception, if at all, by the Tribunal of copies of the relevant material directly from Mr. Roche. Whilst it is difficult not to find fault with such a delay in failing to forward promptly to the Tribunal w h a t were relevant documents, it is accepted that the belated furnishing of these documents w a s contributed to by Mr. Nathan's overseas c o m m i t m e n t s and his solicitor's inability to consult him until shortly before the documents were produced. Although Mr. N e e d h a m ' s wish to obtain the advice of counsel before committing himself to advising his client, Mr. V a u g h a n , must be respected, it is nevertheless regrettable that what, as Mr. V a u g h a n must have known, and was accepted by him in evidence, was a copy of a portion of his file, a portion as yet undisclosed to the Tribunal, should have been withheld for so long. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter CONCLUDING 11.80 interested 10 OVERVIEW Page | 387 The foregoing falls far short of a definitive list of the delays occasioned persons. However, it serves to illustrate the type of delays and to the work of the Tribunal in the course of dealings with legal advisers to disruptions that not infrequently impeded progress. Further, although advancing the interests of clients, and seeking relevant information, undoubtedly required some measure of correspondence with the Tribunal on the part of solicitors retained, the proliferation in this regard was in some instances of such legal dimensions as to cast doubt on the realistic need and actual intention underlying long sequences of letters. It should not of course be suggested that practitioners as a whole sought to delay matters, or withhold co-operation with the Tribunal, and even among solicitors representing persons or entities who had lengthy and detailed involvement with the Tribunal, it was evident that they capably equated their duties to their clients with conducting their dealings with the Tribunal in a prompt and positive manner. 11.81 The impact of lengthy legal challenges in the Courts inevitably impacts significantly upon advancing and concluding the work of the Tribunal. It is trite to state that persons affected by Tribunal inquiries have a right of access to the Courts, and that Tribunals can make errors which, if not corrected by the Tribunal itself, require correction by the Courts to vindicate the rights of affected persons. However, in the present instance, the impact of eight substantial sets of proceedings brought before the High and Supreme Courts, all unsuccessful, has undoubtedly extended the duration of the Tribunal. When taken in conjunction with the other matters alluded to in the course of this chapter, it means that the time-scale permits sources. for completion of the work of the Tribunal public has been and delayed media significantly beyond what could have been projected, a factor that unsurprisingly of somewhat facile depictions in some relations Certainly, from the examination by the Tribunal of the workings and reports of Tribunals of Inquiry appointed under the same originating legislation in the early years of the State, it would seem that the change of environment is such as to enable significant delay and disruption at the behest of wealthy entities or individuals, for w h o m a legal defeat may be sizeably offset by the resultant temporary stagnation induced in Tribunal workings. Regarding the proceedings brought against the Tribunal, it should be said that in each instance the High and Supreme Courts undoubtedly sought to hear and determine the matters in issue with the minimum delay feasible, but their impact upon the work of the Tribunal was nonetheless substantial. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 P a g e | 388 S H A R E S FOR FRIENDS A N D FAMILY INTRODUCTION 12.01 This chapter, on the Tribunal's investigations into financial matters pertaining to Mr. Michael Lowry, relates back to information which came to the attention of the Tribunal in the course of its scrutiny of dealings involving the late Mr. David Austin, who, as the Tribunal has already found, was a conduit for both a donation from Esat Digifone to Fine Gael, and a payment by Mr. Denis O'Brien to Mr. Michael Lowry. This aspect of the Tribunal's investigations related to share transactions involving holdings of Mr. Austin in the shares of Esat T e l e c o m following that c o m p a n y ' s successful Initial Public Offering in November, 1997. One of these transactions bore close similarity to other dealings between Mr. O'Brien and Mr. Austin investigated by the Tribunal, in that a substantial shareholding in Esat Telecom, held in Mr. Austin's name, was acquired shortly before his death, on the instructions of, and paid for, by Mr. O'Brien, but was reversed after Mr. Austin's death, unbeknown to his executors, in circumstances which were far from orthodox. Furthermore, in c o m m o n with many other aspects of the Tribunal's inquiries, the person who effected both limbs of that share dealing, that is the USA based stockbroker, Mr. Peter Muldowney of Messrs. Donaldson Lufkin & Jenrette, refused either to attend to give evidence at public sittings of the Tribunal, or to provide direct assistance to the Tribunal in the course of its private investigations. 12.02 On the occasion of the IPO of Esat Telecom, on 7 th November, 1997, some 5 % of the shares being made available were, in line with usual practice, reserved to the self-explanatory category of a Friends and Family S c h e m e . It appears that there was much d e m a n d for this minority of shares in a generally over-subscribed issue, with many persons canvassing senior Esat Telecom personnel, including Mr. O'Brien, for amounts of these shares at w h a t was in any event a hectic and busy period. 12.03 Two persons in particular requested that Mr. O'Brien enable t h e m to buy shares under this category, these being his friend, Mr. Austin, and his fatherin-law, Mr. Noel Walshe. Provision was duly made for each of t h e m in separate 12,000 transactions, but it was in relation to a further and later purchase of shares, initially acquired in the name of Mr. Austin, but which appeared to have been transferred to Mr. Walshe, subsequently and on foot of matters 1st dealings arising close to the date of death of Mr. Austin, on that Tribunal inquiries centred. November, 1998, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 12.04 In the case of all three 10 transactions, whilst instructions were Page | 389 forthcoming from either Mr. O'Brien or Mr. Aidan Phelan on his behalf, the professional stockbroking aspects were handled in US currency by Donaldson Lufkin & Jenrette, an A m e r i c a n firm associated with Credit Suisse First Boston. Within that firm, the individual primarily involved was Mr. Peter Muldowney, an Irish individual based for some years in the United States, w h o was a close associate of Mr. O'Brien, and in regular communication with him during the period of the flotation. 12.05 Following the death of Mr. Austin, the solicitor acting in the administration of his estate was Mr. Walter Beatty, of Messrs. Vincent & Beatty, Dublin, who acted on behalf of the executors, which included Mr. Aidan Phelan and Mr. Michael O'Leary. Mr. Beatty was of prompt assistance to the Tribunal in documentation, which enabled a taking instructions and furnishing available more complete picture of the transactions to be presented, than w h e n they first arose in evidence. Accordingly, in the absence of Mr. Austin, testimony w a s heard from Mr. O'Brien, both before and after that additional documentation was received, Mr. Aidan Phelan and Mr. Noel Walshe, in addition to more testimony from Ms. Helen Malone, a business associate of Mr. Phelan's. limited INITIAL A C Q U I S I T I O N S O F E S A T T E L E C O M S H A R E S 12.06 Before outlining the evidence relating to the 12,000 share purchase, it is appropriate to refer by w a y of background to the initial transactions w h e r e b y both Mr. Walshe and Mr. Austin acquired Esat T e l e c o m shares in circumstances referable to the Friends and Family S c h e m e . 12.07 Mr. Walshe stated that he had made an initial purchase of shares under this scheme, close to the time of the IPO, that an account in his name had been opened for this purpose with Donaldson Lufkin & Jenrette, and that the purchase had been f u n d e d in the first instance by his son-in-law, Mr. O'Brien. The value o f t h e shares rose appreciably, and in February, 1998, Mr. Walshe disposed of all of his holding, save for one share, transferring to Mr. O'Brien such as was sufficient to reimburse the initial purchase, and three months later applied the proceeds to purchase a quantity of Smurfit shares. 12.08 As to Mr. Austin's initial involvement, Mr. O'Brien testified that, in the period immediately surrounding the IPO, Mr. Austin had asked him on a number of occasions to obtain shares under the Friends and Family S c h e m e . W h e n Mr. O'Brien inquired how much Mr. Austin wished to invest, Mr. Austin indicated a s u m of $100,000.00, w h e r e u p o n Mr. O'Brien told his friend to leave the matter with him. In the context of the many similar requests received, and overall REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 390 pressures of that time, Mr. O'Brien stated that in the event he overlooked making any provision for Mr. Austin's holding, and it was only when Mr. Austin c o m m e n t e d to him how well the share price was going, that Mr. O'Brien realised his omission. Having told Mr. Austin that he could cover him for the $ 1 0 0 , 0 0 0 . 0 0 investment in an immediate context, then request payment in due course, Mr. O'Brien stated that he did not have the heart to confess he had not made the investment. By the time he addressed the matter on 18 th February, 1998, the shares in fact had appreciated in value by 50%, so Mr. O'Brien on the same day transferred $ 5 0 , 0 0 0 . 0 0 out of a Radio Investments NV account in W o o d c h e s t e r Bank to the credit of Donaldson Lufkin & Jenrette, in effect thereby personally funding the differential between w h a t the shares would have cost under the Friends and Family S c h e m e at flotation, and w h a t a similar quantity, namely 6,600 shares, actually cost to purchase on the market some four months later. 12.09 From the documentation relating to Mr. Austin's estate made available by Mr. Beatty, it appeared that on 8 t h October, 1998, that is to say, only some three w e e k s before his death, Mr. Austin wrote a letter on unmarked notepaper, to Donaldson Lufkin & Jenrette, with regard to this holding in the following terms: "Please account transfer 6,600 ADS's [sic] of ESAT Austin's Telecom Group pic from my 22Y208238 to Maureen account at DLJ. I appreciate your prompt attention in this matter, Yours truly, David Austin" The usage "ADR", misquoted in the letter as "ADS", refers to American Depository Receipt, representing the ownership in the shares of a foreign c o m p a n y trading on US financial markets. Notwithstanding that a manuscript notation at the top it seems that this instruction of the letter appeared to contain the word "done", was not implemented by the time of Mr. Austin's death, and that his executors were unaware of any intention to transfer the shares to his wife, as the Inland Revenue Affidavit prepared by his executors set out the shareholding as remaining part of his assets at date of death. A copy of the letter referred to above can be found in the Appendix to this chapter. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 391 SUBSEQUENT ACQUISITIONS O F ESAT TELECOM SHARES 12.10 Turning to the final share transaction, which appeared to involve both Mr. Austin and Mr. Walshe, the documentation made available to the Tribunal indicates the following sequence: (i) In September, 1998, again through the agency of Donaldson Lufkin & Jenrette, 12,000 Esat Telecom shares were purchased with funds provided by Mr. O'Brien for the account of Mr. Austin, the amount paid was $294,000.00. (ii) Those shares remained in Mr. Austin's account until 16 th November, transfer, 1998, fifteen days after his death, when Donaldson Lufkin & Jenrette, acting on foot of what was deemed a customer authorised transferred the holding out of Mr. Austin's account to that of Mr. Walshe. (iii) Donaldson Lufkin & Jenrette indicated in correspondence to Mr. Beatty that the authority on foot of which they effected this transfer was comprised in a further letter of Mr. Austin, dated 13 th October, 1998, and again on unmarked notepaper, but in this instance addressed not to the stockbrokers, but to Mr. Aidan Phelan, at his business Telecom address Group at Pic" Clonskeagh, Dublin 14; this was headed "Re. ESAT and was in the following terms: "Dear Aidan Further to our recent conversation, DLJ in New York to transfer company with DLJ." I would be obliged if you would of 12,000 ADR's in the has an existing request above account... my holding to Mr. Noel Walshe, who I understand An account number referable to Mr. Walshe was given, and Mr. Austin concluded by thanking Mr. Phelan for his assistance, and signing the letter. A copy o f t h e letter referred to above can be found in the Appendix to this chapter. (iv) Donaldson Lufkin & Jenrette thereupon gave written notice to Mr. Walshe of his entitlement to the 12,000 shares, probably in early 1998. 22,000 shares, of which the additional December, That notification in fact referred to a fresh aggregate holding of 10,000 was referable to the exercise of an entitlement on the part of existing shareholders to acquire a fixed further proportion of the amounts of shares actually purchased and REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter paid for "on the margin", 10 in effect on the security of the existing holding. Page | 392 The statement of account furnished to Mr. Walshe in respect of the period between 31 s t October, 1998, and 27 t h November, 1998, notified him as to the amount of his indebtedness in respect of the shares acquired on the margin account, and also recited a "customer authorised transfer" of 16 th November, 1998, w h e r e b y the 12,000 Esat T e l e c o m shares had been transferred from Mr. Austin's account to that of Mr. Walshe. (v) In April, 1999, by which time the Esat T e l e c o m share price had risen to in excess of $ 4 0 . 0 0 per share, Mr. Walshe sold 6 , 5 0 0 shares of his overall holding in Esat T e l e c o m , realising a s u m of $261,210.04. recorded in Donaldson Lufkin & Jenrette's Of that sum, as account statement for the $260,000.00 period between 27 t h March, 1999, and 30 t h April, 1999, was transferred to Mr. O'Brien's account, to discharge the liability for the funds advanced by Mr. O'Brien to purchase the 12,000 shares, that is, the shares which had originally been held by Mr. Austin. 12.11 Before proceeding to recount the salient features of the 7th evidence heard, it is necessary to mention the contents of a letter, dated September, 2001, from Mr. Peter Muldowney to Mr. Walter Beatty, in response to the queries raised by him at the instance of the Tribunal. Apart from referring to copies of documents pertaining to Mr. Austin's share account with the brokers, which were enclosed with the letter, Mr. Muldowney advanced a basis of mistake in his initial instructions as to the intended beneficiary of the shares, an aspect that arose in evidence primarily in the testimony of Mr. O'Brien. After referring to letters received from Mr. Beatty, Mr. Muldowney w e n t on to state: "1. The holding until November enclosed, shares dated of 12,000 Esat shares remained in David Austin's account (copy the 16, 1998, when we received October 13 1998) from a letter of authorization David Austin to transfer to the account for which they were originally intended. 2. The documents account, we sent including of are the record of all transactions share not transfers on Mr. and Austin's share funds dealings, and do receipt/disbursement documentation discovered elapsed, show When period supporting an error of time is has holder shares authorising transfers and on the account. if some from in an account, we request particularly a letter of authorisation the account the (copy enclosed) to the proper to permit account. us to rectify the error by transferring 3. As requested, we enclose copies account of all documents including held by DLJ in relation to the late Mr. Austin's all share dealings on the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter account, including the transfer 10 of any shares into or out of the account, by Page | 393 the receipt of funds on the account in relation and the receipt to all share of any instructions or on behalf of Mr. Austin dealings. 4. We enclose a copy of the trade confirmation for the purchase of 12,000 Esat shares in Mr. Austin's from account and the letter of to transfer the authorization to the a subsequently account received Mr. Austin shares for which they were originally in verbal Esat instructions shares intended. The error arose from misunderstanding to purchase During given by Mr. Denis O'Brien Charles to DLJ Walshe. were 12,000 for his Father-in-law, the conversation both Mr. Austin's and Mr. Walshe's names mentioned and in error DLJ bought the stock in the wrong account. 5. The 12,000 Esat shares authority were transferred on November 16, out of Mr. Austin's 1998. account and dated to on Mr. Austin's received October a letter We requested enclosed) of authorization from Mr. Austin 16, 1998 intended. (copy 13, 1998 on the November to transfer the shares the party for whom they were originally Yours Peter sincerely Muldowney" It is understood that the Mr. Charles Walshe referred to in the letter and Mr. Noel Walshe are one and the same person. A copy of the letter referred to above can be found in the Appendix to this chapter. 12.12 The evidence of those witnesses who testified in relation to the final transaction will now be summarised. Evidence of Mr. Noel Walshe: a second purchase 12.13 Having referred to his initial purchase of shares under the Friends and Family S c h e m e , with the proceeds of their sale being applied to reimburse his son-in-law Mr. O'Brien, and purchase a quantity of Smurfit shares, Mr. Walshe stated that those shares proved vastly less to his advantage, and diminished significantly in value over succeeding months. With a view to offsetting that loss, Mr. Walshe resolved to buy further Esat Telecom shares, perhaps in an amount similar to that acquired under the Friends and Family S c h e m e . He recalled indicating this wish to Mr. O'Brien, on an occasion w h e n Mr. O'Brien and Mr. Walshe's daughter had paid a visit to Mr. W a l s h e ' s home. Since Mr. Walshe was reluctant to canvass the matter in the presence of his wife or daughter, this REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 394 request was conveyed to Mr. O'Brien only casually and briefly, as Mr. O'Brien was about to leave the house. 12.14 Mr. Walshe stated that he was uncertain w h e n he actually learned full details of his new purchase of Esat T e l e c o m shares, but felt that he would probably have received a copy statement of account in early December, 1998, from Mr. Muldowney in Donaldson Lufkin & Jenrette, showing his entitlement to 2 2 , 0 0 0 shares; of that quantity, he assumed that Mr. O'Brien had funded 12,000 shares, with the 10,000 balance being secured by w a y of margin account on his new purchase, and other shares. He believed that shortly after obtaining that statement he would have raised the position generally with Mr. O'Brien, who reassured him in terms of "don't worry about it", or words similar. No actual discussion of the a m o u n t or time of repayment took place with Mr. O'Brien, and when he sold the 6,500 shares in April, 1999, to enable repayment of $ 2 6 0 , 0 0 0 . 0 0 to Mr. O'Brien, this amount was notified to him by Mr. Muldowney, with w h o m Mr. Walshe said he had become quite friendly, in the course of telephone conversations in regard to his account. It was put to Mr. Walshe by Tribunal counsel that it s e e m e d from account documentation that Mr. O'Brien had in fact paid $294,000.00, in September, 1998, for the shares that were subsequently transferred to Mr. Walshe, but Mr. Walshe merely responded that the amount he repaid w a s that notified to him by Mr. Muldowney. 12.15 Mr. Walshe further stated that he knew nothing in relation to any question of the 12,000 shares having in error gone into the w r o n g account, and that he did not at the time attach significance to his own statement of account describing the acquisition as a "customer authorised transfer", rather than as an actual purchase, simply taking it to be the case that these shares had been purchased for him. W h a t in fact was Mr. Austin's account number on the relevant statement was a s s u m e d by Mr. Walshe to be that of Mr. O'Brien, as the person funding the acquisition in the first instance. Mr. Walshe had not been acquainted with Mr. Austin. 12.16 given any Mr. Walshe said that there was certainly no question of his having person Lufkin a Power of Attorney nor, w h e n when the he opened his account with letter, Donaldson & Jenrette; content of Mr. Austin's requesting transfer of the holding to the stated number of Mr. W a l s h e ' s account was brought to his attention, could he recall giving that number to Mr. O'Brien or anyone else, or authorising Mr. Muldowney to divulge that number, although he felt Mr. O'Brien could probably have ascertained this. of his Esat T e l e c o m share transactions had In the ultimate, the entire a profit, and he had realised discharged the appropriate Capital Gains Tax. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 10 Evidence of Mr. Aidan Phelan: only involved in second purchase 12.17 Mr. Phelan stated that he had had no involvement in the initial belated Page | 395 purchase of shares by Mr. O'Brien for Mr. Austin under the Friends and Family S c h e m e , and thought that this transaction had been effected by Mr. O'Brien himself in contact with Donaldson Lufkin & Jenrette by telephone. He did recall the other significant transaction on Mr. Austin's account with the brokers, in September, 1998, which was the purchase of 12,000 Esat T e l e c o m shares for in excess of $295,000.00. The funds came from an account of Mr. O'Brien with Credit Suisse First Boston, and Mr. Phelan arranged for the acquisition on Mr. O'Brien's instructions. He would probably have got a phone call from the brokers asking for payment for the 12,000 shares in question, in respect of Mr. Austin's account. Mr. Phelan said that, when he did this, he understood he was purchasing shares for Mr. Austin on the instructions of Mr. O'Brien, would have checked with Mr. O'Brien to this effect, and was in no doubt of his instructions that the shares were to go directly to Mr. Austin's account. There was, he insisted, no question of any mistake on his part. Prior to the transaction, there were 6,600 Esat T e l e c o m shares in Mr. Austin's account, and when the further purchase was added, Mr. Austin owned 18,600 shares. Asked if Mr. O'Brien would have known that the purchase money was being applied for shares held on Mr. Austin's account, Mr. Phelan responded in the affirmative, observing "it's money". a fair sum of 12.18 Given that the final statement of Donaldson Lufkin & Jenrette, sent to Mr. Austin on 30 t h October, 1998, two days before his death, still s h o w e d 18,600 Esat T e l e c o m shares in his account, Mr. Phelan believed that the 12,000 shares must have been transferred from Mr. Austin's account to Mr. Walshe's account after Mr. Austin's death; however, as one of Mr. Austin's executors and a friend of long-standing, Mr. Phelan said that neither he, nor to his knowledge any of his coexecutors, gave any instructions to Donaldson Lufkin & Jenrette to sell or transfer the shares. It was only subsequently that, in dealings between Mr. Phelan, Mr. Beatty and the brokers, he became aware of any possible issue of a mistake having been made, and he understood Donaldson Lufkin & Jenrette would be providing a response in this regard. The address given for Mr. Austin on the relevant statements f r o m the brokers was that of Bryan Phelan & Company, accountants in Clonskeagh, Dublin, o f w h i c h Mr. Aidan Phelan was a partner. 12.19 dealings Mr. Phelan gave further evidence on 17 th October, 2001, regarding his with Donaldson Lufkin & Jenrette in connection with Mr. Austin's been shareholding. He stated that the transaction, w h e r e b y the brokers had instructed to transfer the 12,000 shares funded by Mr. O'Brien from Mr. Austin's account to that of Mr. Walshe, had no particular impact on him, especially as his REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 396 role was that of a facilitator or conduit only. He said that he technically relayed instructions of Mr. Austin by forwarding the letter of 13 th October, 1998, to Donaldson Lufkin & Jenrette only. In this regard, he had no recall of receiving the letter. At the time, his office was used as a mailing address for correspondence with the brokers, and he believed that the letter was passed on to t h e m by his secretary. However, having made inquiries within his office, nobody r e m e m b e r e d the letter, and no copy w a s available. He could not account for the delay between the date o f t h e letter, 13 th October, 1998, and its apparent receipt by the brokers in or around 16 th November, 1998. 12.20 As to the reference to a conversation between Mr. Austin and 13 th Mr. Phelan in the letter of October, 1998, from the former to the latter, Mr. Phelan said that he had no recall of any such conversation, but had s o m e recall, in conversation with Mr. Austin shortly before his death, of discussing the possible transfer by him to his wife of some shares other than the 12,000 in question. He recalled no dealings in relation to this letter, and had no idea whether or not the brokers knew of Mr. Austin's death, not having acted as his agent with them. Regarding any such transfer to Mr. Austin's wife, Mr. Phelan agreed that it s e e m e d that the brokers had not acted on foot of the instructions set forth in Mr. Austin's earlier letter of 8 t h October, 1998. Regarding the terms of the letter of 13 th October, 1998, addressed to t h e m directly, Mr. Phelan also agreed that it s e e m e d that Mr. Austin was saying the shares in question were his, and this was w h a t purchase. Mr. Phelan had believed in sending the funds for their Mr. Phelan said he would have seen no need for Mr. Austin to write to him in this regard, and felt that a phone call to the brokers should have sufficed. He confirmed that he had no recall of any question of an error being made at the time; nobody so informed him in this regard, and his only awareness of any possible error had arisen in the context of dealings with the Tribunal. Evidence of Mr. Denis O'Brien: error in communications 12.21 occasions. Mr. O'Brien gave evidence relating to these share transactions on two The first was on 27 t h June, 2001, when only incomplete documentation was to hand, and the identity of his father-in-law Mr. Walshe was not referred to. 12.22 Having referred to his initially overlooked purchase of 6 , 6 0 0 Esat T e l e c o m shares for Mr. Austin, as already noted, Mr. O'Brien proceeded to refer to the later transaction, in which he said he had sought to fund the purchase of 12,000 shares for Mr. Walshe, who was not identified on that occasion, but due to an error in communications, these shares were in fact purchased in the first instance for Mr. Austin. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 12.23 10 He had in S e p t e m b e r , 1998, directed Mr. Aidan Phelan to advance Page | 397 funds to buy 12,000 shares for Mr. Walshe, but in error Mr. Phelan had arranged their purchase on 3 r d S e p t e m b e r , 1998, for Mr. Austin, who like Mr. Walshe had an existing account with Donaldson Lufkin & Jenrette. Accordingly, on 18 th September, 1998, Mr. Phelan arranged for the transfer of the purchase price to Mr. Austin's account, and the shares were subsequently transferred in correction of the error to Mr. Walshe's account. No financial benefit accrued to Mr. Austin, and it was a case of miscommunication between the agents acting on Mr. In O'Brien's behalf, that is, between Mr. Aidan Phelan and Mr. Peter Muldowney. fact, in his further evidence, Mr. O'Brien stated that he thought the error was on the part of the brokers, w h o subsequently corrected it w h e n they became aware of it, but he was not 100% sure of this, since it could have been on the part of Mr. Phelan. It looked to Mr. O'Brien as if the brokers had got confused between their put Irish clients. He remarked that brokers make plenty of errors w h e n they shares into the w r o n g account, or buy shares and put t h e m into the wrong account. As to w h o was actually the author of the mistake, Mr. O'Brien said he really did not know, and it would be necessary to check with Donaldson Lufkin & Jenrette which, as was already observed, was not disposed to be of direct assistance to the Tribunal. 12.24 Mr. O'Brien said he did not know whether or not Mr. Austin, w h o he thought was in hospital in London at that time, knew of the matter, and felt if Mr. Austin had received a statement from the brokers relating to a new acquisition of shares, he would have telephoned to inquire w h a t was happening. Indeed, Mr. O'Brien w e n t on to say that Mr. Austin would have been very embarrassed, if told he had received shares from Mr. O'Brien in these circumstances, and Mr. O'Brien would not have told him. 12.25 Following that evidence, the further 22 n d documentation sought by the Tribunal was made available, and on October, 2001, following the testimony of Mr. Walshe, Mr. O'Brien resumed his evidence. He said that he believed he had given verbal instructions to Mr. Peter Muldowney to purchase approximately $ 3 0 0 , 0 0 0 . 0 0 worth of Esat T e l e c o m shares in S e p t e m b e r , 1998, and had wished to acquire these for the account of his father-in-law. Whilst unsure of the exact date of giving these instructions, he was sure it was on, or j u s t before, 3 r d September, 1998, when the shares were purchased. He referred to Mr. Muldowney's letter to Mr. Walter Beatty, which referred to there having been a mention of Mr. Austin's name, and the error having been made in consequence, but said that he could not recall the details of the conversation with Mr. Muldowney, or his having mentioned Mr. Austin. He confirmed that he gave Mr. Phelan instructions to pay for the shares, and believed that it was in mid to late September, 1998, w h e n Mr. Phelan asked for approval to make the payment, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 He nevertheless having Page | 398 that he Mr. O'Brien discovered the error that had been made. approved the payment, because he wanted the shares for Mr. Walshe: been purchased, they had to be paid for, w h e r e u p o n it would then merely be a question of correcting the error. The payment w a s sought by the brokers on 18 th September, 1998, and made four days later. Insofar as he had previously ascribed the error to Mr. Phelan, this was because he had discovered it in the course of a conversation with him. Other than Mr. Phelan, he had dealt only with Mr. Muldowney, and believed that he had telephoned him, and asked him to correct the error after his conversation with Mr. Phelan. He recalled no dealings with Mr. Austin, or any other person, which might have given rise to the letter from Mr. Austin of 13 th October, 1998, addressed to Mr. Phelan requesting him to arrange for the transfer of those 12,000 shares to Mr. Noel Walshe. 12.26 Mr. O'Brien agreed with Mr. Walshe that the latter had indicated his interest in further Esat T e l e c o m shares in conversation at Mr. W a l s h e ' s home, in August, 1998, and that it was in the course of the succeeding w e e k that he had spoken to Mr. Muldowney. Whilst Mr. O'Brien could not recall the conversation, in relation to which Mr. Muldowney had written that both Mr. Austin and Mr. Walshe were mentioned, thereby giving rise to the error, he said that Mr. Muldowney did know Mr. Austin, having been introduced by Mr. O'Brien w h e n his account was first opened, and it may have been that Mr. Muldowney mentioned Mr. Austin in some context in the conversation, thereby giving rise to the misunderstanding. He could only speculate that Mr. Muldowney may have inquired how Mr. Austin was; as to whether any similar mistake with a broker had taken place in his experience, Mr. O'Brien said that there may have been, but none had ever been brought to his attention. However, Mr. O'Brien said that his telephone call was for one purpose only, to purchase shares for Mr. Walshe. That request had given rise to the further holding of shares acquired by Mr. Walshe on his margin account. 12.27 Insofar as Mr. Phelan had expressed himself unaware of any error, Mr. O'Brien said that he did not know if he referred to the error in his conversation with him, and could not recall doing so, but he knew an error had occurred, and had told Mr. Phelan to pay the price, even t h o u g h account. He took no further steps with Mr. in respect of the but rather wrong Mr. Phelan, rang Muldowney, and pointed out the mistake, w h e r e u p o n the latter stated that he would correct the position, and have the shares transferred to the account of Mr. Walshe; it was Mr. Muldowney's mistake, up to him to rectify, and Mr. O'Brien said that he did not speak to Mr. Austin at all, regarding the matter. He did see Mr. Austin both on the night he died, and s o m e days previously, but the very advanced stage of illness enabled no more than a f e w words to be exchanged, and it was no time to talk of shares. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 12.28 10 Mr. O'Brien stated that he would not have been aware of Mr. Walshe's Page | 399 account number with Donaldson Lufkin & Jenrette. W h e n put by Tribunal counsel that Mr. Muldowney, a close associate throughout the Esat T e l e c o m flotation, and person of Irish origin, w a s unwilling to attend to give evidence, or even take part in a conference call with the Tribunal, Mr. O'Brien stated, as earlier had Mr. Walshe, that he had no objection whatsoever in this regard. He observed that, in the course o f t h e flotation period, he would have spoken to Mr. Muldowney nearly every day. 12.29 As to the necessity for Mr. Austin's letter to Mr. Phelan, of 13 th October, 1998, requesting transfer of the holding, Mr. O'Brien indicated that the brokers would have requested written confirmation to rectify the error. Not having been privy to dealings between Mr. Austin and Mr. Muldowney, he could not account for that letter having been addressed to Mr. Phelan, rather than as with the earlier direct instructions to the brokers to transfer shares to his wife, which was dated 8 t h October, 1998, only five days before. 12.30 13 th 16 th Mr. O'Brien agreed that it appeared to be the case that this letter of October, 1998, had been received by Donaldson Lufkin & Jenrette only on November, 1998, 15 days after Mr. Austin's death. As to how, in those circumstances, it transpired that the brokers had transferred 12,000 shares, a portion of Mr. Austin's estate, Mr. O'Brien said that he had not been involved, would not have known of the transfer at the time, and did not recall discussing Mr. Austin's death with Mr. Muldowney. 12.31 Regarding Mr. O'Brien's initial evidence that the error may have been that of Mr. Phelan, he said that, after that evidence, Mr. Phelan had told him that he r e m e m b e r e d there w a s an error in respect of the person for w h o m the shares had been purchased, but such error had not been his, but that of Donaldson Lufkin & Jenrette. That aspect of Mr. O'Brien's evidence was directly in conflict with the evidence given by Mr. Phelan himself. 12.32 Mr. O'Brien said that all that had transpired was a simple human error as to the beneficiary of the shares, that he had taken steps to rectify upon learning of it; there was never any intention on his part that Mr. Austin would acquire the shares in any context, still less any reversal of any such acquisition, in the context of Mr. Austin's impending demise. Asked if all telephone conversations with Donaldson Lufkin & Jenrette were at that time recorded, Mr. O'Brien was unable to be of specific case, assistance; he felt that in some been circumstances this would be the but stated that he had never informed by a broker that a conversation with him was being taped. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 12 P a g e | 400 Evidence of Ms. Helen Malone 12.33 Apart from the foregoing evidence, Ms. Helen Malone also testified on 16 th October, 2001, that she had assisted Mr. Austin, at the request of Mr. O'Brien, in opening an account with Donaldson Lufkin & Jenrette, for the purpose of holding his initial acquisition of shares in Esat Telecom, perhaps in January or February of 1998. She recalled obtaining account-opening forms, and thought that she gave these to Mr. Phelan, to have signed by Mr. Austin; upon this being done, she felt that she probably sent them to Donaldson Lufkin & Jenrette. As her office address was used as a correspondence address on the account, she She believed she would have received account statements, put them in an envelope, and given them to Mr. Phelan, to bring to Mr. Austin when he next saw him. did not recall issuing or receiving instructions in relation to shares from Mr. Austin, but said that she or her secretary could well have passed on such instructions. However, she could not remember passing on any instructions on behalf of Mr. Austin to Donaldson Lufkin & Jenrette, and specifically said that she did not have dealings in relation to the transfer of the 12,000 Esat Telecom shares out of Mr. Austin's account, some fifteen days after his death. CONCLUSIONS 12.34 The transaction relating to the 12,000 Esat Telecom shares shows perplexing features and, in the belated alteration or both certain individual reversal of an ostensibly straightforward dealing, and in the further involvement of Mr. Phelan and Mr. Austin in arrangements commencing with funds moving from Mr. O'Brien, potential affinities with earlier transactions investigated by the Tribunal. In these circumstances, connections as was between set out in the relevant Opening and a Statements, the transaction was examined as part of the exercise, whereby the Tribunal scrutinized a number of transactions, number of persons common to those transactions, all of w h o m had associations with Mr. Michael Lowry. 12.35 Following a conversation between Mr. O'Brien and Mr. Muldowney, the shares were purchased in the name of Mr. Austin, and in arranging and seeking approval for payment on this basis, Mr. Phelan was entirely unaware of any error. The basis of a subsequently rectified error by him as to the beneficiary is of course a possibility, but certain inherent improbabilities are in the circumstances apparent. 12.36 Since it is apparent from the evidence that, when Mr. Phelan sought approval from Mr. O'Brien to make payment to benefit Mr. Austin, he was not informed of any error, it seems extraordinary, given the close association between REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 401 Mr. O'Brien and Mr. Phelan at the time, and the fact that each of t h e m was a personal friend to Mr. Austin, that Mr. O'Brien was silent as to error and, w h e n a revised instruction then could easily have rectified the position, permitted Mr. Phelan to pay the purchase price for the w r o n g party. 12.37 Further, although no evidence was heard on the matter, it appears Mr. Muldowney's letter to Mr. Beatty that Donaldson Lufkin & implicit from Jenrette were unaware that Mr. Austin had in fact died over two w e e k s prior to the transfer of ownership of the shares executed by them. Since, as with Mr. Walshe, Mr. Muldowney had become acquainted with Mr. Austin through Mr. O'Brien's introduction, to the extent that Mr. Muldowney may have made inquiry as to Mr. Austin's health w h e n Mr. O'Brien telephoned initial instructions as to the share purchase, and in view of the incidence of contact had between Mr. O'Brien and Mr. Muldowney at the time, it s e e m s surprising that Mr. O'Brien, having attended Mr. Austin on the night he died, did not impart the news of his friend's death. 12.38 Whilst allowance must be made for the further documentation that came to hand between the two occasions on which Mr. O'Brien gave evidence, it is nonetheless curious that Mr. O'Brien initially testified that he was unaware whether or not Mr. Austin, who himself had made no payment for the shares, knew of the transaction, would have been embarrassed if informed, and was not in fact so informed by Mr. O'Brien, w h e n it was subsequently to transpire that the basis of the transfer of ownership required by the brokers was request in that behalf, shortly before his death. Mr. Austin's 12.39 Obviously, if Donaldson Lufkin & Jenrette were aware of Mr. Austin's death, it would have been entirely inappropriate for t h e m to have acted in relation to the transfer on foot of a letter subsequently received from Mr. Austin. 12.40 A s s u m i n g no such knowledge, w h a t has been asserted on behalf of Donaldson Lufkin & Jenrette by Mr. Muldowney nonetheless presents difficulties to the Tribunal. The basis of error, speculated upon by Mr. O'Brien, and asserted only in correspondence by Mr. Muldowney, was that, w h a t may have been a mere courteous inquiry by Mr. Muldowney of Mr. O'Brien as to Mr. Austin's health, in the course of a conversation instructing the purchase of shares for Mr. Walshe, gave rise to the shares being acquired for Mr. Austin, rather than Mr. Walshe. Whilst possible, it is nonetheless not easy to see how Mr. Muldowney came to superimpose the identity of the person he inquired of socially, over that of the person for w h o m he was asked to buy shares. Whilst Mr. O'Brien initially remarked that brokers often make such errors, he was in the event unable to point to any similar situation ever having been brought to his attention. T h a t Mr. Muldowney, not least as a person of Irish origin, has been unprepared to attend REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 402 to testify, or even to assist by participating in a conference call with the Tribunal, and that no assistance has been forthcoming as regards any possible record of the relevant telephone conversation or conversations, has significantly restricted the investigation of this matter, diminished such weight as may in any event be attached to the basis of error, and must be viewed as a reprehensible omission on the part of a leading stock-broking and banking entity. 12.41 justifies The clear evidence of Mr. Phelan as to his instructions and steps taken to check them, allied to the infirmities noted as to the basis of mistake advanced, a view that the likelihood is that the shares were intended to be purchased for Mr. Austin at the outset, and that Mr. Muldowney was instructed accordingly. Nonetheless, it would clearly be unsubstantiated and unwarranted to find that the holding, or its value, was connected in any w a y with Mr. Michael Lowry, either in circumstances within the T e r m s of Reference or otherwise. Whilst entitled to have regard to overall assessments of the credibility of witnesses, the Tribunal must ultimately base findings relating to particular transactions evidence that is appropriate and sufficient. There is neither any upon evidence implicating Mr. Lowry, nor any proper basis for impugning the general tenor of Mr. Walshe's evidence, which rightly was not put in issue w h e n he testified. Nor, given the point in time of the events, and the advanced stage of Mr. Austin's terminal illness, would a course of deploying him as a conduit for some clandestine In all disposal in this regard s e e m other than fraught with high risk and difficulty. the circumstances, whilst the matters noted justify clear misgivings as to the basis of events contended for by Mr. O'Brien, the Tribunal makes no finding as to any impropriety in the substantive transaction falling within the Terms of Reference. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Page | 403 1 T H E MARLBOROUGH HOUSE ARBITRATION INTRODUCTION Terms of Reference 13.01 Whilst the contents of this Volume of the Tribunal's Report are largely directed to the Tribunal's money trail inquiries made pursuant to paragraphs (e) and (f) of its Terms of Reference, there is one aspect of its inquiries into acts and decisions which fell within the ambit of paragraph (g) of its Terms of Reference, which was unrelated to the balance of the Tribunal's inquiries under that paragraph, and which it is appropriate to report on at this point. Those inquiries related to a matter which ought to have been brought to the attention of the McCracken Tribunal, as it related to dealings between Mr. Ben Dunne and Mr. Michael Lowry, and had it been, the inquiries of the McCracken Tribunal might well have taken a different course. Doubling of rent 13.02 In brief, what this evidence establishes is that Mr. Michael Lowry sought to influence the outcome of an arbitration being conducted in 1995 in relation to the reviewed rent payable by the tenant of a substantial building in Dublin, to a company owned and controlled by Mr. Ben Dunne, which had recently acquired the landlord's interest. What Mr. Lowry sought to secure, through deploying his influence was a doubling of the rent then payable, which would have resulted in a corresponding doubling of the investment value of Mr. Dunne's interest in the property. What was reprehensible about his actions was that the tenant of the building was Telecom Eireann, of which, as Minister for Communications, Mr. Lowry was the ultimate shareholder. Had Mr. Lowry secured this benefit for Mr. Dunne, he would have done so at the expense of Telecom Eireann, the shares of which he held on behalf o f t h e State, that is, on behalf of the people of Ireland. Emergence of information 13.03 In 1995, firm Mr. Mark FitzGerald FitzGerald, was that a he principal had been member of the in auctioneering of Sherry instrumental founding some years previously. He was also, having both on his own and his wife's family side a long tradition of involvement in Fine Gael, actively involved in the affairs o f t h a t party. He had been since 1991, a trustee o f t h e party. 13.04 evidence Mr. FitzGerald's involvement in the matters in relation to which he gave emerged on somewhat the part of belatedly, the and in into the course of preliminary and Tribunal political contributions investigations REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 404 donations made to Fine Gael in the years 1995, and 1996. Documents referable to a Fine Gael golf classic held in October, 1995, noted that sponsorship relevant to other aspects of the Tribunal's inquiries had been arranged "via Mark Fitzgerald". In response to the Tribunal's initial inquiries of him, Mr. FitzGerald furnished the Tribunal with a statement in w h i c h he referred to a number of meetings with Mr. Lowry in his Department. Following further inquiries made arising from that, and other aspects of his first statement, Mr. FitzGerald provided the Tribunal with two further statements in which he recounted dealings had with Mr. Lowry as Minister. These dealings included certain meetings and conversations between t h e m in regard to the rent arbitration involving a large commercial premises in Marlborough Street, Dublin, in relation to which the landlord's interest had recently been acquired by a company owned and controlled by Mr. Ben Dunne. 13.05 arbitration Although the matters conveyed by Mr. FitzGerald in relation to the rent were unconnected with the GSM competition, their content was promptly conveyed under a seal of confidence to the solicitors for both Mr. Lowry and Mr. Dunne, with a view to eliciting responses. However, within less than a week, the entry of these matters into the public domain was accelerated by the publication in The S u n d a y Independent issue of 1st December, 2002, of a substantial article, in which the majority of the matters related by Mr. FitzGerald were "leaked". Accordingly, it became necessary to incorporate these matters, together with such responses as could be made available within the time, on 6th December, 2002, in the course of the Tribunal's lengthy Opening Statement, made primarily in regard to the G S M competition. 13.06 In July, 2003, Mr. FitzGerald gave evidence in relation to the matters comprised in his various statements, and additional evidence was heard from w o r k colleagues of Mr. FitzGerald at the time, from persons connected to Fine Gael, and from persons likely to be affected by Mr. FitzGerald's testimony. In setting forth the principal elements of the evidence heard, reference will be confined to those relating to the rent arbitration, and other relevant dealings had between Mr. FitzGerald and Mr. Lowry, as described in the former's second and third statements. THE RENT ARBITRATION Evidence of Mr. Mark FitzGerald Background 13.07 Mr. FitzGerald initially recalled s o m e early encounters of little m o m e n t with Mr. Lowry, who was known to him as a fellow Fine Gael trustee, in 1993, and 1994. These comprised a request by Mr. Lowry to have an apartment in Kimmage REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 405 valued, of which nothing came, and a brief conversation with Mr. Lowry and fellow Fine Gael T.D., Mr. Phil Hogan, in a golf club following a Fine Gael outing. 13.08 After Mr. Lowry became a Minister in the new G o v e r n m e n t at the end of 1994, the first meeting with him that Mr. FitzGerald recalled was a short conversation prior to a meeting of Fine Gael trustees in February, 1995. Mr. Lowry mentioned a v a c a n c y for the chairmanship of ESB, and inquired if Mr. FitzGerald knew of anyone in the business world w h o would both be a good appointment, and acceptable to Mr. Dick Spring and the Labour Party. Mr. FitzGerald mentioned two individuals, one being Mr. William McCann, w h o was already a m e m b e r of the ESB Board. It later transpired that Mr. McCann was appointed as Chairman. Mr. Michael Lowry's 13.09 first approach In late March or early April, 1995, Mr. Lowry telephoned Mr. FitzGerald called Gill" working in on his mobile phone, and asked him was there " a man Sherry FitzGerald, who was involved with a Dublin building off O'Connell Street, of which T e l e c o m Eireann was the tenant. and he was unaware This struck Mr. FitzGerald as unusual, number, but as Mr. of having given Mr. Lowry his mobile someone was with him at the time, he did not ask the reason for the request. FitzGerald responded by confirming that Mr. Gordon Gill was a colleague in Sherry FitzGerald, and that he, Mr. FitzGerald, knew nothing about the particular matter but that he would make inquiries. would be in touch again. the query, and Mr. Gill Mr. Lowry concluded the call by stating that he Mr. FitzGerald telephoned Mr. Gill at home in relation to informed him that the property in question was Marlborough House, also known as Telephone House, in Marlborough Street, and that he had just been appointed as arbitrator to review the rent. In the circumstances Mr. FitzGerald felt that it was inappropriate to discuss the position further with his colleague, whilst the rent process was ongoing. The premises in Eireann question was held under a lease dating from 1978, of which T e l e c o m was the tenant and of which Mr. Ben Dunne was landlord, having acquired the landlord's interest that same year through a c o m p a n y which Mr. members of his immediate family owned and controlled. Dunne and A second 13.10 approach A very short time after, Mr. Lowry again telephoned Mr. FitzGerald, on this occasion in his office, and requested that they meet in a premises close to Mr. Lowry's office in Kildare Street, that had previously been Powers Hotel. Within an hour or so, they met over coffee and Mr. Lowry told Mr. FitzGerald that Marlborough House had recently been purchased by Mr. Ben Dunne, and that Mr. Dunne had been in t o u c h with him, and w a n t e d the rent increased f r o m ? 5 . 0 0 to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter ? 1 0 . 0 0 per sq. foot. 10 He referred to Mr. Gill being involved, and asked could Mr. Page | 406 FitzGerald organise it. Mr. FitzGerald told Mr. Lowry emphatically that he could not, and would not, and referred to Mr. Gill's independent role as an arbitrator. Mr. Lowry then said: "what are 'we' going to do, as Ben Dunne has contributed Fine Gael?" ?170,000.00 to Mr. FitzGerald replied that this was the first he had heard of that, and that Mr. Lowry should not pursue the matter further. Mr. FitzGerald understood Mr. Lowry's reference to "we" as meaning Fine Gael. Mr. Michael Lowry 13.11 Within persists a further short period of days, Mr. Lowry telephoned Mr. FitzGerald again at his office, and said that he wanted to buy a house, but wished to keep a low profile. sale by Sherry He referred to a mews house that had been advertised for in the Palmerston Road area of Rathmines, and FitzGerald, inquired could he view it the following day. Mr. FitzGerald said that he would arrange this, and quickly reverted to him with a proposed time, and the name of his colleague, w h o would s h o w Mr. Lowry the property. However, Mr. Lowry stated that he only wished Mr. FitzGerald to show him the property, and did not w a n t other members of the firm to know his business. Mr. FitzGerald said that was not the w a y the firm operated, but he agreed to attend at the viewing with his female colleague w h o was actually handling the transaction. Either then, or in a short subsequent telephone call, Mr. Lowry requested that Mr. FitzGerald would pick him up in advance of the viewing, at the Orwell Lodge Hotel in Rathgar. This was done, and they proceeded to the property. Following a brief and perfunctory conversation on an unrelated matter, Mr. FitzGerald's colleague arrived and the inspection t o o k place, but Mr. Lowry never expressed further interest in the property. At Mr. Lowry's request, Mr. FitzGerald drove him back to his Department, but en route he again mentioned the matter of Marlborough House: Mr. FitzGerald stated that he was exceptionally emphatic in his response, and said that he could not, and would not, interfere with Mr. Gill in his role as arbitrator. Having checked with his colleague by means of her a p p o i n t m e n t diary, Mr. FitzGerald believed that the date in question was 6 t h April, 1995. It s e e m e d to Mr. FitzGerald that this amounted to three contacts in relation to Marlborough House in the course of one week, which Mr. FitzGerald viewed as rather intensive. No intervention by Mr. Mark FitzGerald 13.12 in arbitration Mr. FitzGerald also referred to w h a t had occurred later on the same day as he had met Mr. Lowry in the Powers Hotel premises, w h e n he discussed REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Mr. Lowry's approach with his colleague, 10 Mr. Killian O'Higgins, at the firm's Page | 407 commercial office in 11 Hume Street. The purpose of this conversation was to seek Mr. O'Higgins' agreement with his view that it was inappropriate to make Mr. Gill aware of the approach whilst he was acting as arbitrator, feeling that he would inevitably have had to resign, if so informed. At the end o f t h e discussion, Mr. FitzGerald decided, with Mr. O'Higgins' agreement, that Mr. Gill should not be informed until the arbitration had been finalised. In the course of the in conversation, Mr. O'Higgins had indicated his awareness of the premises question, and his view that a rent in the vicinity of ? 5 . 0 0 / 6 . 0 0 per sq. foot was likely to be assessed. Mr. FitzGerald recalled being informed by office colleagues, approximately one month after his dealings with Mr. Lowry, that Mr. Gill had fixed the rent for the building at a rate of approximately ? 6 . 0 0 per sq. foot. Apart from speaking to Mr. Gill after the arbitration had been concluded, Mr. FitzGerald did not inform any other m e m b e r of the firm. However, he did discuss the position with a number of people to w h o m he was closely connected personally. 13.13 had then Tribunal counsel put to Mr. FitzGerald the content of a statement that recently been made available on behalf of Mr. Lowry, which was essentially to the effect that, whilst contact had been made by Mr. Lowry with Mr. FitzGerald in regard to the arbitration, it had been solely with a view to expediting the conclusion of the process, rather than in any w a y seeking to influence the level of rent, a basis also advanced by Mr. Ben Dunne. Mr. FitzGerald's response was to the effect that this did not accord with his recollection of events, that a request to hurry the process had not been specifically raised and that, in any event, had an approach been made solely on that basis, he would not have brought it to Mr. Gill's attention. Mr. FitzGerald stated that his impression was one of being asked by Mr. Lowry to influence the rent. Other dealings between Mr. Mark FitzGerald 13.14 and Mr. Michael Lowry The concluding portion of Mr. FitzGerald's evidence in regard to Mr. About Lowry related to the remainder of his dealings with him whilst Minister. late April, or early May, 1995, Mr. FitzGerald recalled being telephoned by Mr. Lowry again, wishing to talk to him in relation to CIE, an agency which, like ESB and T e l e c o m Eireann, fell within the ambit of Mr. Lowry's Ministerial remit. Mr. Lowry stated that his Department w a s keen to have its Assistant Secretary, Mr. Michael McDonnell, since deceased, included on a short list for the position of chief executive of CIE. Mr. FitzGerald had been aware that CIE was experiencing problems at board and senior executive level, and responded to Mr. Lowry that, although he had only met Mr. McDonnell once, both his father and brother had, from previous dealings with Mr. McDonnell, come to view him as a public servant of high calibre. Mr. Lowry then expressed a similar view, and stated that he had contacted Mr. FitzGerald because the appointment of a chief executive w a s soon REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 408 to be made from a short list compiled by Messrs. PricewaterhouseCoopers, and that this list was being handled by Mr. T o m O'Higgins, w h o Mr. Lowry believed was known to Mr. FitzGerald, and related to his wife. Mr. Lowry accordingly requested Mr. FitzGerald to have a word with Mr. O'Higgins, in relation to the qualities of Mr. McDonnell, and to say that the Department was keen to see him on the relevant short list. Mr. FitzGerald stated that he duly did this, and that Mr. O'Higgins did not respond, save to confirm the general good impression of Mr. McDonnell, but that Mr. McDonnell was duly short-listed, and was subsequently selected as CIE Chief Executive. 13.15 The only remaining dealings with Mr. Lowry alluded to by Mr. FitzGerald in January, or February, of 1996, Mr. related to internal Fine Gael arrangements: FitzGerald came to understand that Mr. Lowry intended to hold a fundraising dinner in Dublin for his constituency of North Tipperary; this had occasioned a degree of angst a m o n g s t Dublin T.D.s in the party, and led to Mr. FitzGerald sitting in on meetings of the organising committee with a view to resolution: a course that Mr. FitzGerald implemented by proposing that a significant percentage of the fund raised should be applied for the benefit of some less affluent Dublin constituency associations. Mr. FitzGerald stated that the meetings held in relation to this function were the only ones he had attended in Mr. Lowry's Department. Late disclosure 13.16 by Mr. Mark FitzGerald It was put to Mr. FitzGerald by Tribunal counsel that he might have considered making his evidence available at an earlier stage of this Tribunal's proceedings, or indeed to the McCracken Tribunal. In reply, Mr. FitzGerald stated that this thought had crossed his mind, that he had considered the position, and sought legal advice on it, but had been told that he was not so required; once specific questions had been raised with him by this Tribunal, he had sought to answer t h e m as fully and accurately as possible. Alarm 13.17 bells In questions by counsel for Mr. Lowry, the matter of late disclosure of evidence was again alluded to, in response to which Mr. FitzGerald responded similarly, and stated that he had not particularly wanted to volunteer for an unpleasant task. It was suggested to Mr. FitzGerald that, over a number of years as fellow trustees of Fine Gael, there must have been more contact between the two, rather than Mr. Lowry's call to Mr. FitzGerald's mobile in March/April, 1995 having been the first such contact. Mr. FitzGerald replied that that w a s not the He case, and that he had not been particularly involved in fundraising matters. similarly took issue with the suggestion that he and Mr. Lowry had often gone to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 409 the bank used by Fine Gael together, stating that Mr. Lowry was a full-time politician, whilst he was a voluntary party worker. It was further put that Mr. Lowry would surely have known that Mr. FitzGerald would not interfere with a process of arbitration, in response to which Mr. FitzGerald stated that he had at first thought that Mr. Lowry's concern with the matter might have been as a public servant, and that it was not until the meeting at the former Powers Hotel premises, w h e n he had explained Mr. Gill's role, that the full picture had emerged and, as he had stated earlier, alarm bells had rung for him. It was again suggested to Mr. FitzGerald that Mr. Lowry had wanted only to speed up the process: Mr. FitzGerald replied that he stood by his evidence, that w h e n Mr. Lowry had seen Mr. FitzGerald's disinclination to intervene, he w e n t on to make the remark about the ? 1 7 0 , 0 0 0 . 0 0 contribution which had been made by Mr. Ben Dunne, and had again raised the matter in the course of the visit to the Palmerston Road premises, after he had had an opportunity to reflect on the position. 13.18 Mr. FitzGerald was, in conclusion, asked, albeit primarily in relation to differences emerging in relation to a separate aspect of his evidence, w h e t h e r he had had any falling-out with Mr. Lowry other than had emerged in his evidence, and he responded that that was absolutely not the case. Evidence of Mr. Gordon Gill 13.19 Evidence was then given by Mr. Gordon Gill, a senior member of Sherry FitzGerald, specialising in residential property. He confirmed that he had been nominated on 31 s t March, 1995, as arbitrator, to determine the revised rent to be paid by T e l e c o m Eireann as tenants of Marlborough House under a lease dated 31 s t December, 1978. His appointment as arbitrator had followed upon another senior valuer having stood down in that capacity. The landlord's interest in the premises had recently been acquired by Bark Island Limited, a company controlled by Mr. Ben Dunne and other family members. 13.20 Mr. Gill proceeded to state that his appointment as arbitrator had been confirmed on 7 t h April, 1995, and that he had convened a preliminary meeting with the valuers representing both sides, on 12 th April, 1995, at which he had issued directions, and received documents from both sides in relation to properties thought to be of importance as comparators. 13.21 On 15 th May, 1995, Mr. Gill held the final arbitration hearing in the matter, hearing the evidence and submissions that were presented by both sides. The landlord had sought a rent fixed at a rate of ? 9 . 2 5 per sq. foot, which, allowing for the area of the building with basement stores, car-parking and a percentage loading, to reflect there being a seven year rental period rather than REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 410 five, gave rise to an aggregate s u m of ? 8 9 2 , 9 8 9 . 0 0 , approximated d o w n w a r d s to an annual rent of ? 8 9 0 , 0 0 0 . 0 0 . On the other side, the tenant had advanced figures giving rise to an aggregate s u m of ? 4 8 3 , 7 9 3 . 0 0 , which was approximated upwards to ? 4 8 4 , 0 0 0 . 0 0 . 13.22 On 26 t h May, 1995, having received his fees in accordance with standard arbitration procedures, Mr. Gill issued his award, fixing an annual rent of ? 6 4 0 , 0 0 0 . 0 0 for the seven year period in question. He stated that, as a rough rule of t h u m b , a building's capital value as of that time, could be calculated as being approximately the annual rental multiplied by fifteen. Soon after he had made his award, Mr. Gill recalled being contacted by Mr. FitzGerald, who told him he had been approached by Mr. Lowry, in a context of seeking to influence the level of reviewed rent. With regard to Mr. FitzGerald's evidence of an initial phone call to inquire whether Mr. Gill had any involvement with the premises, Mr. Gill stated that he had no recollection of this, but it would not have been unusual. Other than this, Mr. Gill had only conversed with his colleague, Mr. Killian O'Higgins in relation to the matter. 13.23 The whole process of the arbitration from Mr. Gill's nomination as replacement arbitrator had occupied a little under two months, which Mr. Gill viewed as being "pretty good". In approximate terms, the figures advanced by the competing valuers reflected a rate of s o m e w h a t under ? 1 0 . 0 0 per sq foot being sought by the landlord, as opposed to s o m e w h a t over ? 5 . 0 0 per sq foot being offered by the tenant, giving rise to a differential of ?406,000.00 when aggregated. Mr. Gill's figure had been a little over ? 6 . 0 0 per sq foot. He was s o m e w h a t shocked at w h a t Mr. FitzGerald had relayed to him, and thought that both Mr. FitzGerald and Mr. Killian O'Higgins had displayed s i m i l a r s e n t i m e n t s . 13.24 In response to questions f r o m counsel for Mr. Lowry, Mr. Gill said that the period of approximately two months occupied by the arbitration process was s o m e w h a t quicker than usual. arbitration concluded with He stated that both sides would have w a n t e d the expedition, and that what took place was in accordance with usual procedures. As to requests to expedite an arbitration being made, he said that it does happen that there will be such requests, but that it was preferable that any such requests should be in writing, and made by one of the valuers involved: for such a request to be made by a principal, or another intermediary, would be unusual. As to his recollection of his conversation with Mr. FitzGerald after the arbitration had concluded, Mr. Gill confirmed that it was his evidence that Mr. FitzGerald had said to him that Mr. Lowry had sought to influence the decision. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter Evidence of Mr. Killian O'Higgins 13.25 O'Higgins Brief testimony was then 10 Page | 411 heard from a further member of Sherry Mr. Mr. FitzGerald who dealt at the time in commercial property, Mr. Killian O'Higgins. stated that he was unrelated to Mr. Tom O'Higgins, or to FitzGerald's wife. In his speciality of commercial property, he had been engaged with Sherry FitzGerald between 1983, and 2001, since w h e n he had been with an associated company in London. He recalled Mr. FitzGerald informing him in early by the then Government Minister, Mr. 1995, that he had been approached Michael Lowry, seeking to influence the outcome of a rent revision arbitration, in which their office colleague Mr. Gill was the arbitrator. Mr. FitzGerald had identified the property, the interest of Mr. Ben Dunne as landlord, and had said that Mr. Lowry had told him that Mr. Dunne w a n t e d a new rent of ? 1 0 . 0 0 per square foot. Being involved in that type of property, and generally aware of the premises in question, Mr. O'Higgins r e m e m b e r e d c o m m e n t i n g to Mr. FitzGerald that ? 1 0 . 0 0 would be at least double the existing rent, and expressing surprise at such an approach by Mr. Lowry. Having discussed the position, they decided to say nothing to Mr. Gill, or anyone else in Sherry FitzGerald, whilst he was acting as arbitrator. 13.26 In June, 1995, after the award had been made, Mr. O'Higgins recalled Lowry's Mr. Gill telling him that Mr. FitzGerald had then relayed to him Mr. approach, and the decision taken in regard to it. Mr. O'Higgins and Mr. Gill briefly discussed the inappropriateness o f s u c h an approach. Evidence of Mr. Ben Dunne Purchase 13.27 of property Mr. Ben Dunne's evidence c o m m e n c e d with his formal confirmation of the statement that he had then recently made available to the Tribunal. This was to the effect that Bark Island Limited, a c o m p a n y of which he was a director, had acquired Marlborough House in 1995, subject to a 1978 lease. A rent review had been due on 23 r d July, 1994, and a valuer was retained to deal with this issue. As it had not proved possible to agree a revised rent, the arbitration clause in the lease was invoked. Mr. H. Whittaker was appointed as arbitrator in February, 1995, but he stood down, w h e r e u p o n Mr. Gill took his place. By 31 s t March, 1995, matters had not gone beyond the appointment of that arbitrator, and Mr. Dunne was anxious for more rapid progress. With this in mind, once he heard that Mr. Gill of Sherry FitzGerald was involved, he telephoned Mr. Lowry, and asked did he know Mr. Mark FitzGerald. Upon Mr. Lowry confirming that he did, Mr. Dunne then asked him to speak to Mr. FitzGerald, and ask if the rent review could be progressed quickly. Mr. Dunne said that his reasoning in this regard w a s that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 412 he did not know anybody in Sherry FitzGerald, and Mr. Lowry came to mind, since he and Mr. FitzGerald were both involved with Fine Gael. Never sought a political favour from Mr. Michael 13.28 Lowry Mr. Dunne said that he had never mentioned to Mr. Lowry that he wanted the rent increased from ? 5 . 0 0 per square foot to ? 1 0 . 0 0 per square foot, but could not be sure that he may not have said to him over the telephone that there was a sum of approximately ?50,000.00 between the respective negotiating positions o f t h e parties. S o m e days afterwards, Mr. Lowry telephoned him, and informed him that Mr. FitzGerald was not in a position to do anything in regard to the request. Mr. Dunne did not pursue the matter further. He stated that he had never sought any political favour from Mr. Lowry. S u c h requests as he had made of Mr. Lowry in the past were confined to seeking tickets for All-Ireland Finals, and even in that regard, the requests had not been confined to Mr. Lowry. 13.29 interests, Questioned further in evidence by Tribunal counsel, Mr. Dunne stated that his company, Bark Island Limited, was one in which he and his family had and had no connections whatever with Dunnes Stores Limited. Regarding the purchase of Marlborough House, his valuers had brought the building to his attention as a potentially good investment, and he had expended ? 5 . 4 million in purchasing the property. Discussions in relation to the revised rent had started about the time that he had purchased the property, and Mr. Gill had been appointed, in substitution for Mr. Whittaker, shortly after he had closed the sale. He was unaware w h y Mr. Whittaker had stood down. Despite the fact that his valuers were very experienced, Mr. Dunne had not asked t h e m to contact Mr. Gill to urge that the process be conducted speedily; over the years, Mr. Dunne had had experience of rent reviews, and tended to ring s o m e o n e in the relevant valuers, not the arbitrator. That was the w a y he operated. He accepted that it would have been in order to have had his own valuers contact the arbitrator or his firm. Looked 13.30 terrible As to w h y the approach had been made to Mr. Lowry, Mr. that this was just spontaneous, and that was his Dunne He responded style. acknowledged that for s o m e o n e reading his evidence, it "looks was the w a y he did business. speedily. terrible", but that He accepted that the arbitration was concluded As to his possible mention of ? 5 0 , 0 0 0 . 0 0 differential between the parties to Mr. Lowry, Mr. Dunne felt that there had been mention of figures, and that that was the only context in which this w o u l d have been mentioned. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 13.31 10 Reminded by Tribunal counsel that, by virtue of his Ministerial Office, Page | 413 Mr. Lowry was at the time of the approach effectively the tenant of the premises, Mr. Dunne stated that he certainly should have been aware of this, but at the time it had not been at the forefront of his mind. Put that, in the context of the landlord's asking figures, as described by Mr. Gill, it might s e e m likely that Mr. Dunne mentioned ? 1 0 . 0 0 per sq. ft. to Mr. Lowry, Mr. Dunne responded that it appeared that way, and he could not disagree, but to his best recall on oath, he did not mention figures on that basis. difference between that, his best had He said that he did understand and Mr. being absolutely positive. the He recollection approached acknowledged if he Lowry on that basis, it was tantamount to seeking a favour. 13.32 It was pointed out to Mr. Dunne that he had previously given money to both Fine Gael and to Mr. Lowry, to which Mr. Dunne replied that he knew w h a t was being said, and could not disagree. He had not at the time thought of all the points that had been made to him in the course of his evidence, but he could not now w a l k away from them. Spontaneous 13.33 approach Mr. Dunne was further asked whether or not he wished to modify the evidence that he had given to the McCracken Tribunal to the effect that he had never sought any political favour from Mr. Lowry. sought any political favour. He reiterated that he had never Put that he had contacted Mr. Lowry with a view to approaching a fellow Fine Gael associate in Mr. FitzGerald, having known Mr. Lowry in a context of giving money both to him and to Fine Gael, Mr. Dunne said that this was so, but that he had first known Mr. Lowry through their business association. Mr. Dunne acknowledged that, if the w a y he approached Mr. Lowry was interpreted as seeking a favour, he could not deny this, but he again stated that his approach to Mr. Lowry had been a spontaneous one, rather than one based on all the circumstances that had been raised with him. 13.34 In response to counsel for Mr. Lowry, Mr. Dunne again stressed the spontaneous nature of his approach to Mr. Lowry, stating that he had contacted him in a personal context, rather than as a Minister, and that his intention was to expedite the process, rather than interfere with it. him that Mr. FitzGerald was Once Mr. Lowry indicated to request, he had not unable to accede to the contacted Mr. Lowry further in regard to the matter. He had not adverted to the aspect of Mr. Lowry being in effect the tenant of the premises; as he had seen it at the time, the rent w a s frozen and, having paid more than ? 5 million for the property, he wanted the position sorted out as soon as possible. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 10 Not a political favour: based on a commercial 13.35 relationship Page | 414 Responding to his own counsel, Mr. Dunne said that any such favour as he had requested had not been a political one, having been based on his prior commercial relationship with Mr. Lowry through Streamline Enterprises, otherwise Garuda. In this regard, he confirmed the evidence that he had given to the He agreed with his counsel that the property had been McCracken Tribunal. introduced by his valuers to him as a r e c o m m e n d e d investment, and that they had advised on the price in the context of the rent thought likely to be obtained on review. He similarly so agreed that the issue had been largely reduced to parameters of ? 6 5 0 , 0 0 0 . 0 0 and ? 6 0 0 , 0 0 0 . 0 0 well before his approach to Mr. Lowry, and that the bottom line which he had given to his experts was quite close to Mr. Gill's eventual determination. Similarly, T e l e c o m Eireann had by that stage its own board of directors, so that, even if Mr. Lowry was the responsible Minister, he was not involved in the c o m p a n y on a day-to-day basis. Mr. Dunne confirmed that he had been told in February, 1995, of Mr. Whitaker's appointment, but had done nothing until he heard that Mr. Gill had replaced him, following which Mr. Gill worked very fast. It was acknowledged by Mr. Dunne that, if he had mentioned the level of rent to Mr. Lowry, the matter was serious, but that did not accord with his recall. Evidence of Mr. Michael Lowry Formal memorandum 13.36 of evidence rejects any suggestion of influence The evidence of Mr. Michael Lowry c o m m e n c e d with his confirmation of the content of a statement which he had provided to the Tribunal. After indicating some relatively minor differences in his recollection of initial dealings had with Mr. FitzGerald, he turned to the matter of the Marlborough House rent arbitration. His recollection was to the effect that Mr. Dunne did inform him as to the level of rent he was seeking, and that this was being arbitrated; however Mr. Dunne's request was that Mr. Lowry should ask Mr. FitzGerald if the matter could be speeded up, since a staff colleague was up on the matter, acting as arbitrator. and had a fairly Mr. Lowry recalled that he followed brief general discussion with Mr. FitzGerald, in the course of which he relayed the information he had obtained from Mr. Dunne. Mr. Lowry stated that he would have had a general understanding of the process, but for Mr. FitzGerald to suggest that he was in any w a y attempting to influence the level of rent review w a s neither fair nor correct, and Mr. Lowry rejected that suggestion absolutely. As to w h a t Mr. FitzGerald had stated in regard to Mr. Dunne's contribution to Fine Gael, it was Mr. Lowry's view that Mr. FitzGerald would have been well aware that Mr. Dunne was a contributor to Fine Gael, and the statement which Mr. FitzGerald attributed to Mr. Lowry in this regard was not made. had Regarding CIE and the late REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 415 Mr. Michael McDonnell, Mr. Lowry stated that he had some recollection of a conversation with Mr. FitzGerald about this. Whilst he could not recall the content of that conversation precisely, he felt that both of t h e m had agreed that Mr. McDonnell was a capable and efficient public servant w h o merited short listing for the position of chief executive. Mr. Lowry felt that Mr. McDonnell had expressed interest in the position, and had been put on the short list on his own merits. 13.37 Mr. Lowry concluded his formal statement or memorandum of intended evidence by referring to the Fine Gael fundraising function held in the Burlington Hotel that had been mentioned by Mr. FitzGerald. This had been arranged and held within a very short space of time, and had the approval of Fine Gael headquarters. Mr. Lowry's view at the outset had been that the primary purpose of the function was to fund weaker Dublin constituencies, in addition to raising funds for Mr. Lowry's own constituency. Mr. Lowry had organised the persons w h o ran the event, and there was never any need for Mr. FitzGerald to make any proposal, as the twofold purpose of the function was known at all stages. Mr. Mark FitzGerald's 13.38 account inaccurate In the course of his further evidence, Mr. Lowry was examined in more detail on these matters, in particular with regard to his dealings relating to Mr. Dunne. He stated that the account given by Mr. FitzGerald in this regard above all disappointed him, and was damaging and inaccurate. W h a t had happened was that he had received a telephone call from Mr. Dunne, in the course of which his only request was in the context of Marlborough House being stuck in an arbitration over rent, which he was concerned would last indefinitely. Mr. Dunne knew that Mr. FitzGerald and himself were both involved with Fine Gael, and he merely asked for expedition. On foot of this request, he did telephone Mr. Mr. Mr. FitzGerald on his mobile phone and did indicate the request, w h e r e u p o n FitzGerald said he would attend to it. If it had been a wrongful request, FitzGerald would have refused, but he knew it only concerned expedition. He rang back, stating that Mr. Gill was dealing with the matter and he had conveyed the request, in response to which Mr. Gill had said that it would have to take its course. Mr. Lowry reported back to Mr. Dunne accordingly, the matter did take its course, a rent was fixed, and no doubt that outcome was proper and correct. W h e n Mr. Lowry had first telephoned Mr. FitzGerald, he did not believe that he had asked was there a man called Gill in Sherry FitzGerald, because he would not have known this unless Mr. Dunne had told him. 13.39 As to Mr. FitzGerald's further evidence of the two of t h e m Lowry's request, for coffee meeting had shortly thereafter, at Mr. in a building that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter formerly been Powers 10 Hotel, this was totally inaccurate, and w h a t had been Page | 416 attributed to him by Mr. FitzGerald, that is, that he had referred to Mr. Dunne as having contributed ?170,000.00 to Fine Gael, had not been said. He had conveyed the initial request, and no further meeting was needed. The two did meet in the former Powers Hotel, but on a totally different matter. In any event, the idea of the rent actually doubling was ludicrous, and even Mr. Lowry would have known that this w a s not remotely feasible. 13.40 Regarding the s u b s e q u e n t inspection of a house on the books of Sherry FitzGerald at Mr. Lowry's request in the c o m p a n y of Mr. FitzGerald and a colleague, this related to evidence formerly given by Mr. Lowry in relation to having contacted a number of Dublin auctioneers in regard to buying a property. Otherwise Mr. FitzGerald's account was substantially accurate, save that Mr. FitzGerald was inaccurate in stating that Mr. Lowry had once again raised the matter of the Marlborough House rent review: he had conveyed w h a t Mr. Dunne wanted, and no long drawn out process was involved. Mr. Michael Lowry 13.41 disappointed On the matter overall, Mr. Lowry stated that he was very disappointed Mr. FitzGerald at the tone and content of w h a t had been said by Mr. FitzGerald. had never indicated any annoyance to him, no one had ever reprimanded him, and he had never heard Mr. FitzGerald use bad or forceful language. If Mr. FitzGerald was correct in his evidence, w h a t had occurred was certainly improper, but he was incorrect. There was nothing w r o n g in seeking to expedite the process, which was all that had happened, an everyday occurrence for politicians. As to the possibility that Mr. FitzGerald may have had some motive for being malicious towards him, Mr. Lowry did not wish to be j u d g m e n t a l , could not answer, and had moved on: he had always been helpful and courteous to Mr. FitzGerald and his family, had never had any personal difference with them, and did not know if there had been s o m e t h i n g under the surface. But this matter had caused him particular hurt. In a later response to his own counsel, Mr. Lowry endeavoured to suggest that in some w a y which, he did not explain, there was a connection between Mr. FitzGerald's evidence and w h a t he termed "disaffection" Mr. FitzGerald and the Fine Gael party. between 13.42 On the lesser matters that had arisen between Mr. Lowry and Mr. FitzGerald, there was not much conflict in relation to w h a t had been discussed in relation to Mr. McCann and ESB more a difference of emphasis. Mr. Dick Spring had raised the matter of ESB and Mr. McCann, and Mr. Lowry had merely asked Mr. FitzGerald was positively. Mr. McCann a proper candidate, to which he responded It was Mr. Spring, rather than Mr. FitzGerald, w h o had first raised the matter of Mr. McCann. Similarly, with regard to CIE and the late Mr. Michael REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 417 McDonnell, the vast majority of what had been stated was correct, save that the telephone contact had been instigated by Mr. Lowry himself, rather than by Mr. FitzGerald. Ultimately, Mr. McDonnell was appointed to the position. As to the Fine Gael fundraising dinner in Dublin, the emphasis adopted by Mr. FitzGerald in what he had stated bordered on the ridiculous, it was Mr. Lowry who had come up with the proposal for what turned out to be Fine Gael's largest fundraiser in modern times, and he had cleared it both with the Taoiseach, Mr. John Bruton, and the General Secretary, Mr. Jim Miley. Benefits accrued to the weaker Dublin constituencies as well as to Mr. Lowry's constituency, and Mr. FitzGerald had made a valuable contribution. CONCLUSIONS Influence was sought to be exercised 13.43 Having considered all the evidence heard in relation to the matters set forth in this chapter, comprising as they do a number of serious conflicts of evidence, along with all that has been urged on behalf of interested persons, the Tribunal is of the view that the following conclusions are appropriate. 13.44 It is not in dispute that, whilst the arbitration process was pending, with Mr. Gordon Gill recently appointed as a replacement in the role of arbitrator, Mr. Ben Dunne contacted Mr. Michael Lowry in that regard, who in turn contacted his fellow Fine Gael trustee, Mr. Mark FitzGerald. The crucial conflict is as to whether what was sought in that contact was to influence the level of rent, or merely expedite the conclusion of the arbitration process. Only limited assistance in resolving that conflict is to be derived from such documentation as available. became 13.45 Both from assessing the direct evidence that was heard, and having regard to the circumstantial factors that emerged, the Tribunal is satisfied that the influence that was sought to be exercised on Mr. Gill, was with a view to a substantial enhancement of the rent, rather than merely expediting the process: at the time of the approach, Mr. Gill had just been appointed, had given no indication of any likelihood of delay in discharging his duty, and proceeded to complete the process in a commendably short time; in addition, for a landlord who was newly aware of the appointment of a replacement arbitrator, it would seem a remarkable commencement of dealings, even through conventional channels and still more so in the light of what transpired, to urge him to hurry up with the matter. Further, if, as the Tribunal accepts, three verbal approaches were made by Mr. Lowry to Mr. FitzGerald in the space of one week, it would seem improbable that the objective was the mere acceleration of the process, which REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 418 Mr. Dunne a c k n o w l e d g e d in evidence could readily have been sought through his experienced valuers. 13.46 Whilst by no means exactly equating to a requested increase from ? 5 . 0 0 per square foot to ? 1 0 . 0 0 per square foot, the figures relayed by Mr. Gill as having been comprised in the submissions advanced to him by the valuers on both sides, do appear to broadly correspond with those parameters, rather than to support Mr. Dunne's recollection of conveying to Mr. Lowry an overall differential of ? 5 0 , 0 0 0 . 0 0 between the parties. 13.47 S o m e degree of confirmation of Mr. FitzGerald's version of events, at least with regard to w h a t was said between Mr. Lowry and Mr. FitzGerald, is to be derived from Mr. Killian O'Higgins' evidence of a largely contemporaneous conversation in like terms had by Mr. FitzGerald with him. Mr. Mark FitzGerald: lack of malicious intent 13.48 been Apart from careful appraisal of the content and manner of Mr. FitzGerald's evidence, no motive has been suggested w h e r e b y he might have disposed to give false or unreliable evidence of a nature potentially damaging to Mr. Lowry and Mr. Dunne. Such apparent lack of malicious intent is indeed borne out by his reluctance to volunteer the information made available to the Tribunal until it came to address specific queries to him. It is true, and was put to Mr. FitzGerald by Tribunal counsel, that he did not volunteer the evidence, and that without his responses to those queries, the information thereby elicited would probably never have come to public notice. However, the Tribunal has given careful attention to w h a t was stated by him in this regard, and also to w h a t was conveyed on his behalf by his solicitors. Given that the content of his statements was likely to involve a degree of e m b a r r a s s m e n t for the political party with which he had had a lifelong association, in addition to being scarcely beneficial in his professional and business life, and that his responses on the more peripheral matter relating to CIE involved to a limited degree implicating his wife's family, the Tribunal views his reticence in volunteering for w h a t he himself envisaged as likely to be "an unpleasant task" as understandable, and indeed as enhancing rather than diminishing the weight of his testimony. Potential financial benefit of EUR3.022 million to EUR6.86 million 13.49 It is not difficult to estimate the financial benefits that would have accrued to Mr. Dunne had the rent been increased from ? 5 . 0 0 per square foot to ?10.00, instead of the ? 6 . 0 0 that was fixed by Mr. Gill. Given an approximate square footage of the premises of 8 5 , 0 0 0 square feet, at a revised rent of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 419 ? 1 0 . 0 0 per square foot would have given rise to an annual aggregate rental of approximately ? 3 4 0 , 0 0 0 . 0 0 (EUR431,711.00) in excess of w h a t was actually fixed. Allowing for seven years of that additional rental until the next rent review arose, this would have a m o u n t e d to an additional ? 2 . 3 8 million or, converting to euro, an additional equivalent of EUR 3 . 0 2 2 million. If the rule of t h u m b enunciated by Mr. Gill, that the capital value of a building would at that time, in broad terms, have been calculated by applying a multiple of fifteen to the annual rent, the additional rent, if it had been secured, would have resulted in a capital value of the property of ? 1 2 . 7 5 million (EUR16.19 million), a virtual doubling of Mr. Dunne's investment o f ? 5 . 4 million (EUR6.86 million) m a d e j u s t months earlier. Profoundly corrupt 13.50 In finding that Mr. Lowry sought, at the request of Mr. Dunne, to influence the revised level of rent payable for Marlborough House, it has to be said that, not merely was this patently improper conduct on the part of both Mr. Lowry and Mr. Dunne, as private individuals, but it was in addition a particularly flagrant dereliction of duty on the part of Mr. Lowry. As Minister entrusted with telecommunications matters, Mr. Lowry in effect stood in the shoes of T e l e c o m Eireann as tenant of Marlborough House, and for him to have sought to procure unwarranted rent increases, that would have improperly enriched Mr. Dunne over a seven year period, and thereby burdened public funds within his Ministerial remit, amounts to a grave conflict of duty and interest. This is c o m p o u n d e d by the fact that the manner of such attempted influence clearly countenanced an attempt to suborn the independent and quasi-judicial functions of Mr. Gill as arbitrator. The seriousness of w h a t was attempted is not diminished by the fact of T e l e c o m Eireann having by then become a statutory c o m p a n y with its own board. Indeed, w h a t w a s contemplated and attempted on the part of Mr. Dunne and Mr. Lowry was profoundly corrupt to a degree that was nothing short of breathtaking. Further, had the increase been achieved, it would have been appreciably immune from scrutiny having been obtained through a quasi-judicial process. 13.51 Both the McCracken Report and this Tribunal have found that Mr. Dunne was the source of funds in bank accounts held in the name and/or for the benefit of Mr. Lowry, including accounts of Fine Gael, of which Mr. Lowry was trustee. The requests made by Mr. Lowry of Mr. FitzGerald were acts, calculated to confer, or procure, or direct Mr. Gordon Gill to confer a benefit upon Mr. Dunne, the person w h o was a source of money to Mr. Lowry within the meaning of paragraph (g) of the Tribunal's Terms of Reference. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 13.52 10 Mr. Lowry's intent in seeking to procure the conferral of that benefit on Page | 420 Mr. Dunne was reflected in his response to Mr. FitzGerald's trenchant rejection of Mr. Lowry's request that he seek to influence Mr. Gordon Gill in the discharge of his office as arbitrator, w h e n Mr. Lowry responded, as the Tribunal accepts, in the following terms: "What are 'we'going to Fine Gael?" to do, as Ben Dunne has contributed ?170,000.00 As evident f r o m that linked to response, Mr. Ben Mr. Lowry's request of Mr. FitzGerald was and inextricably Dunne's status as a financial supporter benefactor of Fine Gael. That he was a financial benefactor of Mr. Lowry himself has already been established by the McCracken Tribunal. 13.53 In reporting on the role in this matter of Mr. Dunne, the Tribunal has had regard to medical reports forwarded on behalf of Mr. Dunne, suggesting that his recollection and capacity had been adversely affected by his kidnapping and other experiences. It w a s also the case that a member of the public made contact with the Tribunal, indicating that Mr. Dunne had afforded him vital assistance at a critical time in his life, and requested that, whilst wishing to retain anonymity, this be recorded in the Tribunal Report. The Tribunal does not doubt the authenticity of that contact, or that Mr. Dunne may have performed other gratuitous acts of kindness on occasion. Likewise, notwithstanding adverse conclusions, it should be recorded that both Mr. Dunne and his legal advisers were at all times prompt, courteous and cooperative in their dealings with the Tribunal. However, having carefully appraised his evidence on the several occasions that he testified, the Tribunal has no hesitation in finding that, as in earlier instances, Mr. Dunne remained an astute businessman w h o was fully aware of w h a t he was doing. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Page H O W REVENUE T A X E D M R . MICHAEL LOWRY INTRODUCTION 14.01 Chapter 19 of Part 1 of the Report of the Tribunal dealt with the | 421 manner in which the Revenue Commissioners addressed the taxation of Mr. Charles Haughey in respect of payments or gifts identified by the McCracken Tribunal as having been made to Mr. Haughey, and also of payments or gifts to Mr. Haughey found by this Tribunal as coming within those Terms of Reference that were relevant to Mr. Haughey. 14.02 W h a t accordingly now remains is T e r m of Reference (j), insofar as it relates to Revenue dealings with Mr. Michael Lowry and the c o m p a n y associated with h i m , G a r u d a Limited trading as Streamline Enterprises. Deleting the portions applicable to Mr. Haughey, the T e r m of Reference reads: " (J) Whether manner the Revenue in exercising Commissioners the powers availed available fully, properly and in a or paid timely seeking to to them in collecting Lowry of the funds trading as to collect the taxation Lowry identified and/or due by Mr. Michael Garuda Limited Michael Streamline Tribunal paragraph Enterprises Report (e) in Chapter relevant 5 of the Dunnes Payments at and any other payments or gifts identified above." 14.03 Once aware of apparent irregularities on the part of Mr. Lowry and Garuda Limited trading as Streamline Enterprises (Garuda) in regard to their tax compliance, it became the task of Revenue to investigate that position in full. As had been the position with Mr. Haughey, Revenue was required to piece together all instances of undisclosed payments or benefits giving rise to tax liabilities, decide upon the particular type or types of taxes that thereby arose, and then assess the amounts due, both for tax and, if applicable, interest and penalties. There was also in this instance the further problem of determining whether such liability was to be borne by Mr. Lowry personally, by Garuda, or apportioned in some manner between both. In evidence given by senior Revenue officials, much emphasis was placed upon the paramount requirement of selecting the correct taxable entity and the correct type of tax: whatever of evidence, or views expressed in the course of Tribunals, Revenue had to act strictly within the confines of existing tax law and practice, and in w h a t was potentially a high profile case, any errors that led to tax not being recovered were going to be an unwanted embarrassment. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.04 10 Whilst, in general terms, the relevant tax affairs of Mr. Lowry and less labyrinthine and diffuse than those of Mr. Haughey, they to Mr. Lowry's house at Holycross, County Tipperary, a Page | 422 Garuda were Mr. Ben nonetheless encompassed the extensive works carried out on the instructions of Dunne considerable range of payments from Dunnes interests to Mr. Lowry and/or Garuda, which were deposited into a number of Irish and off-shore accounts, and a number of additional payments from other sources examined by this Tribunal. In addition, it was necessary for Revenue to become fully aware of any possible tax consequences arising from the UK property transactions in which Mr. Lowry had an actual or suggested involvement, and in other financial arrangements entered into by him. Each of these latter matters was examined by the Tribunal in private investigations, and public sittings over a number of years from the Report. 2001 onwards, as has been set forth in earlier chapters of this Volume of this Part of TRANSACTIONS GIVING RISE T O ACTUAL O R POTENTIAL T A X LIABILITIES matters investigated and 14.05 Commencing with reported upon by the McCracken Tribunal, and then proceeding to those which came Tribunal, it is proposed to set forth the relevant transactions. before this Only very brief summaries are included at this point, as full relevant details in relation to the former are to be found in the McCracken Report, and in relation to the latter, in relevant individual chapters of this Volume. Before listing the transactions, it is well to set out some brief further matters in relation to the works carried out at Mr. Lowry's house in Holycross. It will be recalled that in Chapter 2 of the McCracken Report, reference was made to allegations having appeared in the media in November, 1996, to the effect that the Dunnes Stores Group had paid over ?200,000.00 towards the renovation of this house. In Chapter 5 it was then reported that the cost of these works actually extended to the sum of ?395,107.00, which was paid to the builders Faxhill Homes Limited by Dunnes Stores, that payment was treated in the books of Dunnes Stores as having been payments for work done for Dunnes Stores at the ILAC Centre in Dublin, and that this course was directed by Mr. Ben Dunne in a manner which appeared to indicate a clear intention on his part that there would be no record of payment having been made for the benefit of Mr. Lowry. 14.06 Evidence heard from Revenue officials at this Tribunal revealed some further details in relation to Revenue's awareness o f t h e works undertaken to Mr. Lowry's house, and steps taken in response. Initial Revenue interest into possible irregularities in this regard had in fact considerably preceded the November 1996 media disclosures. anonymous It was in late August, 1992, some four years earlier, that an received by Ms Kathleen Maher, a Revenue official letter was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 423 employed at Thurles, to the effect that sub-contractors working at Mr. Lowry's home were employing persons who were claiming to be unemployed; following this, she visited the site with a representative from the Department of Social Welfare. W h a t she found there, including the rapid exodus of s o m e of the w o r k m e n upon her arrival, suggested that there were indeed irregularities in the operation, and she duly furnished a report to Mr. John Hussey, the Senior Inspector of Taxes and District Manager of the Thurles office. Mr. Hussey in evidence recalled receiving this report, but stated that it was noted in a context of possible adverse c o n s e q u e n c e s for the sub-contractors and workers, rather than Mr. Lowry. Mr. Hussey gave evidence of his dealings with Mr. Lowry as a local taxpayer, which in general terms were unremarkable, and do not require to be detailed. Prior to 1991, Mr. Lowry had had no tax agent and had made no tax returns, and it was in August, 1991, that Messrs. Oliver Freaney & C o m p a n y had made contact on his behalf, and furnished the outstanding returns for years going back to 1987/88. This was however not unusual for someone in Mr. Lowry's position as of that time, and in fact a refund was furnished to him in 1992, Revenue having appraised his position both as a T.D. and in the context of his refrigeration activities. Over the years in question, Mr. Lowry made payment of tax due on his income as disclosed, more or less on time and, w h e n late, some interest was collected. W h e n the media disclosures arose in 1996, he had been short-listed for a PAYE/PRSI audit, but his operation overall was not regarded as one of high risk, particularly since Garuda in practice traded with only one large client, Dunnes Stores. Residential Property Tax 14.07 Apart from considerations of taxing Mr. Lowry in respect o f t h e benefit conferred on him by reason of the refurbishment of his house, Revenue had also to address the possibility that the self-assessed valuations of the premises returned by him for Residential Property Tax purposes might not have adequately reflected the then inevitable increase in value. As he had earlier done in relation to Mr. Haughey's Abbeville residence, Mr. Fergus Carroll, then the head of the relevant section in Revenue, gave succinct and helpful evidence in relation to the Residential Property Tax paid by Mr. Lowry in respect o f t h e Holycross house, and the steps taken by Revenue in consequence. The relevant years were 1993 to 1996 inclusive, and in assessing the initial 1993 return, allowance was made for the fact that Mr. Lowry's overall purchase had included substantial lands, and for a period w h e n the property was under renovation and not being used by Mr. Lowry and his family. The returns were furnished punctually, save in respect of 1995, on which occasion a small interest charge was made for the fact that the return was two months late. At the time it appeared in the circumstances that there was no reasonable basis for suspecting any substantial undervaluation of the property. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.08 10 W h e n the nature and apparent cost of the refurbishment works came Page | 424 to light in 1996, this aspect was re-visited in the course of a full investigation being instituted into Mr. Lowry's tax affairs. In the course of information furnished to Revenue in April, 1997, by Messrs. Ernst & Y o u n g on behalf of Mr. Lowry, revised valuations for the house were furnished, based on valuations then obtained from a local auctioneer. After matters had been shelved for a period pending wider investigations, Mr. Carroll contacted the Office of the Commissioner of Valuation, seeking an opinion on the revised valuations. A n inspection was carried out, following which Mr. Carroll was notified that the revised valuations were adequate. The resultant aggregate balance due, including interest, and allowing credit for the overpayment made in relation to the year 1993, w h e n building works appeared to have been in progress, w a s ? 4 , 8 3 1 . 0 0 . This amount was duly discharged as part of a larger payment made on account of unpaid tax. The position may be s u m m a r i s e d as set forth in the Table below: YEAR 1993 1994 1995 1996 SELF-ASSESSED VALUATION ?115,000.00. ?115,000.00 ?115,000.00 ?125,000.00 REVISED V A L U A T I O N ? 90,000.00 ?220,000.00 ?240,000.00 ?275,000.00 Instances of potential taxation liability Payments 14.09 referable to McCracken Tribunal Chapter 5 of the McCracken Report had four categories of payments by Dunnes interests to Mr. Lowry and/or Garuda, the first such category being payments to Mr. Lowry personally, all from a Dunnes Stores account in Bank of Ireland, Marino, at the direction of Mr. Ben Dunne, the details of which were as follows: (i) a cheque for ? 6 , 0 0 0 . 0 0 dated 20 t h December, 1989, payable to Mr. Lowry which was cashed by him; (ii) a cheque for ? 8 , 5 0 0 . 0 0 dated 21 s t December, 1990, payable to cash which was lodged to Mr. Lowry's personal account in the Thurles, County Tipperary branch of the Bank of Ireland; (iii) a cheque for ? 6 , 5 0 0 . 0 0 dated 10 th July, 1991, payable to M. Lowry which was lodged into his personal account at the Dame Street, Dublin branch of Allied Irish Banks; REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter (iv) 10 Page | 425 a cheque for ? 8 , 0 0 0 . 0 0 dated 11 th December, 1991, payable to cash which was also lodged to the personal account of Mr. Lowry in the Dame Street, Dublin branch of Allied Irish Banks; (v) a cheque for ? 1 2 , 0 0 0 . 0 0 dated 15 th December, 1992, payable to cash which was cashed by Mr. Lowry. All these payments, with the exception of that at paragraph no. (iii) above, were found by the McCracken Report to have been made on the instructions of Mr. Ben Dunne, for the purpose of paying Christmas bonuses to Garuda staff. 14.10 The second category of payments identified by the McCracken Report were cheques issued by Dunnes in favour of Garuda under its trade name of Streamline Enterprises, which were either cashed by Mr. Lowry, or lodged to his own bank accounts, details of which were as follows: (i) a cheque for ? 6 , 0 0 0 . 0 0 dated 14 th November, 1988, which was lodged to Bank of Ireland, Thurles; (ii) a cheque for S t g . ? 5 , 0 0 0 . 0 0 cashed by Mr. Lowry; dated 13 th December, 1988, which was (iii) a cheque for S t g . ? 9 , 9 4 5 . 0 0 dated 2 n d February, 1989, which was cashed by Mr. Lowry; (iv) a cheque for S t g ? 7 , 8 7 5 . 0 0 dated 25 t h October, 1989, which was cashed by Mr. Lowry; (v) a cheque for S t g . ? 7 , 9 5 0 . 0 0 dated 16 th October, 1989, which was cashed by Mr. Lowry; (vi) a cheque for S t g . ? 1 9 , 7 3 0 . 0 0 dated 19 th October, 1990, which was cashed by Mr. Lowry; (vii) a cheque for S t g . ? 1 5 , 8 2 5 . 0 0 dated 14 th September, 1990, which was cashed by Mr. Lowry; (viii) a cheque for S t g . ? 3 4 , 1 0 0 . 0 0 dated 3 r d S e p t e m b e r , 1991, lodged to an account in Allied Irish Banks, Channel Islands, in the name of Mr. Lowry and his three children; (ix) a cheque for S t g . ? 5 5 , 3 1 4 . 0 0 dated 15 th March, 1993, which w a s lodged to Allied Irish Banks, Dame Street. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 14 Page | 426 The McCracken Report did not accept Mr. Lowry's evidence that these payments were made by Dunnes Stores to him personally for w o r k done, and recorded that that Tribunal was satisfied, as far as Dunnes Stores were concerned, that these sums were paid to Garuda for w o r k carried out by that firm, and were intended for Garuda, not for Mr. Lowry. 14.11 The third category of payments identified by the McCracken Report were bonus payments made by Dunnes Stores to Mr. Lowry, the details of w h i c h were as follows: (i) a payment of S t g . ? 2 5 , 0 0 0 . 0 0 made on 9 t h October, 1990, lodged to an account in Bank of Ireland, Isle of Man and transferred on 20 t h May, 1992, to an account of Mr. Lowry in Irish Permanent Building Society, Cork; (ii) a payment of S t g . ? 4 0 , 0 0 0 . 0 0 made on 1 s t August, 1991, transferred from an account of Tutberry Limited with Rea Brothers (Isle of Man) Limited to an account of Badgeworth Limited, then transferred on 18 th May, 1992, to an account of Mr. Lowry with Irish Permanent Building Society, Cork; (iii) a payment of ? 4 0 , 0 0 0 . 0 0 made on 29 t h May, 1992, lodged to an account of Mr. Lowry with the Irish Permanent Building Society, Cork; (iv) a payment of ? 5 0 , 0 0 0 . 0 0 made on 27 t h May, 1992, and also lodged to an account of Mr. Lowry with the Irish Permanent Building Society, Cork. 14.12 The fourth category of payments identified by the McCracken Report related to Mr. Lowry's house at Holycross, County Tipperary, in respect of which the contractor had been by an paid ?395,107.00 engaged by for Dunnes that Stores, purpose. on foot of of certificates issued architect Arrears Residential Property Tax and interest also arose in this regard, as set forth earlier in this chapter. Matters referable to this 14.13 Tribunal The remaining instances are referable to this Tribunal, as detailed within this Volume. Firstly, in this regard is a further payment of ? 1 5 , 0 0 0 . 0 0 on 13 th November, 1992, to Mr. Lowry from the Dunnes Stores account at Bank of Ireland, Marino, which w a s drawn to the attention of the Tribunal by Mr. Lowry's advisers, by w h o m it w a s indicated that this p a y m e n t was a bonus to Mr. Lowry personally similar to those enumerated at paragraph 14-11 above amongst payments referable to the McCracken Tribunal. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.14 10 The next is a s u m of ? 2 5 , 0 0 0 . 0 0 from Mr. Bill Maher of Maher Meat Page | 427 Products, a UK based business, to Mr. Lowry, lodged to an account of Mr. Lowry, at Allied Irish Banks, Dame Street, Dublin 2, on 23 r d December, 1992. This was stated in evidence by Mr. Lowry to have been paid in respect of refrigeration consultancy w o r k undertaken by him personally. 14.15 The next are payments amounting to ? 1 5 , 0 0 0 . 0 0 , by Whelan Frozen Food Limited, in May, 1992, lodged to Mr. Lowry's account at Bank of Ireland, Thurles, and also contended by him to have been in respect of refrigeration consultancy w o r k undertaken by him personally. 14.16 The next is a s u m of ? 3 5 , 0 0 0 . 0 0 cash, stated by Mr. Lowry to have been paid to him by Mr. Pat Doherty for the sale of some antiques, of which ? 3 2 , 9 5 0 . 2 0 was, on 19 th May, 1995, lodged to an account of Mr. Lowry at Allied Irish Banks, Dame Street, Dublin 2. 14.17 Allied There then is a deposit of Stg.?100,000.00, made by Mr. Lowry with Irish Banks in the Channel Islands on 3rd S e p t e m b e r , 1991. In the McCracken Report, it was concluded that this s u m of S t g . ? 1 0 0 , 0 0 0 . 0 0 included the cheque for S t g . ? 3 4 , 1 0 0 . 0 0 detailed at paragraph 14-10 (viii) above. The evidence given to this Tribunal indicated that the account in question was first opened by Mr. Lowry with Allied Irish Banks in the Channel Islands in January, 1991, with a deposit of Stg.?55,000.00; this may have represented the bulk of the same funds noted in paragraph 14-10 (ix) above. The deposit matured on 17 th July, 1991, and the s u m of S t g . ? 1 0 0 , 0 0 0 . 0 0 proceeds of the matured deposit, plus the may have comprised the proceeds of the Stg.?34,100.00 cheque, together with a further small sterling draft drawn on Allied Irish Banks on 30 t h August, 1991. 14.18 The next instance relates to the account which was opened in the name of Mr. Lowry in Irish Nationwide (IOM) Limited in Douglas, Isle of Man, in October, 1996, with a lodgment of ? 1 4 7 , 0 0 0 . 0 0 . This account closed on 7 th February, 1997, and the source of the funds lodged to the account w a s a bank draft drawn by the late Mr. David Austin on his account with Bank of Ireland, Jersey, which was opened on 26 t h July, 1996, with ? 1 5 0 , 0 0 0 . 0 0 transferred from an account of Mr. Aidan Phelan, a close associate of Mr. Denis O'Brien, which the Tribunal was informed represented the proceeds of the sale of a property in Spain by Mr. Austin to Mr. O'Brien, but has found represented a payment made by Mr. O'Brien to Mr. Lowry channeled through Mr. Austin. 14.19 purchased The in next instance 1999, relates in the to the name property of Mr. in Mansfield, for a England, sum of March, Lowry, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 428 Stg.?250,000.00, as already addressed in this Volume. According to Mr. Lowry and Mr. Aidan Phelan, this was purchased by t h e m in partnership together, with Mr. Lowry and Mr. Phelan holding 10% and 9 0 % interests respectively. The deposit of S t g . ? 2 5 , 0 0 0 . 0 0 was paid from Mr. Lowry's own funds, and the balance due on completion was provided by Mr. Phelan from funds held in an account in Credit Suisse First Boston in London i n the name of Mr. Denis O'Brien. Mr. Phelan informed the Tribunal that he had the authority of Mr. O'Brien to draw this payment, and it represented an advance on a bonus payment he was negotiating with Mr. O'Brien in connection with services rendered by him to Mr. O'Brien. The Tribunal has also found that the funds used to complete the purchase of this property represented the proceeds of a p a y m e n t made by Mr. O'Brien to Mr. Lowry, through the conduit of Mr. Phelan. 14.20 Detailed evidence was also heard in relation to the property at Cheadle, England: according to Mr. Lowry, he intended to purchase this property for his sole benefit. It w a s intended to be taken in the name of Catclause Limited, of which company Mr. Lowry and his daughter were directors. A deposit paid in September, 1999, out of the surplus of S t g . ? 4 4 , 5 0 0 . 0 0 was of funds transferred to the client account of Mr. Christopher Vaughan, solicitor, for the Mansfield purchase referred to at paragraph 14-19 above. The balance for GE completion was paid in late December, 1999, with funds borrowed from Capital Woodchester/Investec Bank. The property was not taken in the name of Catclause Limited, but in the name of Mr. Vaughan. Relevant further evidence was heard from Mr. V a u g h a n at a late stage of the sittings referable to this Volume of this Part of the Report. The Tribunal has further found that the deposit S t g . ? 4 4 , 5 0 0 . 0 0 represented the balance of the payment made by Mr. O'Brien to Mr. Lowry, through the conduit of Mr. Phelan and that the borrowings Woodchester/Investec Bank were secured with the support of Mr. O'Brien. from 14.21 A final matter of potential relevance to the manner in which the Revenue dealt with Mr. Lowry's affairs arose from media reports which came to the attention of the Tribunal only at a late stage in the dealings between Mr. Lowry and Revenue. This related to a reputed involvement on the part of Mr. Lowry in a further English property transaction, the purchase of Doncaster Rovers Football Club, which ostensibly was acquired by interests referable to Mr. Denis O'Brien. Mr. Lowry denied any such involvement. Evidence in relation to this transaction was heard in 2 0 0 7 and subsequently, and has been addressed elsewhere in this Volume. 14.22 Regarding the final three items above, arguments were made to Revenue on behalf of Mr. Lowry to the effect that no basis for any taxation was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 429 disclosed, and it appears that Revenue t o o k the view that, at least until the Tribunal had published this Volume, no steps should be taken. REVENUE DEALINGS WITH REPRESENTATIVES O F MR. MICHAEL L O W R Y A N D G A R U D A IN R E L A T I O N T O T A X LIABILITIES 14.23 As was done in relation to the taxation affairs of Mr. Charles Haughey, the approach adopted by Revenue in relation to taxation of Mr. Lowry and Garuda was to monitor closely all relevant evidence at both the McCracken Tribunal and this Tribunal, and to investigate fully all relevant aspects in relation to potential civil liabilities under taxation law, in addition to any possible criminal consequences, with regard to both Mr. Lowry and Garuda. The officials primarily involved on behalf of the Investigation Branch of Revenue were Mr. Aidan Nolan and Mr. Liam Liston, both Principal Officers, and in dealing respectively with the civil and criminal aspects, they reported periodically on developments to Patrick Donnelly, Assistant Secretary of Revenue. 14.24 Mr. The investigation had c o m m e n c e d in November, 1996, on foot of the information that had been conveyed to Revenue as to the financing of building works to Mr. Lowry's home at Holycross, and media disclosures as to payments made by Dunnes interests. On 2 n d December, 1996, Oliver Freaney, Mr. Lowry's then tax agents, informed Revenue of possible errors or omissions in the tax returns made on behalf of both Mr. Lowry and Garuda. On 18 th April, 1997, Revenue received from Messrs. Ernst & Young, then also acting, a submission relating to additional liabilities for Mr. Lowry in relation to Income Tax and Residential Property Tax, and for Garuda in relation to PAYE, PRSI and Value A d d e d Tax. A payment of ? 1 0 0 , 0 0 0 . 0 0 on account of unpaid tax w a s enclosed with that submission, and it was indicated by Mr. Lowry's advisers that the Mr. aggregate of undeclared income amounted to approximately ? 5 0 0 , 0 0 0 . 0 0 . Liston viewed this s u m as falling short of a true figure, which he regarded as amounting to not less than ? 6 1 8 , 0 0 0 . 0 0 . 14.25 As Mr. Lowry had availed of the tax amnesty provided for by the Waiver Interests and Penalties Act, 1993, Revenue was in the first of Certain Tax instance precluded from inquiring into his affairs for the years prior to the tax year 1992/1993. In order to advance investigations in respect of that period, it was necessary for Revenue to make an application to the Appeal Commissioners under that Act to set aside the Certificate issued to Mr. Lowry, when he had availed of that tax amnesty. This was done, and an Order was made by the Appeal Commissioners on 3 r d November, 1997, with the consent of Mr. Lowry, thereby enabling further investigation into 1 9 9 2 / 1 9 9 3 and previous years to proceed. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.26 24 t h 10 A further indication of the intensification of the investigation arose on By Page | 430 February, 1998, when Mr. Lowry attended for an interview by Revenue. that time, Mr. Liston had formed the view that any question of possible criminal prosecution had reached the point that Mr. Lowry could be adversely affected by any admissions he might make at the interview. advisers of his intended course, Having forewarned Mr. Lowry's Mr. Lowry Mr. Liston proceeded to caution formally at the meeting, in effect warning him that any admissions he might make could be used against him in any subsequent criminal prosecution that might be brought by the Director of Public Prosecutions. Whilst undoubtedly the proper and j u s t course for Mr. Liston to have taken, this inevitably had the effect of giving rise to s o m e element of mutual tension between the civil and criminal aspects of the investigation, and in particular in complicating possible negotiations with Mr. Lowry's advisers with a view to reaching settlement of the civil liabilities resulting f r o m unpaid tax. However, efforts continued to be made to agree and resolve the undoubtedly substantial civil liabilities, and in addition to the ? 1 0 0 , 0 0 0 . 0 0 payment on account made in April, 1997, some four further payments on account were made in the course of 1997 and 1998, amounting to ?342,000.00. 14.27 Initial evidence was heard from Mr. Liston in March, 2001, indicating On the civil side of matters, the the progress of the investigation as of that time. principal unresolved aspect was determining how much more Mr. Lowry and Garuda would be required to pay to dispose of outstanding tax, interest and penalties, over and above the payments already made. In this regard, a very significant factor was whether or not Mr. Lowry would be found to have made w h a t Revenue describe as a voluntary disclosure in respect of the further matters under investigation, by virtue of the letter to Revenue from Oliver Freaney of 2 n d December, 1996. In essence, a voluntary disclosure occurs w h e n a taxpayer freely discloses a tax default to Revenue, rather than Revenue discovering it through an investigation. Whilst Mr. Lowry and his advisers contended that such a voluntary disclosure had been made, this was not accepted by Mr. Liston or his colleagues, w h o s e view on behalf of Revenue was that by 2 n d December, 1996, the relevant information was of a voluntary available to or ascertainable by a taxpayer involves by Revenue. very The making disclosure significant of advantages, both insofar as the a m o u n t of financial penalties in respect unpaid tax will be very substantially mitigated, and as the publication of the taxpayer's identity in the periodic list of tax defaulters will thereby be avoided. Apart from these civil aspects, the matter of w h e t h e r or not a criminal prosecution would be initiated by the Director of Public Prosecutions remained unresolved in March, 2001. In the circumstances of these unresolved matters, the Tribunal, in ease of Mr. Lowry and at the urging of his legal advisers did not then pursue further related inquiries or sittings, as it did not wish to interfere with or jeopardize their resolution. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.28 with the 10 Matters thereafter moved slowly for a time, reflecting a number of Page | 431 factors, including some understandable caution in advancing civil negotiations, spectre of a criminal prosecution still unresolved, and procedural difficulties which delayed the documentary records of Garuda becoming available to Revenue until early 2002. Revenue cannot be faulted in this regard as considerable difficulties were encountered by Revenue in gaining access to the relevant records of Garuda, which was secured only after High Court proceedings to that end. Contact between Mr. Lowry's advisers and Revenue resumed in the course of 2 0 0 2 by which time Revenue, based on the relevant records of Garuda, had been able to raise assessments in relation to the amounts of unpaid tax considered due. 14.29 Apart from the actual sums involved, the issue as to voluntary disclosure and the ongoing possibility of criminal prosecution, a more immediate concern for Revenue arose: were the liabilities those of Mr. Lowry personally, or of Garuda, and if liabilities were to attach to both, w h a t were the respective proportions? This in turn reflected not only Revenue concern as to where legal liability lay, but also as to the ability to pay on the part of Mr. Lowry and, more particularly, Garuda. With these factors in mind, protective assessments were raised on both Mr. Lowry and Garuda, thereby seeking to cover both options, although from an early stage it was felt in Revenue that Garuda was likely to bear substantially the larger portion of liability. From Mr. Lowry's own vantage point, a new impetus towards seeking to resolve issues with Revenue arose with the enactment in 2 0 0 1 of the Standards in Public Office Act, under Section 2 1 of which he w a s obliged, within nine months of election or re-election as a T.D., to provide either a tax clearance certificate, or a d o c u m e n t referred to in that Act as an application settlement. 14.30 Thornton, A meeting of representatives of both sides was held on 2 n d S e p t e m b e r , 2002. This was at the request of Mr. Denis O'Connor, of Messrs. Brophy Butler chartered accountants, who had by then become Mr. Lowry's tax agents. Both Mr. Liston and Mr. Nolan attended on behalf of Revenue, and Mr. O'Connor was accompanied by Mr. Neale O'Hanlon, also of Brophy Butler Thornton, whose primary concern was with the representation of Garuda. From the minutes of the meeting, it appears that Mr. O'Connor acknowledged his awareness that Mr. Lowry had received a caution in regard to a possible criminal prosecution, but nonetheless indicated that he wished to advance matters in relation to the civil tax liability by seeking to agree figures for payments and benefits, and then to decide by w h o m the resultant tax and associated liabilities were properly payable. This course appeared to have been acceptable to Revenue, and Mr. Nolan recalled in his evidence that, contrary to Revenue's view that the entity primarily liable was Garuda, the initial submission advanced by REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 At Page | 432 Brophy Butler Thornton was that the primary liability was that of Mr. Lowry. that point, it seems that Brophy Butler Thornton, which were also auditors to Garuda, had not been in a position to close off the accounts of Garuda for the year ended 2001, and there was a concern that, if Garuda was liable for the tax protectively assessed, the c o m p a n y could be insolvent, and unable to trade further. On foot of this agreed basis of co-operation, estimated income and tax figures were provided by Revenue to the tax agents for discussion purposes, and Mr. O ' C o n n o r documentation in turn made available to Revenue a wide range of accounts, and analysis relating to Mr. Lowry's financial transactions, including off-shore account documentation, the production of which was not then yet legally compellable under existing law. 14.31 Further meetings between the same representatives followed in December, 2002, with attention being given to all the items comprised in a Table of Income Figures prepared by Revenue, setting forth the substantive giving rise to unpaid tax, as s u m m a r i z e d earlier in this chapter. matters Apart from resolving a number of matters in relation to rates of tax applicable, discussion appears to have centered upon three issues affecting the aggregate computation of figures undisclosed for tax purposes. These were firstly, a deduction that Mr. O'Connor considered should have been allowed in respect of a p a y m e n t to a UK supplier, secondly, a figure of S t g . ? 1 0 0 , 0 0 0 . 0 0 referred to at page 25 of the McCracken Report as a lodgement made by Mr. Lowry to an Allied Irish Banks Channel Islands account on 3rd September, 1991, which Mr. O'Connor considered had been double-counted in the figures provided by Revenue, and thirdly, a contention by Mr. O ' C o n n o r that the Revenue computation of the value of the renovation works at Mr. Lowry's Holycross house substantially exceeded their actual value. Additional discussions led to the first two such matters being agreed in accordance with Mr. O ' C o n n o r ' s contentions, and the third being agreed on the basis of the Revenue valuation of the Holycross works. 14.32 By 31 s t March, 2003, matters had progressed to the extent of Mr. O'Connor furnishing Mr. Nolan with a draft letter for discussion purposes, setting out proposals for finalising the liabilities of both Garuda and Mr. Lowry. The s o m e w h a t tentative f o r m of the letter probably reflected ongoing concern at the continuing criminal investigation, and the caution previously administered by Mr. Liston. In the letter, Mr. O'Connor calculated the aggregate tax due by Mr. Lowry and Garuda as EUR 1 , 0 9 6 , 1 8 4 . 2 4 , but this figure was based upon assumptions that a voluntary disclosure had been made, thereby mitigating all penalty payments by 95%, that interest should not be charged beyond 31 s t March, 1998 (arguing that a settlement on a similar basis had been aborted through Revenue's cancellation of a meeting with the tax agents at that time), and that the lower figure for the house renovations should be accepted by Revenue. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.33 meeting 10 Within days, Revenue conveyed emphatically to Mr. O'Connor at a that this sum, and the assumptions governing it, were wholly Page | 433 unacceptable. Mr. O'Connor responded that substantially larger figures would be beyond the capacity of both Mr. Lowry and Garuda, and that, if agreement could not be reached, Garuda would have to be treated as insolvent, and would have to be liquidated. Much attention was given by Revenue to this contention of inability to make full payment on the part of Garuda, and copies of accounts and other documentation detail. The regarding its financial capacity were sought and examined substantial matter of concern for Revenue, as in other already mentioned, was w h e t h e r the civil tax liability should rest with Mr. Lowry, Garuda, or be shared between both. 14.34 Prior to the end of August, 2003, Revenue finalised their quantification of tax, interest to March, 2003, and penalties, these last being c o m p u t e d on a basis of being full penalties payable by both Mr. Lowry and Garuda, in effect rejecting the argument that voluntary disclosure had been made. As regards Mr. Lowry, the total s u m assessed was EUR 1 7 3 , 0 7 4 . 0 0 , being in respect of additional Residential Property Tax on the revaluation of his residence, Income T a x on the payments from Maher Meat Products and Whelan Frozen Foods, plus interest on undeclared bank deposits, both Irish and off-shore. In the case of Garuda, the EUR1,708,620.00 total inclusive of interest to March, 2003, and penalties was being in respect of Valued A d d e d Tax, PAYE and PRSI in respect of the payments identified by Revenue from the McCracken Report, the public sittings of this Tribunal, and its own examinations. 14.35 In his evidence, Mr. Nolan stressed the careful consideration that had Revenue to the matter of whether finalised assessments been given within should be made against Mr. Lowry or Garuda or, if both, the respective amounts. In making substantially the larger assessment against Garuda, he had had regard to a number of factors, including the clear documentary course of dealings w h e r e b y Dunnes payments were consistently expressed as having been made to Streamline Enterprises, as the trading name of Garuda, and invoices furnished to Dunnes were similarly expressed, and quoted the relevant Valued A d d e d Tax number. Mr. Nolan also recalled speaking to Mr. Ben Dunne in this regard, and being informed by him that his dealings had been with Streamline Enterprises, and even in the instances where no documents were available, Mr. Nolan and his colleagues formed the view that the trading entity was Garuda rather than Mr. Lowry. Indeed, Mr. Nolan expressed his concern that, other than in the instances which had no connection with Garuda, had Mr. Lowry been assessed personally, Revenue might well have been unsuccessful in any hearing before the Appeal Commissioners. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.36 penalties Revenue 10 The contention of inability to pay the full a m o u n t of tax, interest and made on behalf of Garuda also led to a detailed examination by and Page | 434 of all relevant documentation in regard to its trading position prospects. On foot of this, both Mr. Nolan and Mr. Liston concluded that the position of the c o m p a n y was frail and unpromising, that a genuine incapacity to discharge the assessments in full was then disclosed, and that the option of liquidation would be lengthy, and unlikely to lead to any ultimate outcome preferable to a realistic negotiated settlement. Mr. Nolan in evidence expressed the view that, if this option had been pursued, less than the actual tax assessed would in the ultimate have been available, never mind the interest and penalties. 14.37 These considerations concentrated the minds of both sides towards seeking a negotiated settlement. At a meeting on 17 th April, 2003, Mr. O ' C o n n o r detailed further intended sources of funding, and indicated that the further s u m that could be raised was EUR 9 0 0 , 0 0 0 . 0 0 . highest Mr. Nolan responded that, even if allowance was made for inability to pay, he could not r e c o m m e n d so discounted an amount, and urged Mr. O ' C o n n o r to improve his offer. on 30 t h Returning June, 2003, Mr. O ' C o n n o r said an increased further EUR 1 0 0 , 0 0 0 . 0 0 could with difficulty be raised, and it appears that in August, 2003, it was agreed in principle that if such an aggregate s u m of EUR 1 , 0 0 0 , 0 0 0 . 0 0 was paid in reduction of the overall Garuda assessment, Mr. Nolan w o u l d r e c o m m e n d that the balance outstanding for interest and penalties would be waived on a basis of inability to make full payment. That balance amounted to EUR447,000.00. Of the EUR 1 , 0 0 0 , 0 0 0 . 0 0 further payment, EUR 1 3 5 , 0 0 0 . 0 0 was paid in November, 2 0 0 3 , and it was initially understood that the balance would be cleared the following month. 14.38 However, matters then stalled. This s e e m s to have been due to a number of factors, including a further downturn in the business of Garuda, a concern on the part of Revenue that it might be premature to conclude a settlement if this Tribunal had yet to e m b a r k on possible public sittings into the UK property transaction involving Doncaster Rovers, and a concern on the part of the advisers to Mr. Lowry and Garuda that the process of settlement might compromise their situation, if criminal proceedings were instituted, against Mr. Lowry and/or Garuda. 14.39 Nevertheless, telephone contact was maintained between the various representatives, a brief correspondence t o o k place with Ms. S u z a n n e Kelly, a Tax Practitioner, and eventually substantive contact between Mr. O'Connor and Mr. Nolan was resumed in 2 0 0 5 . This led to an email being sent by Mr. Nolan to Mr. O'Connor on 5 t h May, 2005, the contents of which may usefully be set forth as a record o f t h e updated basis of understanding between both sides. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter "Denis, As you are aware ofAugust VAT PAYE 2003 Garuda's was EUR EUR EUR Interest Penalties EUR EUR 158,603 548,009 706,612 595,375 406,633 Liability 10 Page | 435 based on discussed figures at the end EUR1,708,620 Payments to that date amounted That amount of Interest to EUR570,808 leaving a balance 2003. tax due is of EUR135,804. still the matter company's [sic] accept was finally paid in November and Penalties on this debt. in full. There I am aware of the too "full to inability claim to pay this amount payment I am not prepared as representing a the proposed of EUR664,000 Ltd." and final settlement accept further prepared, acceptance Ltd. could the criminal (a) (b) (c) Subject the payment untoward in respect of Garuda I would be prepared as a further payment arise from the on account Tribunal and should I would nothing then be Moriarty as discussed, to recommend to the Revenue as the maximum prejudice Commissioners sum Garuda of of of a formal offer of EUR1,261,250 now raise. This would be without to the outcome on receipt Lowry. investigation Present and would ofcourse be conditional for Michael day value Statement of Affairs Ltd. Latest Draft Accounts Further to the information above and of Garuda if we deem it pending receipt necessary. of an I regard offer in settlement as acceptable still under At present General. to the Revenue Appeal. the status Commissioners the assessments of the SIPO certificate is proper to the Collector This can be discussed of Michael further at our next meeting. Revenue If it is the intention Lowry to issue a public statement statement. O'Hanlon the meeting office. will have no input into the text of the Reviewing arranged Regards, Aidan" my conversation for next Monday, with Neale 9th has been May, 2005, at 10:30 in my REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.40 9th 10 On foot of these arrangements, a further meeting duly t o o k place on Mr. O'Connor furnished Mr. Nolan with a updated The Page | 436 May, 2005, on which occasion cheque for the outstanding balance of EUR 6 6 4 , 0 0 0 . 0 0 in addition to documentation in relation to the financial position of Garuda and Mr. Lowry. payment was enabled by bank borrowings taken out by Mr. Lowry, and other sources which were disclosed both to Revenue and to the Tribunal in private investigations, which it w a s not necessary to particularise in evidence. 14.41 Although Mr. Lowry had accordingly paid on behalf of Garuda w h a t Mr. Nolan had indicated would be sufficient for him to r e c o m m e n d settlement to the Board o f t h e Revenue Commissioners, no such approval was granted or sought in the immediate aftermath o f t h e May, 2005, arrangements. It would appear that, from the viewpoint of Revenue, a s h a d o w had been cast over the matter by reason of both relevant public sittings of the Tribunal not having concluded, and a decision whether or not to bring criminal prosecutions not yet having been made. This element of probably understandable caution in seeking to conclude matters was evident w h e n Revenue witnesses testified in April, 2006. 14.42 Mr. in Nolan this dealt with and the majority of that, matters over that have been limited summarised discretions to chapter, confirmed and above in conclude final settlements with taxpayers vested Revenue officials of different grades, higher settlements had to be approved by the Board of the Revenue Commissioners. Any such positive recommendations as he himself had made to the Board in the past in this regard had been accepted, and he had been prepared to r e c o m m e n d settlement regarding Garuda in May, 2005, but, the matter having not then been resolved, he still had to receive a formal offer and reappraise G a r u d a ' s inability to make full payment, and in the light of those factors he then might or might not r e c o m m e n d settlement. Accordingly, he viewed the position as of May, 2005, as limited to being a snapshot as of that time. As to the matter of publication as tax defaulters, Mr. Nolan stated that it was and remained the view of Revenue that relevant details in regard to both Mr. Lowry and Garuda would in due course be published in this fashion. 14.43 As Assistant Secretary of Revenue, Mr. Donnelly acknowledged having been briefed periodically on the matter by Mr. Nolan and Mr. Liston, and having approved of how they had conducted matters, but he felt that the position had remained some distance short of a binding settlement. Whilst the matter was one of hundreds of cases being pursued by Revenue, its most conspicuous factor was the high profile of Mr. Lowry. Although the financial sums involved were not in relative terms huge, he accepted that a potential write-off of close to EUR 5 0 0 , 0 0 0 . 0 0 for a c o m p a n y of modest proportions was sizeable. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 14.44 Mr. Liston, who had testified 10 in more detail at earlier sittings, Page | 437 confirmed Mr. Nolan's evidence, and stated that his primary function in relation to the negotiations had been to ensure that the potential criminal aspects of the investigation were not compromised. He confirmed in response to counsel for Mr. Lowry that it was standard practice to caution a suspect where there was a prospect of a prosecution being brought. The treatment of Mr. Lowry had been "very much by the book", and was neither more robust nor more favourable than would have applied to anyone else selected for criminal investigation. As to the proposed discounting of the Garuda assessments, this was based on inability to pay, and reflected as large a s u m as could be bargained for, on foot of company accounts that were far from promising. 14.45 Mr. Frank Daly, Revenue Chairman, then testifying in relation to both Mr. Haughey and Mr. Lowry, alluded to the tension that had arisen in seeking to conclude the recoupment of unpaid tax by Mr. Lowry and Garuda, and the danger of cross-contamination between civil and criminal aspects. Given the then unresolved position regarding a criminal prosecution, and the ongoing financial position of Garuda, he felt that it was premature to state w h a t final view he would take on the terms of settlement proposed in 2 0 0 5 . 14.46 On 19 th February, 2007, the Tribunal was notified by the solicitor to been conveyed by the Office of the had been made Director of Public a Revenue that it had Prosecutions to Revenue that a decision not to institute prosecution against either Mr. Lowry or Garuda. In the light of that decision, and further dealings had between the respective representatives, it appeared likely to the Tribunal that a final settlement of the outstanding tax liabilities in issue, either in terms of the 2 0 0 5 arrangements or in revised and related terms that were broadly similar, was likely to be reached. 14.47 Later that year, the settlement arrangements were duly finalised. With regard to Garuda Limited, a total liability of EUR 1 , 2 6 1 , 2 5 0 . 0 0 was discharged in respect of underdeclaration of V A T and PAYE/PRSI, consisting of EUR 7 0 6 , 6 1 2 . 0 0 for tax, and EUR 5 5 4 , 6 3 8 . 0 0 for interest and penalties. the aggregate liability discharged for As to Mr. Lowry personally, of Income Tax was underdeclaration EUR 1 9 2 , 1 2 0 . 2 4 , consisting of EUR 6 3 , 5 1 6 . 0 9 for tax, and EUR 1 2 8 , 6 0 4 . 1 5 for interest and penalties. As had been expressed as the intention of the Revenue, and was required by Section 1086 o f t h e Taxes Consolidation Act, 1997, particulars o f t h e settlement, amounting in total to EUR 1 , 4 5 3 , 3 7 0 . 2 4 , were set forth in the list of Revenue defaulters published in the Iris Oifigiuil edition of 25 t h S e p t e m b e r , 2007. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 CONCLUSIONS Page | 438 14.48 In the investigations, assessments and negotiations carried out by Revenue in relation to the relevant unpaid tax liabilities, Mr. Nolan and Mr. Liston in general terms discharged their duties in a manner that was diligent and professional. Given the difficulties involved in the case, the eventual resolution was justified and satisfactory. The delay in bringing finality to the negotiations primarily related to the mutual tension arising as a result of deploying criminal and civil procedures at the same time, and Revenue cannot be faulted in this regard. 14.49 From the evidence heard, in particular with regard to prior media reports, it would appear that the initial approach made to Revenue by Mr. Lowry's then tax agents was correctly viewed by Revenue as not constituting voluntary disclosure. It is noted that the overall quantification of financial penalties on the basis of an absence of voluntary disclosure was not queried by or on behalf of Mr. Lowry or Garuda, and that any element of discounting arose solely on a basis of inability to pay on the part of Garuda. 14.50 Whilst local tax officials did become aware of potential irregularities at Mr. Lowry's Holycross house, this was in a context referable to those then carrying out works at the initial stages, and not Mr. Lowry. Given the absence of any evidence that an extension was then being constructed, the location of the premises, the self-assessment nature of Residential Property Tax, and all other circumstances, it would be setting forth an inordinately high duty of care to criticise Revenue for not having physically inspected the premises, or investigated further in advance o f t h e 1996 media disclosures. 14.51 The issue of which taxable entity should be held liable for undeclared income was an important and substantial decision to be made by Revenue. Whilst it is accepted that the constraints of the tax code and the documentation existing in relation to material payments left Revenue little option but to regard the majority of payments made by Dunnes as having been received by Garuda, it is noteworthy that minimal if any evidence exists of any such payments having been reinvested into the growth of the Garuda business or otherwise having accrued to its benefit. On the contrary, the almost invariable course of dealing appears that the payments were appropriated to Mr. Lowry's personal benefit, either by encashment or lodgment to Irish or off-shore bank accounts in his name. Most reprehensibly, of the sums intended to be dispensed among Garuda It is readily understandable that of employees as Christmas bonus payments, these appear to have been personally appropriated in their entirety by Mr. Lowry. Revenue had to "shoehorn" the apparent liabilities within the constraints REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 439 existing law and practice, and that there was anxiety to avoid any speculative or incorrect basis of assessment. Nonetheless, this was a case of Mr. Lowry as agent having personally benefited from the vast preponderance of payments ostensibly paid to his c o m p a n y as principal, and given the forms of redress that can be pursued in civil law against an agent in similar circumstances, it would seem desirable that s o m e form of provision be made in tax law and practice for holding an agent liable in such circumstances, particularly if a c o m p a n y as principal is likely to be insolvent. Having said this, it is also right to note that Mr. Lowry and his advisers are entitled to credit for raising substantial funds on behalf of Garuda, rather than saddling Revenue with a poorer outcome from a potentially insolvent company. 14.52 Further b y w a y of recommendation, reference has already been made to the difficulties raised for both Revenue and taxpayer by the mutual tension between the criminal and civil aspects of investigation. From the evidence, it would s e e m that although Mr. Nolan and Mr. Liston both sought to define their separate functions, they carried out their duties in t a n d e m and as a team, so that any such demarcation could be said to be little more than notional. It is surely in ease of both Revenue and taxpayer in cases involving both a criminal and civil investigation that meetings and other dealings on each aspect assume s o m e real and physical demarcation, thereby facilitating prompt payment of arrears in a manner that will be demonstrably without prejudice to a legal caution, or other processes proper to the separate criminal investigation. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 5 15.01 Page CONCLUDING OBSERVATIONS | 440 In concluding this V o l u m e with a brief overview, it is of interest to refer to a number of characteristic features that appeared c o m m o n to most, if not all, of the individual transactions and dealings addressed in the preceding chapters. Non-disclosure 15.02 First and foremost of these was the fact that, although at least a substantial portion of these matters was acknowledged by Mr. Michael Lowry to be material to the Tribunal's Terms of Reference, none of t h e m was brought to the attention o f t h e Tribunal until the disclosures of March, 2001, from Mr. Matt Cooper, donation, and and from the Investec Cheadle Bank, regarding respectively in turn the $50,000.00 further transaction. These prompted information being furnished on the part of s o m e affected persons in relation to the transactions involving Carysfort, Marbella and Mansfield, and by Mr. Barry Maloney, in response to queries raised by the Tribunal, in relation to a number of material conversations had between him and Mr. Denis O'Brien. It is reasonable to assume that, in the absence of w h a t had thus been conveyed by Mr. Cooper and Investec, the Tribunal would in early course have concluded its outstanding inquiries relating to the late Mr. Charles Haughey, and found no basis of association between Mr. Michael Lowry and Mr. Denis O'Brien, in any context referable to the Terms of Reference. The withholding of all of this information and, as later emerged, the furnishing of much false and contrived documentation and evidence, delayed and extended completion of this crucial portion of the Report inordinately. Much that was offered in the evidence of affected persons, mainly by w a y of contention that matters were not relevant to the Tribunal was unconvincing in the extreme. Things are not what they seem 15.03 once Apart from concealing in the first instance from the Tribunal transactions and dealings that ought to have been disclosed, it was the case that, such matters had emerged, some affected persons and their representatives contended that, promptly set about depicting t h e m in terms in which, it was however uneasily or uncomfortably they might sit with the apparent meaning of w h a t s e e m e d to occur, no adverse inferences within the Terms of Reference were warranted. The most significant and recently uncovered instance of this was the wholesale falsification and suppression of much crucial documentation in the files of Mr. Christopher Vaughan, the UK solicitor w h o acted for Mr. Lowry in respect of the Mansfield and Cheadle transactions, and for Mr. O'Brien in respect of the Doncaster Rovers transaction. By the truncation of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 441 certain documentation, and the removal of other documents, it was possible to make available to the Tribunal a documentary record of events which could have appeared, at least on a strained interpretation, to accord with false evidence provided on important aspects of the property transactions, particularly Cheadle and Mansfield. 15.04 respond As to the $ 5 0 , 0 0 0 . 0 0 donation to Fine Gael, w h a t might have s e e m e d a disposition on the part of Mr. O'Brien that his consortium, Esat Digifone, should handsomely, yet discreetly, to a major international fundraising endeavour, on the part of the main party in the Government that had recently awarded the G S M licence to Esat Digifone, was explained in evidence by Mr. O'Brien as an essentially autonomous move by his Norwegian partner, Telenor, with the object of becoming more involved in Irish affairs, giving rise to a payment that he stated would have been inappropriate for himself, but which he later indemnified, although only in response to "bullying" never have foreseen. by Telenor, that he could 15.05 Similarly, the later undisclosed instances of money from accounts of Mr. O'Brien moving covertly, via intermediaries, to Mr. Lowry, in one instance being abruptly returned on the establishment of the McCracken Tribunal, and in the other, proceeding to fund substantial proportions of the Mansfield and Cheadle purchases, are given apparent justification in evidence by a series of loans, other financial transactions purporting to constitute remuneration, and property transactions in differentjurisdictions. These entailed the transmission of ? 1 4 7 , 0 0 0 . 0 0 to Mr. Lowry, described by Mr. O'Brien on the one hand, and Mr. Lowry on the other hand, as two separate and independent transactions, f r o m which it appeared, as it was contended, purely coincidentally, that that s u m of money was transferred, covertly, from an off-shore account of Mr. O'Brien to an off-shore account of Mr. Lowry. Likewise in the case o f t h e Mansfield transaction, the transfer of S t g . ? 3 0 0 , 0 0 0 . 0 0 f r o m an account of Mr. O'Brien to Mr. Lowry's account with Mr. Christopher Vaughan, was as the result of, w h a t was again contended to be two purely coincidental transactions. The Stg.?300,000.00 transferred from Mr. O'Brien's account to Mr. Lowry's account, was stated to have constituted remuneration to Mr. Aidan Phelan who, it was testified, was coincidentally to go into business with Mr. Lowry at the selfsame time. 15.06 Just as Mr. O'Brien did not bring any of these matters to the attention of the Tribunal, neither did Mr. Lowry bring to the attention of the Tribunal his Isle of Man off-shore bank account to which the ? 1 4 7 , 0 0 0 . 0 0 was credited, nor his account with Mr. Christopher V a u g h a n to which the s u m of S t g . ? 3 0 0 , 0 0 0 . 0 0 was credited. In the case of the Cheadle transaction, the plain words of two intimate associates of Mr. O'Brien to the effect that he w a s behind a transaction entailing REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter a loan of Stg.?420,000.00 for the 10 benefit of Mr. Lowry, as recorded by Page | 442 responsible officials of Investec Bank, with no vested interest, were dismissed as the result of misunderstanding, confusion or even fabrication on the part of the officials, or in the case of one of Mr. O'Brien's associates, as a result of representations which he conceded had probably been made by him, but which he had stated in evidence were unauthorised and false. None of these matters could readily, if indeed at all, have been gleaned from the ostensible money trail facts. Again, the recorded expression of views of a number of professional witnesses, to the effect that Mr. Lowry had an interest in the Doncaster Rovers transaction, disputed by Mr. O'Brien, was met by a series of explanations based on mistake, or inaccurate note-taking on the part of professionals w h o , despite such mistakes and unprofessional behaviour in so serious a matter, nevertheless continued to be retained by Mr. O'Brien on the one hand, and Mr. Lowry on the other. Recurring personnel 15.07 The most delicate liaison roles in all the transactions and dealings under review appear always to have been undertaken by a small number of close confidants, essentially, in the case of Mr. O'Brien, the late Mr. David Austin and Mr. Aidan Phelan. The former was the initiator and conduit involved in the $50,000.00 payment to Fine Gael, was the person who had a central role in dealings pertaining to both Carysfort and Marbella, and also had a significant role in the Friends and Family share transactions. The latter initially emerged in evidence as the individual who made the vital approach to the former in 1997, with regard to confirmation that $ 5 0 , 0 0 0 . 0 0 had made its w a y to Fine Gael, by which time Mr. Austin w a s gravely ill, was centrally involved in implementing Mr. O'Brien's directions as to the dealings with his funds which are addressed in the chapter entitled "From Carysfort to Marbella", was involved in both the crisis inquiries undertaken in consequence of the conversations between Mr. O'Brien and Mr. Maloney, in addition to the Friends and Family share transactions, and was a pivotal figure at critical stages of each of the three UK property transactions examined. 15.08 As regards Mr. Michael Lowry, his accountant and friend, Mr. Denis O'Connor, was intimately involved on his behalf from the Tribunal's earliest days, and indeed going back as far as the McCracken Tribunal, in a like role. Having become so emphatically identified with Mr. Lowry, it came as an appreciable surprise in latter evidence to learn of his extensive and undeclared involvement in numerous guises referable to each of the three UK property transactions, including dealings with aspects of the Doncaster Rovers transaction, at the request of Mr. Denis O'Brien Senior, and his cryptic peregrinations in this regard REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter are examined Vaughan, he, in Chapters as a 9 and 10 10. In c o m m o n witness, attained only with a degree Mr. Christopher range of Page | 443 professional and involvement that was unique in the lengthy hearings held. Finally, whilst in no sense indicative in itself of an involvement in the Doncaster Rovers transaction on the part of Mr. Lowry, the disposition towards recurring personnel was exemplified w h e n Mr. Bill Maher and Mr. Pat Doherty, two business associates of Mr. Lowry w h o had made payments to him that were addressed in the s o m e w h a t uncontroversial evidence heard in 1999, in regard to Mr. Lowry, made unexpected reappearances as persons w h o had been involved in the embryonic stages of that transaction. Witnesses refuse to attend 15.09 Mr. Peter Potentially critical witnesses who were not compellable, being resident Two of them, Mr. Kevin Phelan and with clear connections to the outside the jurisdiction, declined to testify. Muldowney, both Irish nationals, jurisdiction, relied on the fact that they were outside of the Tribunal's reach in failing to cooperate with it, despite the fact that, in the case of Mr. Peter Muldowney, he was an executive of a company, Messrs. Donaldson Jenrette, which was at the time associated with major international institutions. Mr. Karl Tully, resident in the Isle of Man, an official Lufkin & financial of Irish Nationwide Bank in the Isle of Man, also declined to testify, despite the fact that Irish Nationwide Bank was wholly owned by Irish Nationwide Building Society in Dublin, and transacted, as far as can be j u d g e d , most of its business with the Dublin-based Building Society. Mr. Christopher Vaughan, although ultimately a witness at the Tribunal's proceedings, attended only belatedly after several prior refusals. In the delay occasioned by concealment, Mr. David Austin, w h o would have had much important information to convey to the Tribunal, passed away. Professional persons' actions are inexplicable 15.10 Apparently competent and intelligent businessmen and professional persons comport themselves with inadvertence and loss of memory, or make unorthodox or capricious decisions, which can scarcely characterise their normal dealings. Instances include: (i) board members of both Esat T e l e c o m and Esat Digifone, with the aid of eminent legal and financial advisers, seeking confirmation of receipt of the $50,000.00 by Fine Gael, do so from Mr. Austin, rather than Fine Gael, palpably the only authoritative source of confirmation, not least having regard to the fact that an approach at that juncture to Fine Gael could REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 money had not by then been Page | 444 have elicited only a response that the received; (ii) correspondence and evidence suggesting that Mr. Christopher V a u g h a n , as a specialist conveyancing solicitor, was prone to confusing the nature of instructions given to him in property transactions by Mr. Kevin Phelan; (iii) Mr. Aidan Phelan, purporting to forget or overlook w h a t was a unique and relevant opening of a substantial account on behalf of Mr. O'Brien, w h e n specifically queried in that regard by Mr. Owen O'Connell, in the course of investigations conducted by Esat Digifone and Esat T e l e c o m in advance of the latter's IPO; (iv) Mr. Peter Muldowney, as an experienced stockbroker, and on the strength only of a supposed reference to Mr. David Austin's health in a telephone conversation, making him, rather than Mr. O'Brien's father-in-law, Mr. Noel Walshe, the beneficiary of a significant share transaction; (v) Mr. O'Brien and Mr. Aidan Phelan, apparently agreeing a considerable financial advance of S t g . ? 3 0 0 , 0 0 0 . 0 0 , from the former to the latter, which funded much of the purchase price of the Mansfield and Cheadle transactions, at a time and in a manner which was devoid of business efficacy, proper accounting, or fiscal procedures; (vi) Mr. Michael Lowry, given his evidence as to entitlement only to 10% of the beneficial specialist interest Capital in the Mansfield Tax advice property, from a seeking colleague and of obtaining Mr. Denis Gains O'Connor, consistent as was conceded in evidence by Mr. O'Connor, only with a substantial interest in the property; (vii) Mr. Denis O'Connor, Mr. Lowry's accountant and representative, and a person s y n o n y m o u s with him, deciding to interpose himself as a broker between Westferry and the Doncaster vendors, for no other reason than that the retention fund disputes were apparently issues of personal fascination for him. 15.11 If indeed a measure of falsification and reconstruction has been deployed, to enable a false picture to be conveyed in respect of crucial aspects of evidence, as the Tribunal finds, haste or panic may have contributed to errors being made, and gaps being left. This may be an element in Mr. Lowry and his daughter having appeared ascertainably for a period as directors of Catclause Limited in the UK, and the needless duplication of typing errors in reconstituted correspondence emanating from Mr. Christopher Vaughan. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter " Chinese 15.12 10 Walls" The nature of this concept was explained in an earlier chapter. In Page | 445 practice, w h a t it amounts to, in the context of dealings between affected persons and their associates, is a professed course of conduct on the part of such persons, having obvious c o m m o n concerns and interests in matters of particular sensitivity, to avoid conversing or otherwise c o m m u n i c a t i n g on those matters. Its existence in practical terms was first noted in Part I o f t h e Report, which referred, at Chapter 3, paragraphs 116 and 117, to how Mr. Charles Haughey had testified that conversations with Mr. Desmond Traynor during the latter's visits, w h e n administering Mr. Haughey's bill-paying service, never addressed the identities of Mr. Haughey's benefactors, but were confined to vague and general discussions on the state of the e c o n o m y and the nation. S o m e such instances are noted in earlier chapters of this Volume relating to the money trail, particularly the $50,000.00 donation, and the Carysfort and Marbella transactions, where the nature and content of conversations had with the late Mr. David Austin, a convivial and widely informed person, w h o enjoyed friendship with each of Mr. Lowry, Mr. O'Brien and Mr. Aidan Phelan, w o u l d from much of their evidence appear to have been strangely inhibited and curtailed. Confusion advanced as recurring theme 15.13 Mr. Christopher V a u g h a n , in a written response to a Tribunal query form" and "short himself and form" letters, produced an exchange of Phelan, in which Mr. Kevin concerning the "long correspondence between Mr. Kevin Phelan suggested that the generation of those letters s t e m m e d from confusion in Mr. Christopher V a u g h a n ' s mind as to w h o his client was at various times in relation to the Cheadle transaction, and to s o m e transaction. extent also the Mansfield Mr. V a u g h a n himself, in a letter to Mr. Lowry, adopted this as the both the "long form" and "short form" explanation for his having generated letters. Mr. V a u g h a n persisted with this explanation until new documentation, which came to light in the course of his evidence in 2009, made it impossible for him to sustain the proposition. 15.14 Confusion was on another occasion advanced as an explanation for unusual aspects o f t h e transactions. This occurred in the course o f t h e evidence of Mr. Lowry, who Phelan's offices indicated that the purpose of his meetings at Mr. Aidan 15 th March, 2001, and at the in Clanwilliam Court on the Regency Airport Hotel s o m e days later, was to endeavour to get to the bottom of w h a t he effectively described as an extremely confusing situation, namely, the suggestion that he should be drawn into a controversy, involving an implication that he had a continuing involvement in the Cheadle transaction, and that that REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 446 involvement was connected also with an involvement of Mr. Denis O'Brien, in the eyes of Investec Bank. 15.15 Again, it was contended that it was confusion, on the part of Mr. Vaughan, 1998, which prompted him to write to Mr. Lowry on 25 t h Christopher September, consistent in relation to the Mr. Lowry being Doncaster a Rovers acquisition, party to that in terms only with principal transaction. Likewise, Ms. Ruth Collard, a senior litigation partner in Messrs. Carter-Ruck, Mr. Denis O'Brien's solicitors in London, was confused w h e n she recorded Mr. Denis O'Connor informing her that Mr. Lowry was involved in that transaction, according to Mr. O'Connor. Little by way of genuine confusion 15.16 There was in fact little by w a y of genuine confusion concerning these Once the entirety of the facts of the transactions had emerged, by transactions. the time of Mr. V a u g h a n ' s evidence in 2009, and once also from that evidence the extent of the lengths to which individuals connected with those transactions had gone in order to obscure or conceal t h e m became clear, it was possible to discern the real source of confusion. The confusion s t e m m e d , not from the simple transactions themselves, which were fairly ordinary purchases of uncomplicated pieces of property in the UK, but rather from the repeated attempts to obscure the transactions, to conceal Mr. Lowry's involvement in them, the extent of his involvement in them, and the fact that his involvement persisted after he had claimed to have ceased to have any interest in the Cheadle transaction. 15.17 Because these transactions were conducted in the UK, there was obviously a much reduced likelihood of their coming to the attention of the Irish public and therefore, unless directly through the actions of any person involved in them, they were unlikely to come to the attention of the Tribunal. As Mr. Lowry's initial dealings with the Tribunal were conducted, or at least mediated, through the e n g a g e m e n t of Mr. Denis O'Connor, the non-disclosure to him of any aspect of those transactions, either the loan from Investec Bank for the Cheadle transaction, or w h a t w a s contended as the loan from Mr. Aidan Phelan to fund the Mansfield transaction, effectively shielded those activities from the view of the Tribunal. This also applied to the funding of the Carysfort refurbishment, by In other words, w a y of w h a t Mr. Lowry contended was a loan from Mr. Austin. every aspect of Mr. Lowry's property dealings, which were connected directly or indirectly, either through Mr. David Austin, or Mr. Aidan Phelan, with Mr. Denis O'Brien, were excluded until 2 0 0 1 from the view of his accountant, Mr. Denis O'Connor. As Mr. O ' C o n n o r w a s Mr. Lowry's interface with the Tribunal, those It is striking that transactions were therefore obscured from the Tribunal's gaze. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 447 though Mr. O ' C o n n o r was kept out of the loop at this stage, after 2001, he became central to a range of interactions between almost every person or entity involved in the Tribunal's examination of matters connected with English property: Mr. Lowry, Mr. Denis O'Brien, Mr. Denis O'Brien Senior, Mr. Aidan Phelan, Mr. Kevin Phelan, Mr. Richardson and Mr. Weaver, Mr. Christopher V a u g h a n , Messrs. Carter-Ruck, Messrs. William Fry, Messrs. LK Shields, Mr. Bryan Phelan and Mr. Craig Tallents. 15.18 The recounting of much of w h a t transpired in relation to these transactions has entailed considerable repetition, both in evidence and in this Report. This is the inevitable result of the Tribunals having repeatedly to examine the transactions once critical new evidence came to light. W h a t is characteristic about the Tribunal's repeated views of these transactions was the fact that the belatedly disclosed evidence clearly had been suppressed, and that the earlier evidence can only have been given in the knowledge that relevant parts of Mr. V a u g h a n ' s files had been withheld from the Tribunal, and other parts had been falsified. Disaffection of Mr. Kevin Phelan 15.19 Undoubtedly w h a t conspired to bring much of this information to the notice of the Tribunal was the disaffection of Mr. Kevin Phelan w h o had, over a repeated period of time, been either centrally or peripherally involved in dispute with Mr. O'Brien's interests, and to some degree also with Mr. Lowry's interest. 15.20 Whilst the Tribunal would have been slow to act on matters brought to its attention, even indirectly, by someone so patently disaffected, if not hostile to the interests of Mr. O'Brien, the material brought to light in this case consisted exclusively of portions of the relevant files of Mr. Christopher V a u g h a n concerning the Mansfield, Cheadle gave evidence, and Doncaster not Rovers transactions. open Even before to any Mr. Vaughan it had been convincingly person connected with these transactions to suggest that any of this material had been forged. Once Mr. V a u g h a n gave evidence, it w a s clear that the material had in form" fact been generated in the course of these transactions, and that the "long letters, and other additional material excluded from the copy files furnished to the Tribunal, had been suppressed in dealings with the Tribunal. In other words, it was those altered, concealed or suppressed documents which represented the true features of those transactions, and the distorted files of documents submitted to the Tribunal were intended to present a picture which excluded the ownership of Mansfield and Cheadle by Mr. Michael Lowry, which had denied in evidence by Mr. Lowry, and other individuals. been Those denials w o u l d not REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 448 have been possible, had that material been available to the Tribunal w h e n those matters first arose in evidence. The closest of associates are the sources of crucial evidence 15.21 Highly significant portions of the evidence and information tending to implicate Mr. Denis O'Brien in transactions and other matters inquired into, in the course of the money trail, came, not from adversaries or persons of w h o m it could have been suggested were likely to be hostile to his interests, or those of Mr. Lowry, but from business and professional associates w h o had no motive so to act. Accordingly, it was not from such persons as Mr. Ken Richardson or Mr. Mark Weaver, representatives o f t h e Doncaster vendors, or from Mr. Kevin Phelan, that evidence which might be termed negative as regards Mr. O'Brien and Mr. Lowry, was heard, but from Mr. Michael Tunney, Mr. Christopher Vaughan, Ms. Ruth Collard and Ms. Kate Macmillan. 15.22 In addition, evidence was given by officials of Investec Bank, persons with no conceivable vested interest, of statements made by close friends and intimate business associates of Mr. O'Brien, namely Mr. Aidan Phelan and Mr. Michael Tunney, evidence, the plain implications of which were of concealed financial connections between Mr. O'Brien and Mr. Lowry. 15.23 and Mr. Indeed, having regard to the conversations had between Mr. O'Brien Maloney, although portions of their content were disputed, it is noteworthy that significant matters contributing to the conclusions formed by the Tribunal in this regard e m e r g e d from Mr. O'Brien's own a c k n o w l e d g e m e n t s as to matters said by him on those occasions. Cumulative aspects 15.24 Although the preceding chapters, from numbers 2 to 12 inclusive, have dealt separately with the money trail matters, and the three separate chapters in accordance with their titles, it would be w r o n g to take the view that, in the ultimate, each much be considered in total isolation. As stated in Chapter 1, the introductory chapter, there is also a cumulative element which must be taken into consideration. The repeated involvement of both Mr. Austin and Mr. Aidan Phelan in this respect is instructive. routing of, and the Mr. David Austin w a s centrally involved in the covert of false documentation so as to facilitate a generation donation of $50,000.00, intended for the Fine Gael party; significant also was his role, together with that of Mr. Aidan Phelan, in the production of a cryptic receipt, designed to satisfy the IPO inquiry, but in fact calculated to conceal the true position. Can it be coincidence that both Mr. Phelan and Mr. Austin were the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 449 primary actors involved in transferring a substantial payment, ? 1 4 7 , 0 0 0 . 0 0 , from Mr. Denis O'Brien to Mr. Michael Lowry, in 1996, by a sinuous and obscure offshore route, and that Mr. Aidan Phelan was the individual who, along with Mr. O'Brien himself, obscured this payment from the IPO? Again it was through Mr. Aidan Phelan that substantial funds were applied for the benefit of Mr. Lowry, firstly in Mansfield, and secondly in Cheadle. was the Mansfield transaction completed W a s it coincidental that, no sooner in March, 1999, Mr. Phelan had introduced Mr. Lowry to Mr. Michael Tunney, a close business associate of both Mr. Phelan and Mr. O'Brien, and that, before Christmas of that year, Mr. Phelan should have negotiated a loan, rushed through the bank's lending procedures, to meet a completion deadline, and described at various times by both of t h e m as a "Denis Lowry's O'Brien initial transaction"? dealings with Again was English it coincidence that, apparently, property should have occurred Mr. in circumstances in which the first communication from his solicitor, Mr. Christopher Vaughan, should have dealt at length, not with Mansfield, the stated purpose of his visit, but with the Doncaster transaction? The Tribunal has concluded that it strains any rational evaluation of the facts that these matters could have been coincidental. T h e y reflected nothing other than an intent consistent with the application of funds for the benefit of Mr. Lowry, in the crediting of ? 1 4 7 , 0 0 0 . 0 0 to his off-shore Isle of Man bank account, the transfer of S t g . ? 3 0 0 , 0 0 0 . 0 0 for the Mansfield, and later the Cheadle, transaction, and the support for a loan of S t g . ? 4 2 0 , 0 0 0 . 0 0 for the Cheadle transaction. Timing of conversations 15.25 O'Brien It is also of interest that the timing of the conversations between Mr. and Mr. Maloney, referring to payments of ? 1 0 0 , 0 0 0 . 0 0 , accords significantly with the evidence in relation to the changing circumstances affecting the s u m of money transferred by Mr. O'Brien, via Mr. Phelan and Mr. Austin, to Mr. Lowry. these Mr. Maloney's evidence was that his first conversation with respect to occurred in October or November, 1996. The conversation matters pertained to two payments of ? 1 0 0 , 0 0 0 . 0 0 . According to Mr. O'Brien's evidence, that conversation occurred on 17 th November, 1996. On either witness's evidence as to the date of the conversation, it took place after money had been covertly transferred by Mr. O'Brien to Mr. Austin, on 10 th July, w h e n ? 5 0 , 0 0 0 . 0 0 was transferred, and on 19 th July, w h e n a further ? 1 0 0 , 0 0 0 . 0 0 was transferred. If the conversation took place in November, it occurred shortly after money was transferred by Mr. David Austin to Mr. Lowry's Isle of Man bank account, that is, between 16 th and 21 s t October, 1996. Evidence was given of subsequent conversations between the two men respecting the same matter, two of which conversations appeared to occur in or around August, 1997 and another, in or around 8 t h October, 1997, in the course of which Mr. O'Brien, recalling his 1996 conversation with Mr. Maloney, had stated that he had not in fact made any REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 450 payment to Mr. Lowry; in a later conversation, he stated that the payment did not happen, that the money "didn't go through"; in their last exchange, Mr. O'Brien stated that w h a t he had not told Mr. Maloney on an earlier occasion was that, whilst he was going to make the payment, it had "got stuck with an and that he had "thought about it but...didn't do it." intermediary", By the time of those latter conversations, the ? 1 4 7 , 0 0 0 . 0 0 , transferred to Mr. Lowry's Isle of Man bank account in October, 1996, had already, since in or about 7 th February, been retransferred to Mr. Austin. "stuck with an intermediary". 1997, By that time, in other words, it had become Lawyers and accountants 15.26 with With reference to the roles of lawyers and accountants in connection aspects of the money trail, certain observations are appropriate. Acknowledging that it is the duty of lawyers fearlessly to represent their clients, it must equally be acknowledged that it is no part of a lawyer's duty to place the interest of his client above the duties of his professional calling. the matters referred to in Chapter 11 will be In this context, the recalled, and specifically Tribunal's findings with respect to the conduct of solicitors, both in England and in Ireland, concerns in representing to the Tribunal that the regarding the making available to City of London of Police access had to the Tribunal documentation concerning the blackmail complaint made by Mr. O'Brien Senior. In submissions relevant to the obvious reliance by the Tribunal on assurances relayed to it by solicitors acting for Westferry, Mr. Denis O'Brien's c o m p a n y , it was contended, without any expression of regret as to w h a t had happened, that instead of relying on those assurances, the Tribunal should have contacted the police directly. In other words, the Tribunal should accept a submission, now being made on behalf of Mr O'Brien, the effect of which is that it should have rejected earlier statements from solicitors acting for one of his companies, surely an extreme case of seeking to have one's cake and eat it. In regard to submissions made on behalf of Mr. Denis O'Connor, the Tribunal in particular notes his expressions of regret for involvement in certain latter activities addressed in evidence, and w a n t of due cooperation with the Tribunal, in regard to these. The money involved 15.27 Whilst the separate matters addressed in relation to Mr. Lowry in Chapters 2, 14 and, particularly, 13, speak for themselves, it must be said that, with regard to the money trail chapters, no conclusion can be arrived at, other than that repeated and clandestine courses of actions were adopted by persons intimately associated with Mr. O'Brien, to confer payments or other benefits upon Mr. Lowry, on behalf of Mr. O'Brien. This initially occurred, in the case of the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 451 payment of ? 1 4 7 , 0 0 0 . 0 0 from Mr. O'Brien, through Mr. David Austin in a series of off-shore moves which, in many ways savoured of the methods adopted in the transmission o f t h e $ 5 0 , 0 0 0 . 0 0 donation, covertly through Mr. Austin, to the Fine Gael party. These two transactions, sharing many similar characteristics as regards method and personnel, were obscured from the IPO. Next, there was the payment of S t g . ? 3 0 0 , 0 0 0 . 0 0 to Mr. Lowry's client account with Mr. V a u g h a n , which funded over S t g . ? 2 3 1 , 0 0 0 . 0 0 interest, of the deposit on the of the overall purchase price, including by w a y of funds, Mansfield property and a further Stg.?44,500.00, Cheadle property, the balance of which completion Stg.?420,000.00, was supplied by w a y of loan, rushed through Bank as a "Denis O'Brien transaction": Woodchester a transaction, the ostensible structure of which, involving a c o m p a n y with which Mr. Lowry was associated, was reversed in early 2000, for "secrecy" reasons. 15.28 T h a t no money trail connection linking Mr. Lowry with the Doncaster some Rovers transaction was identified, and that a succession of witnesses, found to be of less than persuasive credibility in other evidence, have denied such an interest on the part of Mr. Lowry, does not explain the sequence of representations made to the contrary by persons within the nexus of the O'Brien interests. Nor does the generally unpropitious course of endeavours, initially calculated to benefit Mr. Lowry, w h e r e b y payments were returned or reversed, and property projects failed to live up to expectations, detract from the initial intent by which such matters were motivated. 15.29 A b o v e all, the wholesale falsification, concealment and delay afforded to the Tribunal, by and on behalf of the persons primarily involved, frequently following spurious assurances of full cooperation, confirms the validity, and indeed necessity, of the findings that have been made. Notwithstanding the appointment of the McCracken Tribunal, and the fact that disclosures were made which caused the Mansfield and Cheadle transactions to come unexpectedly to the attention of this Tribunal in 2001, both necessitating the taking of steps to reverse or falsify actions taken, the Tribunal is satisfied that Mr. Lowry received payments of ?147,000.00 from Mr. from Denis Mr. O'Brien Denis in O'Brien in July, and a 1996, benefit Stg.?300,000.00 March, 1999, equivalent to a payment in the form of Mr. O'Brien's support for a loan of S t g . ? 4 2 0 , 0 0 0 . 0 0 in December, 1999. Had the Thistlewood sale of Cheadle proceeded, the Tribunal is satisfied that an e n h a n c e d benefit would have accrued to Mr. Lowry, in the order of Stg.?1.1 million. Had the Berwood sale gone ahead, a total sale price for both Mansfield and Cheadle would have been achieved in the order of Stg.?1.36 million. It should be observed that, at the time of the making of these payments, the annual Dail and/or Ministerial salary entitlements, enjoyed by Mr. Lowry, on any appraisal paled in comparison with their amounts. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 5 EXECUTIVE S U M M A R Y CAVEAT 16.01 In Part I of its Report, published in December, 2006, the Tribunal Page | 452 followed the practice of previous recent Tribunals of Inquiry of including an Executive Summary of the principal conclusions, findings and recommendations contained in the main body of its Report. On that occasion, the Tribunal noted that it had been conveyed that that practice should, if possible, be adhered to. In the case of this Volume of the Tribunal's Report, it is also intended to set out, as now follows, a comparatively brief resume o f t h e principal matters comprised in each of the preceding chapters of this Volume. 16.02 As before, the Tribunal wishes to record that it is far from an easy task to set out in condensed form an accurate or sufficient summary of chapters, that already represent a truncated and distilled account of matters that transpired over many days of evidence, and of voluminous documentation, together with associated conclusions, findings and recommendations. The Tribunal therefore wishes to reiterate that what follows can be regarded as no more than in itself an endeavour to enable a reader acquire a superficial overview o f t h e main matters addressed; it cannot hope to replicate the full content of what is contained in the detailed chapters, or to reflect in a fully satisfactory way the balance conveyed in those chapters, or to enable a full and informed understanding of the substantive subject matter o f t h e Report. EARLY EVIDENCE RELATING T O MR. MICHAEL LOWRY 16.03 Chapter 2 traces the evidence heard, and the outcome of the Tribunal's initial investigations in 1999 into Mr. Lowry's financial affairs pursuant to paragraphs (e) and (f) of its Terms of Reference, which culminated in public sittings over a comparatively short number of days in June, 1999. The evidence heard reflected the outcome of an exercise of relatively lengthy duration conducted confidentially, in the course of the Tribunal's private investigations in advance of those public sittings, whereby the Tribunal scrutinised lodgements to Mr. Lowry's disclosed bank accounts over the years then regarded as relevant, that is, over the years 1987 to 1996. In conducting that exercise, the Tribunal was assured, by and on behalf of Mr. Lowry, that the maximum degree of cooperation and disclosure was being afforded to it. 16.04 In all, the Tribunal examined lodgements to nineteen bank accounts held by Mr. Lowry, including accounts held off-shore, which had already been discovered by the McCracken Tribunal. The Tribunal received assistance in this regard from Mr. Denis O'Connor, Mr. Lowry's accountant and adviser, who carried REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 453 out an exercise of reconstructing the history of Mr. Lowry's finances, and of matching lodgements to those bank accounts, to Mr. Lowry's known income, and other receipts from various sources. This exercise produced an aggregate figure of unmatched lodgements of ? 3 1 , 2 9 5 . 0 0 , which Mr. O'Connor testified was immaterial in terms of accepted accountancy practice. Whilst the Tribunal did not regard that differential, over a ten year period, as sufficiently significant to warrant further inquiry, the Tribunal has concluded that Mr. Lowry's financial arrangements in general disclosed palpably inadequate book-keeping, a w a n t of transparency in his dealings, and a disposition to declare and discharge his tax liabilities far below w h a t could reasonably be expected from a holder of public office. Furthermore, at that time, the Tribunal was unaware that there was considerable additional information not made available to it, and which did not emerge until 2001, and thereafter up to 2009. 16.05 Apart from scrutinising lodgements to Mr. Lowry's then known bank accounts, the Tribunal also pursued investigations into five separate transactions which appeared to have particular relevance to the Tribunal's Terms of Reference concerning Mr. Lowry. The evidence heard, and the outcome of those investigations is also set forth fully in Chapter 2. 16.06 Investigations related firstly to a cash payment of ? 3 5 , 0 0 0 . 0 0 made by Mr. Patrick Doherty to Mr. Lowry, the substantial proceeds of which were lodged to an account of Mr. Lowry in Allied Irish Banks, Dame Street, in May, 1995. This related to the purchase by Mr. Doherty of a painting and certain items of antique furniture from Mr. Lowry. The second set of dealings investigated also related to cash payments, or cheque payments payable to cash, made for refrigeration consultancy services provided by Mr. Lowry personally to Mr. Bill Maher of Maher Meat Products, w h o operated in the UK, and Mr. Patrick W h e l a n of Whelan Frozen Foods Limited. Mr. Lowry received ? 2 5 , 0 0 0 . 0 0 in cash from Mr. Maher, in December, 1992, ? 1 0 , 0 0 0 . 0 0 in May, 1992, and ? 5 , 0 0 0 . 0 0 in May, 1994, by cheques payable to cash, f r o m Mr. Whelan. Mr. Maher, who together with Mr. Doherty was to feature in investigations conducted many years later into the acquisition of Doncaster Rovers Football Club, and who was resident in the UK, declined to attend as a witness to the Tribunal. 16.07 The third financial transaction, which featured in the Tribunal's early sittings, related to a further bonus payment of ? 1 5 , 0 0 0 . 0 0 by Mr. Ben Dunne, on behalf of Dunnes Stores, to Mr. Lowry, in addition to those identified by the McCracken Tribunal. As with other such payments, the source of this payment was the bank account of Dunnes Stores, maintained by Mr. Dunne at Bank of Ireland, Marino. The payment came to light in the course of investigations conducted by Mr. Lowry's accountant and adviser, Mr. Denis O'Connor, after the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 454 publication of the Report of the McCracken Tribunal, and its emergence further demonstrated the covert arrangements devised by Mr. Dunne and Mr. Lowry to remunerate Mr. Lowry in a manner that would enable him to evade tax. 16.08 The fourth matter examined in the course of those sittings w a s the Carysfort acquisition and s u b s e q u e n t disposal by Mr. Lowry of a property in Avenue, Blackrock, County Dublin, through the agency of the late Mr. Michael Holly, of Cedar Building C o m p a n y Limited. The evidence heard on that occasion related solely to the purchase of the property in July, 1996, by Mr. Holly for ? 2 0 0 , 0 0 0 . 0 0 , the extending by him of an option to Mr. Lowry to acquire it, of which Mr. Lowry availed, and Mr. Lowry's s u b s e q u e n t resale of the property to Mr. Holly in January, 1997. property acquisition Significant additional facts surrounding the short-lived not disclosed to the Tribunal at that time, were notwithstanding repeated assurances, by and on behalf of Mr. Lowry, of full cooperation having been afforded to the Tribunal. Those full facts, which did not emerge until 2001, related to the provision of ? 1 4 7 , 0 0 0 . 0 0 to Mr. Lowry, seemingly to assist him in the refurbishment of the Carysfort property, through the late Mr. David Austin, from monies which he had received from Mr. Denis O'Brien, and which funds were held by Mr. Lowry in an off-shore account in his name in Irish Nationwide (IOM) Limited, in the Isle of Man. 16.09 The final transaction investigated by the Tribunal in 1999, and reported on in Chapter 2, was the sources of a S t g . ? 1 0 0 , 0 0 0 . 0 0 deposit made in January, 1991, to an off-shore account in the name of Mr. Lowry and his three children, with Allied Irish Banks, in the Channel Islands, and the manner in which that deposit was initiated with the assistance of officials of the Dame Street and O'Connell Street branches of Allied Irish Banks, without adherence to exchange control regulations. The Tribunal has concluded that, in the making of that deposit, Mr. Lowry, together with officials of those branches of Allied Irish Banks, knowingly and improperly combined to circumvent exchange control regulations then in force, and to aid Mr. Lowry in evading his taxation liabilities in respect of the funds placed off-shore. 16.10 Had the Tribunal's inquiries not been delayed in the year 2000, consequent on Mr. Charles Haughey's health problems, it may well have been the case that the Tribunal's w o r k would have concluded before further material information regarding Mr. Lowry's finances, which had been withheld from the Tribunal, came to its attention. Had that been so, Chapter 2 would into have Mr. of represented the entire of the Tribunal's Report of its investigations Lowry's financial affairs, pursuant to paragraphs Reference. (e) and (f) of its Terms REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 455 T H E E S A T / T E L E N O R $50,0000.00 D O N A T I O N T O FINE G A E L 16.11 Chapter 3 is the first of the series of chapters which addresses the further evidence heard in 2001, 2002, 2004, 2007 and again in 2009, regarding Mr. Lowry's finances. The chapter traces the evidence heard and conclusions drawn by the Tribunal in relation to a donation of $50,000.00 made on behalf of Esat Digifone to Fine Esat Gael, some had approximately won the two months after and it was announced that Digifone GSM competition, whilst negotiations were continuing between Esat Digifone and the Department for the granting of the licence. The late Mr. David Austin, who also featured in Part I of the Tribunal's Report, in relation to a payment made by the Jefferson Smurfit Trust to Mr. Charles Haughey, was a conduit for this donation, which was paid to and held by him in an off-shore account in the Channel Islands, until the 1997 General Election, when it was remitted to Fine Gael by Mr. Austin in the guise of a personal donation. Ultimately, when the surrounding facts emerged, neither the donor nor the recipient wished to retain it. 16.12 The donation was ostensibly made towards a Fine Gael fundraising dinner promoted by Mr. Austin, and held in the 21 Club in New York on 9 t h November, 1995, although the event had long passed by the time the donation was made in late December, 1995. The evidence heard, which touched on a multiplicity of circumstances surrounding the tortuous process Chapter 3, as are the ramifications which flowed from it. 16.13 by which the donation was made, retained and remitted, is addressed at some length in The payment was made by Telenor, Mr. O'Brien's Norwegian partners The issue, over which in Esat Digifone, the company which competed for and won the GSM licence, with Telenor subsequently being reimbursed by Esat Digifone. there was considerable conflict in the evidence heard, was whether the donation was intended to be one made by Telenor on its own account, arising from its interest in Irish affairs, or one made by Telenor, on behalf of Esat Digifone. 16.14 November, The material events commenced two weeks some short time prior to 9th 1995, approximately after the result of the licence competition had been announced, when Mr. Austin, who was a close friend of both Mr. Denis O'Brien and Mr. Michael Lowry, telephoned Mr. O'Brien to inquire whether "Esat" would take two tables at the New York dinner, at a suggested Mr. Austin was long deceased by the time the matter came tariff of $50,000.00. to light, and evidence was heard by the Tribunal in 2001. In early December, 1995, at the end of a meeting in Oslo, Mr. O'Brien raised the matter with Mr. Arve Johansen, the most senior Telenor executive involved in the GSM project. They REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 and a full account of their Page | 456 differed as to w h a t was said on that occasion, evidence, and the conflicts which arose, is set forth in Chapter 3. 16.15 from Mr. Johansen then made telephone contact with Mr. Austin, arising which he received and from Mr. Austin that an invoice for $50,000.00 be made to for a consultancy services, a direction payment should numbered account in Bank of Ireland, Jersey. On 29 t h December, 1995, payment was made by the transmission of funds from Telenor's bank, Den Norske Bank, to Bank of Ireland, Jersey, for crediting to Mr. Austin's account. 16.16 Telenor then raised a series of three separate invoices to Esat Digifone for recovery of that amount, in which payment was sought, initially in Danish Kroner, then in US Dollars, and finally in Irish Pounds. The third invoice was charged to the running account between Telenor and Esat Digifone, and was discharged by Esat Digifone, as part of a large aggregate payment made on 30 t h June, 1996. 16.17 Johansen Mr. Austin acknowledged receipt of the payment by letter to Mr. he in February, 1996, and towards the latter part of that month, informed the then Taoiseach, Mr. John Bruton, that money was available from Esat Digifone interests for Fine Gael. A full account of Mr. Bruton's recollection of their conversation is set forth in Chapter 3, as is Mr. Bruton's evidence that, mindful of the recent a n n o u n c e m e n t of Esat Digifone as the winner of the G S M licence competition, he was adamant, and so informed Mr. Austin, that no donation from that source would be accepted by Fine Gael at that time. Being under the impression that the funds were in an account under the control of the donor, Mr. Bruton believed that he had informed Mr. Austin to "leave is". it where it 16.18 The $50,000.00 remained in Mr. Austin's off-shore account in Bank of In late April, 1997, in the run-up to the General Election, Mr. Ireland, Jersey. Austin telephoned Mr. Jim Miley, the then General Secretary of Fine Gael, and informed him that he wished to make a sizeable personal donation to Fine Gael, and indicated that it was "in my dollar account". Mr. Austin then telephoned an old friend of his, the late Mr. Frank Conroy, a long-standing supporter of Fine Gael, and also a person well known to Mr. Michael Lowry, and told him that he was sending him money for transmission to Fine Gael, and that it was the balance of funds raised in connection with the New York fundraiser. Mr. Conroy received a cheque, payable to himself, from Mr. Austin for the Irish Pound equivalent of $50,000.00, endorsed it, and transmitted it to Fine Gael. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.19 by Esat 10 Unbeknown to the Tribunal, this donation was subject to close scrutiny Digifone, Esat Telecom, Mr. O'Brien's telecommunications holding Page | 457 company through which he held his shareholding in Esat Digifone, Fine Gael, and separately by Telenor in 1997 and 1998. Close consideration was given to This whether it should be brought to the attention of the Tribunal, but it was not. consideration arose in the context of certain inquiries which were pursued by Esat Digifone and Esat T e l e c o m in advance of the issue by Esat T e l e c o m of a prospectus in November, 1997, in connection with an Initial Public Offering in the US of Esat T e l e c o m shares. These inquiries were primarily directed to statements, reportedly made by Mr. Denis O'Brien, to the chief executive officer of Esat Digifone, that he had made a payment to Mr. Michael Lowry in connection with the award of the G S M licence, and which, if true, could have given rise to a significant prospectus. liability on the part of both companies for the contents of the In the context of that inquiry, Telenor also brought the circumstances of the $ 5 0 , 0 0 0 . 0 0 payment to the attention of both companies. 16.20 It was decided, following deliberations in both companies, that it would be necessary to establish that the $50,000.00 payment had been received by Fine Gael, thereby excluding any possibility that Mr. Lowry might have benefitted personally from it. Rather than making contact with Fine Gael to obtain confirmation to that effect, Mr. Aidan Phelan, w a s deputed to contact Mr. Austin, who was then gravely ill in France. and close associate, w h o featured Mr. Aidan Phelan was Mr. O'Brien's adviser in many other aspects of the Tribunal's inquiries into Mr. Lowry's finances, and w h o also happened to be a close friend of Mr. Austin, and was ultimately to act as one of the executors of his estate. result of this contact, Mr. Austin furnished, around 7 t h November, undated handwritten fax addressed "to whom it concerns", As a 1997, an in which he stated: "I confirm that as Chairman of the Fund Raising Committee for a of dinner raising Telenor held in the 21 Club in New York in Dec. monies for the "Fine Gael" '95, for the purposes a contribution Party - I received from A S . for the amount of$50,000. I duly forwarded these funds to the Fine Gael party." This was, it seems, accepted as sufficient evidence of receipt by Fine Gael, the prospectus was issued, the IPO proceeded, and the matter was not drawn to the attention of the Tribunal. 16.21 Telenor's concerns continued, and in January, 1998, they sought advice from their Irish solicitor as to whether the payment should be referred to the Tribunal. Telenor was advised in the first instance, that direct confirmation of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter receipt from Fine Gael should be 10 sought. Having informed their fellow Page | 458 shareholders in Esat Digifone of their intentions, and having retained a public relations consultant, Telenor representatives met with Fine Gael representatives at the party headquarters in Dublin, in February, 1998. The investigations then undertaken by Fine Gael are detailed in Chapter 3, including inquiries made of Mr. Austin, and of Mr. Bruton, on foot of which it was decided that the donation should be returned by Fine Gael. Consideration was also given by Fine Gael to whether the payment should be referred to the Tribunal, and the opinion of senior counsel was obtained. The opinion was to the effect that the payment did not fall within the Tribunal's T e r m s of Reference, although it was acknowledged in evidence by Mr. Jim Miley that, at that time, neither Fine Gael, nor any of its legal advisers, had available to them significant documentary evidence then in existence. The payment was not therefore referred to the Tribunal by Fine Gael, nor was it referred by Telenor, having received confirmation from Fine Gael that Mr. Michael Lowry was not a named account holder at the time the payment was transmitted to Fine Gael in May, 1997. Likewise, neither Esat Digifone, Esat Telecom, Mr. Denis O'Brien, or any of the numerous directors and personnel of those companies, w h o had a deeper knowledge of the circumstances, brought it to Tribunal attention. 16.22 Fine Gael returned the 2nd payment, by cheque payable to Telenor, forwarded to their solicitors on March, 1998. Telenor, which had long been reimbursed for the payment by Esat Digifone, promptly delivered it to Mr. O'Brien. There then c o m m e n c e d a fractious course of dealings between the Esat Digifone shareholders, which led to the cheque being returned to Fine Gael. Following media disclosures in 2 0 0 1 , which resulted in the matter coming to the attention of the Tribunal for the first time, the process was re-kindled by Fine Gael, this time by bank draft, which passed to-and-fro between the shareholders of Esat Digifone, and w h e n last mentioned in evidence had come to rest s o m e w h e r e in Esat Digifone. 16.23 Chapter 3 recounts in some detail the evidence of those centrally involved in connection with the events to which reference has been made in this summary, and it is not intended to outline that evidence further, save to refer briefly to the evidence of Mr. Michael Lowry. Mr. Lowry was Chairman of the trustees of Fine Gael f r o m 1993, until his resignation in November, 1996. Mr. Austin was a very close personal friend of Mr. Lowry, with w h o m he was in weekly contact, and in latter years in virtual daily contact. Whilst aware, as Chairman of the trustees, of the New York fundraising event, and having been informed of it formally in correspondence by Mr. Austin, he had not attended it, and, according to his evidence, despite the closeness of his relationship to Mr. Austin, had known nothing of Mr. Austin's dealings with Mr. Denis O'Brien, or with Mr. Arve Johansen of Telenor. He had no knowledge o f t h e payment, or of any controversy REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 459 surrounding it in 1997 or 1998, and first learned of it as a result of media coverage in early 2001. 16.24 As concluded in Chapter 3, w h a t was in essence a political donation to Fine Gael, the senior party in Government, agreed to be paid by Esat Digifone, in the immediate aftermath of the successful outcome of the G S M competition, was made in a manner the which, having regard to its false and misleading and the documentation, initial payment to an off-shore Jersey account, eventual delays and misrepresented form of transmission to Fine Gael, was secretive, utterly lacking in transparency, and designed to conceal the fact of such payment, by or on behalf of the donors. The Tribunal has rejected as spurious and untenable the suggestion made, in the course of public sittings, that the payment by Telenor was legitimate, as an expression of interest in Irish affairs, but not by any other entity or shareholder within the Esat Digifone consortium. The Tribunal is satisfied that the intention from the outset was that the payment was one made by Telenor, on behalf of Esat Digifone, and not on its own account. 16.25 Whilst acknowledging the entitlement of persons to seek and act on legal advice, it is nonetheless viewed by the Tribunal as regrettable that no disclosure whatsoever w a s made to a public Tribunal of Inquiry, notwithstanding a substantial degree of knowledge concerning the clandestine circumstances o f t h e payment. This observation also applies to Fine Gael, whose role both in Government and Opposition had been instrumental in the establishment of this Tribunal, in favour of which establishment its Oireachtas Members had unanimously voted. 16.26 The failure of those concerned, in determining whether the donation was one that should have been referred to the Tribunal, was to have regard to the significance of Mr. Lowry's position, as of the date on which the donation was made, that is, in December, 1995. At that time Mr. Lowry was Chairman of the trustees of Fine Gael, and an account holder on behalf of Fine Gael. This omission betrayed a marked reluctance to engage with the Tribunal, and a sensitivity surrounding the circumstances of the payment. The Tribunal has found that the payment, although not one ever intended for Mr. Lowry personally, was nonetheless one that technically falls within its Terms of Reference, and was a payment to Fine Gael, on behalf of Esat Digifone, at the instigation and promotion of Mr. Denis O'Brien. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r 16 P a g e | 460 CONVERSATIONS BETWEEN M R . DENIS O'BRIEN A N D MR. BARRY MALONEY AND THEIR AFTERMATH 16.27 Chapter 4, as is apparent from its title, relates to certain conversations which took place in 1996, and 1997, between Mr. Denis O'Brien, and Mr. Barry Maloney, Chief Executive Officer of Esat Digifone, and a long-standing intimate friend of Mr. O'Brien. The content of those conversations, and what was stated by Mr. O'Brien, which in substance was not disputed by the latter either in 1997, or in his evidence to the Tribunal in 2001, was the principal subject matter of the crisis investigations conducted by Esat Digifone and Esat Telecom, in advance of the Esat Telecom November, 1997. Initial Public Offering in the US, which proceeded in late 16.28 Chapter 4 sets out in considerable detail both the evidence heard relating to those conversations, and to the internal investigations put in train when those conversations became known to the directors and shareholders of Esat Digifone, in mid-October, 1997. The first of the conversations took place in October or November, 1996, when Mr. O'Brien was pressing Mr. Maloney for Esat Digifone to make success payments due to consultants, who had assisted Esat Digifone in its successful bid for the GSM licence, which had issued the previous May, 1996. Mr. Maloney, it seems, indicated that the payments would be made, once they were properly vouched, and in response, Mr. Maloney recalled Mr. O'Brien saying: "Well, you think you've ?100,000 got problems. I've had to make two payments Lowry", of each, one of which was to Michael or words similar. Mr. O'Brien was subsequently to assert that what he stated on that occasion was false, that the statement had been made in jest and bravado in order to induce Mr. Maloney to make the outstanding success payments, and that he had never mentioned Mr. Lowry by name. Mr. Maloney and Mr. O'Brien it arose, according to Mr. Maloney, differed as to the context o f t h e conversation: in the course of a business meeting in Mr. O'Brien's office at the Malt House in Dublin; Mr. O'Brien placed it as having occurred in the course of a Sunday run that the two were in the habit of doing in the Wicklow mountains. 16.29 The further conversations took place in August and October, 1997, in Mr. O'Brien's and Mr. the aftermath o f t h e Report of the McCracken Tribunal, and in the latter instance, in the aftermath of the establishment of this Tribunal. Maloney's evidence as to what prompted the August, 1997, exchange differed. According to Mr. Maloney, it was Mr. O'Brien who raised the topic on both occasions, and on the first instance, used words to the following effect: REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter "Do you remember 10 I told you about the payment to Lowry. Well, I Just want Page | 461 to let you know I didn't do it. Thank God I didn't do it", and on the second occasion used words to the following effect: "I know happen. you must be worried, and I Just want to assure through." you it didn't I did not make thepayment. It didn't go Mr. O'Brien recalled only one exchange, w h e n it was Mr. Maloney w h o raised the matter, and inquired whether any money had been paid to Mr. Lowry, to which Mr. O'Brien replied categorically in the negative. 16.30 S o m e w e e k s later, in early October, 1997, by which time this Tribunal had been established, and its Terms of Reference published, the two spoke about the matter again on 8 t h October, 1997, and on 13 th October, 1997. It was Mr. Maloney who, by then having become increasingly anxious about the information which Mr. O'Brien had imparted to him, in the light of the forthcoming IPO of Esat Telecom, and the potential liability that might attach to Esat Digifone, in the event that the licence was impugned consequent on any irregularity in dealings between Mr. O'Brien and Mr. Lowry, impressed on Mr. O'Brien that he should not at that time proceed with the IPO. Mr. O'Brien sought to reassure Mr. Maloney that there was no cause for concern and said: "Like, you are not buying it, are you? You don't believe Well, what I didn't tell you was that I was going I thought me?.. but to make the payment, it got stuck with an intermediary. about it but I didn't do it... It didn't go through. 16.31 Had it gone through, I couldn't be doing the IPO." Having taken legal advice f r o m Esat Digifone's solicitors, Messrs. McCann Fitzgerald, Mr. Maloney again met with Mr. O'Brien on 13 th October, 1997. By then, he had resolved that, unless Mr. O'Brien agreed to postpone the IPO, he w a n t e d the matter considered by the directors of Esat Digifone, and he so informed Mr. O'Brien. Mr. Maloney made a final effort on the evening of 13 th or 14 th October, 1997, when he visited Mr. O'Brien at his home late in the evening. Whilst considerable conflict arose between Mr. Maloney and Mr. O'Brien as to w h a t then transpired, there was no conflict as to the outcome, and Mr. O'Brien did not agree to the postponement urged by Mr. Maloney. 16.32 By then, Mr. O'Brien had informed Dr. Michael Walsh, a director of Esat of Mr. Dermot Desmond who, Digifone, and an associate and representative through one of his companies, was a minority shareholder in Esat Digifone, of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 462 w h a t had arisen. From that point, there proceeded over the ensuing w e e k s an intense process of inquiry and consultation, initially between the shareholders and directors of Esat Digifone, and which latterly extended formally to Telecom, the c o m p a n y about to be floated in the US. during this process, and largely participated Esat Mr. O'Brien was in the US conference telephone through facilities. Chapter 4 details the sequence and substance of the meetings and considerations which t o o k place, the evidence relating to t h e m which was heard, and the contents o f t h e contemporaneous records kept. 16.33 The initial phase of this process entailed the directors and shareholder statements representatives of Esat Digifone meeting to consider the various made by Mr. O'Brien, as reported by Mr. Maloney, and substantially accepted by Mr. O'Brien, and the risks for Esat Digifone in terms of potential liability, arising from the Esat T e l e c o m IPO, and the contents of the proposed prospectus. Mr. O'Brien was asked to explain those statements at meetings held on 20 t h October, and 23 r d October, 1997, neither of which was designated as a board meeting of Esat Digifone, even though its directors were in attendance. Mr. O'Brien participated by conference telephone facilities, and was called upon to explain the various statements he made to Mr. Maloney, and the circumstances of them. On being questioned at the first of these meetings, Mr. O'Brien indicated that w h a t he had stated regarding the making of payments to Mr. Maloney was untrue, and for the first time it s e e m s that he attributed elements of jest and bravado to the circumstances. and in written In response to questioning at the second meeting, Mr. O'Brien identified the "intermediary" replies to questions, referred to by him in the course of his exchange with Mr. Maloney on 8 t h October, 1997, as Woodchester Bank in Dublin, his then principal bankers. 16.34 A matter of particular concern to Esat Digifone, and to Mr. Maloney, was Mr. O'Brien's statement that he had thought of making a payment to Mr. Lowry, but that it had not proceeded, and it had got "stuck with an intermediary". From this it was feared that a third party had knowledge of Mr. O'Brien's intent, and this gave rise to a risk of future exposure. Following the matter having been formally brought to the attention of Esat Telecom, and legal advice, including legal advice from US attorneys, having been taken, it was resolved that further more formal inquires w o u l d be necessary, primarily in relation to Mr. O'Brien's statements to Mr. Maloney, but also regarding the $50,000.00 payment made to Mr. David Austin on behalf of Fine Gael, which had by then also emerged, and that Esat Digifone's support for the Esat T e l e c o m IPO would be dependent on the outcome of these inquiries. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 10 16.35 Two forms of investigation were pursued: Page | 463 (i) the formal structured questioning of Mr. O'Brien by a litigation partner of McCann Fitzgerald in the presence of the directors and shareholder representatives, and their legal advisers, to enable t h e m form a view of Mr. O'Brien's explanations; (ii) the scrutinising of all relevant bank accounts, including Mr. O'Brien's bank accounts with Woodchester Bank, to identify any payments from t h e m potentially o f t h e type described by Mr. O'Brien to Mr. Maloney. 16.36 facilities, The questioning on of 4th Mr. O'Brien, again 1997, by conference the telephone and proceeded of Esat November, when directors legal shareholders assembled at Digifone, together with their Desmond's offices respective advisers, Financial Mr. Dermot in the International Services Centre. A full account of Mr. O'Brien's responses to the questioning posed can be found within Chapter 4. His evidence to the Tribunal, as already summarised, was consistent with the responses given by him and recorded on that occasion. He also stated that he had known in late 1996, at the time of his first conversation with Mr. Maloney, that Mr. Lowry's business was in difficulty. He acknowledged having said to Mr. Maloney subsequently that: "I didn't actually do it, thank God", and admitted that he had thought about paying Mr. Lowry: he had been flush with cash, and felt that Mr. Lowry had been above board in relation to a dispute he had with T e l e c o m Eireann. He could have provided ? 1 0 0 , 0 0 0 . 0 0 out of his Woodchester deposits, but realised it would have been misinterpreted. the money was "stuck with an intermediary", he meant that In saying been it had earmarked out of Woodchester. But he changed his mind, and no payment was made. W h e n put to him that, in normal usage, a reference to an intermediary would not refer to a bank, Mr. O'Brien said he differed, that it obviously did mean a bank, and that people in any event do not always say the obvious thing. 16.37 Having considered Mr. O'Brien's responses, and s o m e observations made by Mr. Maloney, the meeting resolved that the Esat T e l e c o m IPO should proceed without objection by Esat Digifone, subject to certain warnings appearing in the prospectus, and subject to certification being made in respect of the auditing of all relevant bank accounts, the provision of an affidavit by Mr. O'Brien, and confirmation being received from Mr. David Austin that the $50,000.00 payment had been received by Fine Gael. All of those conditions were it s e e m s subsequently met to the apparent satisfaction of Esat Digifone. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.38 10 The investigation of drawings f r o m relevant bank accounts proceeded Page | 464 under the direction of Mr. Owen O'Connell, of William Fry, solicitors, who was then an adviser to Esat Telecom, w h o had flown to Boston to meet Mr. O'Brien over the w e e k e n d prior to 4 t h November, 1997, to examine him thoroughly on all issues. The exercise conducted entailed Mr. O'Brien's bookkeeper examining the relevant accounts to isolate all debits in excess of ? 2 5 , 0 0 0 . 0 0 , with a view to identifying their ultimate application. Mr. O'Connell also made inquiries of Mr. Aidan Phelan, Mr. O'Brien's accountant and financial adviser, to ensure that all relevant bank accounts had been identified and examined. Mr. Phelan informed Mr. O'Connell that, apart from a household expenses account, and a UK salaries account, there were no other relevant accounts requiring examination in the context of the exercise being undertaken. Mr. Phelan was fully aware of the purpose of that exercise, and the context in which it arose, and played a further part in advancing the overall investigation by contacting Mr. Austin to obtain confirmation regarding the application of the $ 5 0 , 0 0 0 . 0 0 payment received by him on behalf of Fine Gael. 16.39 The Tribunal has found that it is significant that Mr. Phelan did not disclose to Mr. O'Connell that, in July of the previous year, that is, July, 1996, some six weeks after the G S M licence had been issued to Esat Digifone, Mr. Phelan, on Mr. O'Brien's instructions, had withdrawn ? 4 0 7 , 0 0 0 . 0 0 from controlled by Mr. O'Brien, of Mr. an at account of Radio Woodchester Investments He NV, a c o m p a n y again Bank. had then, on the instructions O'Brien, transferred that s u m of ? 4 0 7 , 0 0 0 . 0 0 , initially to an off-shore account of a third party c o m p a n y with which he was associated. From there, it was promptly transferred to an off-shore account opened by Mr. Phelan, on behalf of Mr. O'Brien, but not in Mr. O'Brien's name, in Allied Irish Banks in the Isle of Man. had thereafter made disbursements from that account on Mr. He O'Brien's instructions, including two payments, in July, 1996, amounting to ? 1 5 0 , 0 0 0 . 0 0 to Mr. David Austin. Like Mr. Phelan, Mr. O'Brien, who was also fully aware of the extent and purpose of Mr. O'Connell's investigation, did not disclose the existence of that account. Neither Mr. O'Connell, nor the directors of either Esat T e l e c o m or Esat Digifone, discovered that, after receiving that money, Mr. Austin had transferred the bulk of it, ? 1 4 7 , 0 0 0 . 0 0 , to an off-shore account of Mr. Lowry, specifically opened in the Isle of Man to receive it. 16.40 The failure of both Mr. Phelan and Mr. O'Brien to disclose that bank account to Mr. O'Connell is of even greater significance in the context of the matters investigated by the Tribunal, which are the subject of Chapter 5. For the purposes of the investigations being conducted in 1997, the disclosure of those other payments by Mr. O'Brien, through Mr. Phelan to Mr. Austin, through w h o m the $50,000.00 donation to Fine Gael had already been channelled, and from REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter whom confirmation as to its 10 application was then being sought, would Page | 465 undoubtedly have caused even greater concern on the part o f t h e two companies. It would have necessitated a deeper consideration of the information which had emerged, and in particular Mr. O'Brien's explanation that money he had earmarked in Woodchester for payment to Mr. Lowry, had become "stuck with an intermediary", when Mr. Austin had already acted in that capacity in the payment o f t h e $50,000.00 donation to Fine Gael. 16.41 The Tribunal has concluded in Chapter 4 that it was regrettable that none of those persons involved in the extensive inquiries conducted in 1997 saw fit to make a timely disclosure of them to the Tribunal, at a time when Mr. Austin's evidence would have been available. 16.42 Overall, the Tribunal has concluded in Chapter 4 that, for the reasons more persuasive and coherent. It has further found that the set forth in that chapter, the Tribunal in general found the testimony of Mr. Maloney the justifications advanced in evidence by Mr. O'Brien for his remarks to Mr. Maloney in their early conversation, whereby he initially attributed his motivation to a form of tactical pretence, and then indicated that the remarks were addressed in a jocose or bravado context, are inconsistent, unconvincing and implausible. Woodchester as the intermediary involved. A similar view has been taken on Mr. O'Brien's identification of the banking entity 16.43 The full import and intent of Mr. O'Brien's statements to Mr. with an intermediary", Maloney in 1996 and 1997 regarding the making of a payment to Mr. Lowry, and that payment having become "stuck can only be appraised in Executive the context of the Tribunal's inquiries, reported on in Chapter 5 of this Report, and which are summarized in the next succeeding section of this Summary. FROM CARYSFORT T O MARBELLA 16.44 Although Chapter 5 commences with a brief overview of the various property transactions, first coming to the Tribunal's attention in 2001, which appeared to disclose possible associations between Mr. Michael Lowry and Mr. Denis O'Brien, its principal content addresses what was heard in evidence in relation to a series of payments, accounts and their surrounding circumstances, involving apposite a number in this of off-shore locations. That any reader evidence seeking a involved properly relatively informed intricate details, and the caveat entered at the start of this chapter is particularly instance, in that understanding of the evidence heard, and the conclusions drawn, will require to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 466 read and consider Chapter 5 in full, rather than rely on an abbreviated s u m m a r y such as is here provided. 16.45 Despite the comparative complexity of the evidence, the overriding question that had to be assessed and answered by the Tribunal could be reduced to limited proportions: did the evidence disclose the making of a covert off-shore payment by Mr. O'Brien to Mr. Lowry, then still Minister for Transport, Energy and Communications, that was hurriedly reversed upon the establishment of the McCracken Tribunal, or were there in fact two transactions, one a loan to Mr. Lowry by Mr. David Austin, a person well known to both Mr. Lowry and Mr. O'Brien, whose involvement in the $ 5 0 , 0 0 0 . 0 0 payment to Fine Gael has already been recorded in Chapter 3, and the other, a payment made by Mr. O'Brien to Mr. Austin for the purchase of a premises near Marbella, Spain, which coincidentally used the same m o n e y ? 16.46 The matter came to Tribunal attention in the following manner. As part of the succession of disclosures that appeared to have been prompted early in 2001, by Mr. Matt Cooper's article on the $ 5 0 , 0 0 0 . 0 0 payment to Fine Gael, and the Investec Bank reference to the Tribunal of a loan transaction at Cheadle, UK, which appeared to disclose associations with both Mr. Lowry and Mr. O'Brien, it was conveyed to the Tribunal by Mr. Lowry's advisers that he had received f r o m Mr. David Austin a loan of ? 1 4 7 , 0 0 0 . 0 0 , which had subsequently been repaid with interest. Not long afterwards, on 3 r d May, 2001, by which time the Tribunal had not circulated any other persons with this information, Radio Telefis Eireann reported the loan on its 9 : 0 0 p m news transmission. Following this disclosure, Messrs. William Fry, solicitors to Mr. O'Brien, notified the Tribunal by letter of 16 th May, 2001, and in subsequent more detailed instance correspondence, between of another and Mr. relevant property transaction, in this Mr. Austin O'Brien, and which was stated to have taken place shortly prior to the dealings between Mr. Lowry and Mr. Austin. In essence w h a t was then conveyed was that Mr. O'Brien had paid Mr. Austin ? 1 5 0 , 0 0 0 . 0 0 as the purchase price for a holiday property in Marbella. 16.47 W h a t will in the first instance be summarised are w h a t appear the money trail facts of what transpired in relation to certain uncontroverted substantial funds of Mr. O'Brien, as dealt with by certain close associates, in particular Mr. Aidan Phelan and Mr. David Austin. In or around early July, 1996, Mr. O'Brien instructed Mr. Aidan Phelan, then his principal financial adviser, to transfer ? 4 0 7 , 0 0 0 . 0 0 from the account at w h a t was then W o o d c h e s t e r Bank of Radio Investment NV, a c o m p a n y within Mr. O'Brien's C o m m u n i c o r p Group, and to open a new account in the Isle of Man in Mr. Phelan's name. This was done on 3 r d July, 1996, and the funds were transferred to Allied Irish Banks, Isle of Man. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 467 As an interim measure, before a new account w a s set up, the funds were lodged to an off-shore account of Diest, a trading c o m p a n y in which Mr. Phelan had an interest. Then the new account was opened in Mr. Phelan's name, with an address ascribed to it at Cape Cod, Hyannis, USA, which had been used by Mr. Phelan for other unrelated dealings. 16.48 over Various payments were made to certain individuals from the account ensuing w e e k s in accordance with Mr. O'Brien's instructions, and the balance in the account was largely dissipated by the end of July, 1996. Among those payments was a ? 5 0 , 0 0 0 . 0 0 cheque in favour of Mr. David Austin, and subsequently a further sum of ?100,000.00, which was transmitted by telegraphic transfer to an account held by Mr. Austin in Bank of Ireland, Jersey, Channel Islands. to On a receipt of those and funds, seven Mr. Austin transferred lodged the the ?100,000.00 new account, days later further ? 5 0 , 0 0 0 . 0 0 cheque to the credit of that new account. Then on 16 th October, 1996, Mr. Austin instructed his Jersey Bank to furnish a draft, payable to himself, for ? 1 4 7 , 0 0 0 . 0 0 . This was then furnished to Mr. Karl Tully, a senior official in Irish Nationwide (IOM) Limited, in the Isle of Man, with instructions to open a new account in the name of Mr. Michael Lowry. The documentation completed in manuscript by Mr. Lowry for purposes of opening that account had some unusual features: his address w a s stated as that of Messrs. Brophy Butler Thornton, accountants, of Foxrock, County Dublin, despite the unawareness of that firm in this regard; it was stipulated that there should be no correspondence except on request, and, despite the fact that Mr. Lowry was, as a G o v e r n m e n t required to, and had resigned his directorship in his refrigeration Minister, company, Garuda Limited, his occupation was stated as having been that of a c o m p a n y director. Finally, on 7 t h February, 1997, further to instructions from Mr. Lowry, the s u m of ? 1 4 8 , 8 1 6 . 9 3 was transferred from the Irish Nationwide (IOM) Limited account to Mr. Austin's Jersey account. This w a s the day that the Tribunal was established. McCracken 16.49 The three most substantial witnesses heard were Mr. Phelan, Mr. O'Brien and Mr. Lowry. W h a t had been conveyed to the Tribunal by William Fry in correspondence was that, in April or May of 1996, Mr. Austin had informed Mr. O'Brien that he was keen to dispose of his property in Marbella before he died, that on foot of w h a t was only then an agreement in principle, a sum of ? 5 0 , 0 0 0 . 0 0 was paid in July, 1996, on account of an eventual purchase price by Mr. O'Brien, that a total price of ? 1 6 5 , 0 0 0 . 0 0 w a s then agreed, but that this was later reduced for to ?150,000.00, duration to reflect Ryder Mr. Cup Austin's golf wish to the remain in occupation the of the contest, remaining ? 1 0 0 , 0 0 0 . 0 0 was thereafter paid, and that s u b s e q u e n t delays in completing all sale procedures were by reason of Mr. Austin being unable to locate all relevant documents. Mr. Phelan testified that Mr. O'Brien had informed him that the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 468 respective ? 5 0 , 0 0 0 . 0 0 and ? 1 0 0 , 0 0 0 . 0 0 payments were referable to w h a t had been agreed as a purchase of the Marbella premises by Mr. O'Brien from Mr. Austin for ? 1 5 0 , 0 0 0 . 0 0 . It did not appear that he had been informed by Mr. O'Brien of the initial ? 1 6 5 , 0 0 0 . 0 0 , or its subsequent reduction. As to the evidence of Mr. Owen O'Connell of William Fry, that he had queried with Mr. Phelan any payments in excess of ? 2 5 , 0 0 0 . 0 0 made from W o o d c h e s t e r accounts of Mr. O'Brien, at the time of the inquiries made prior to the Initial Public Offering of Esat Telecom, Mr. Phelan stated he could not recall this specific query, but was aware of the general nature of Mr. O'Connell's inquiries. He agreed that he had not informed Mr. O'Connell of the ? 4 0 7 , 0 0 0 . 0 0 which he had transferred offshore from Woodchester Bank on Mr. O'Brien's instructions. Regarding the ? 1 5 0 , 0 0 0 . 0 0 comprised by the two payments f r o m that account, he had viewed that at the time merely as a house purchase, but if he had then known all the matters which came latterly to light, he would have seen matters differently, and informed Mr. O'Connell accordingly. 16.50 Mr. Phelan a c k n o w l e d g e d that Mr. O'Brien had funds in other accounts from which he could have openly transmitted the purchase price to Mr. Austin for the Spanish property. Whilst he did not accept that the primary basis of the off- shore account, opened in his name on the instructions of Mr. O'Brien, had been concealment, stating that Mr. Austin wished to be paid from an off-shore account, he did agree that the manner in which the payment was processed concealed the true identity of the owner of the funds, leading any person examining the account to regard it as Mr. Phelan's account. He also agreed that it was reasonable to assume that Mr. O'Brien did not w a n t his name on the account in the Isle of Man. As to Mr. O'Brien's own knowledge of his financial situation, Mr. Phelan stated that, in the context of an amount as large as ? 4 0 7 , 0 0 0 . 0 0 , Mr. O'Brien would have been aware o f t h e m o v e m e n t of funds. Mr. Phelan also testified that he had been unaware that Mr. Austin had paid Mr. Lowry ? 1 4 7 , 0 0 0 . 0 0 , out of the ? 1 5 0 , 0 0 0 . 0 0 received by him from Mr. O'Brien. Although Mr. Phelan had been asked by Mr. Austin shortly before his death to be one of his executors, he had never discussed this matter in any context before Mr. Austin's death, and became aware of these matters only w h e n they arose through Tribunal inquiries. 16.51 Mr. Denis O'Brien testified in accordance with the account of events He stated that for the Tribunal to furnished by his solicitors on his instructions. link the property transaction and the loan was far-fetched, and reflected the Tribunal's tendency to add one and one and get twenty. Asked why, at the time of the IPO of Esat Telecom, he had not disclosed the payment out of the Radio Investments NV account, and in particular the aggregate payment of ? 1 5 0 , 0 0 0 . 0 0 to Mr. Austin, he responded that he had been aware o f t h e property purchase, but did not recall from which account it had been paid. In any event, it was only a property purchase. It was pointed out to Mr. O'Brien, in the course of REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter his examination, in that at the time giving 10 of the IPO there the would have been of no the Page | 469 documentation existence effect to ownership transfer Marbella property. Mr. O'Brien had intended the Marbella property to be for the use of his parents, but ultimately matters did not w o r k out that way, and his father had made use of part of a further substantial purchase made by Mr. O'Brien in the Algarve, in Portugal. The fact that transfer documents in relation to the Marbella transaction were not executed until 1998, but had been backdated to 1996, was due to delay on the part of Mr. Austin; Mr. O'Brien had known of Mr. Austin's failing health, and was not anxious to hound him. 16.52 As to taking the decision to tell the Tribunal of the ?150,000.00 purchase, w h e n he himself contended that for the Tribunal to link it with a loan by Mr. Austin to Mr. Lowry was far-fetched, Mr. O'Brien stated that he felt that it would be helpful for the Tribunal to know of the transaction, involving as it did a similar amount of money. W h e n then asked w h y he had not informed the Tribunal of his conversations with Mr. Maloney, which had occasioned much concern at the time of the IPO, Mr. O'Brien agreed that he had only dealt with this matter after the Tribunal raised it, fearing "trial by media". 16.53 Mr. Michael Lowry also gave evidence. In his earlier 1999 evidence, he had informed the Tribunal of his short-lived purchase of a house at Carysfort Avenue, Blackrock, County Dublin, but had made no disclosure whatsoever of any loan of ? 1 4 7 , 0 0 0 . 0 0 to him from Mr. Austin, in particular for the intended Asked purpose, as the Tribunal was told, of refurbishing the Blackrock property. w h y he had not then disclosed this loan transaction, w h e n he had purportedly made full disclosure of all material matters to the Tribunal, including the Blackrock purchase, but not the refurbishment loan, or its source, he responded that, having obtained 100% purchase finance from Irish Nationwide Building Society, it would have been necessary for him to pay refurbishment costs himself, the property being in poor repair; he had initially intended to use a s u m of approximately ? 1 4 0 , 0 0 0 . 0 0 held by him in an off-shore Channel Islands account, but in conversation with the builder Mr. Michael Holly, and Mr. David Austin, they had calculated that the aggregate costs would amount to approximately ? 1 4 7 , 0 0 0 . 0 0 , and Mr. Austin had offered to provide him with a loan in that amount. In support of that loan, Mr. Lowry relied on two handwritten documents, stated by him to have been prepared by Mr. Austin, one reciting the basis of the loan, and the other acknowledging receipt of its return with accrued interest. Asked why, instead of the intricate off-shore accounting procedures used, Mr. Austin had not simply written him a cheque for the ? 1 4 7 , 0 0 0 . 0 0 , Mr. Lowry responded that Mr. Austin had been a non-resident, and had suggested procedure followed. the REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.54 10 As to the unusual features in his own handwritten entries in the loan Page | 470 documentation, Mr. Lowry agreed that he had not sought the consent of Brophy Butler Thornton for the use of their address, but did not think this had been necessary; regarding his stipulation for " n o correspondence save on request", this was normal, and w h e n he described himself as a company director, rather than as a Government Minister or politician, he stated that he had remained a company director "in my mind", and that it was not in any event his practice to As to his not having disclosed the promote himself as a G o v e r n m e n t Minister. entire transaction to the Tribunal at the outset, it was Mr. Lowry's response that this was because he did not then feel that it came within the Terms of Reference, even though the account was opened w h e n Mr. Lowry held Ministerial Office. W h e n it was suggested that Mrs. Maureen Austin, Mr. Austin's widow, appeared never to have known of the loan, or the documentation recording it, Mr. Lowry responded that there had never been any need in this regard, as w h a t had been involved was an arrangement between trusted friends. Mr. Lowry further professed himself entirely unaware that the ? 1 4 7 , 0 0 0 . 0 0 received by him from Mr. Austin had in fact been the bulk of the ? 1 5 0 , 0 0 0 . 0 0 transferred by Mr. Phelan to Mr. Austin, f r o m Mr. O'Brien's Radio Investment NV account. 16.55 S o m e other evidence was heard, including testimony from Mr. Michael Fingleton, the then long-serving Chairman of Irish Nationwide Building Society, and a director of Irish Nationwide (IOM) Limited. Whilst his testimony primarily related to the loan made by the building society to Mr. Lowry in respect of the Carysfort Avenue purchase, he was also queried as to the circumstances in which the Isle of Man Bank had declined to make the evidence of Mr. Karl Tully available to the Tribunal. He stated that, even though the building society in Dublin owned the Isle of Man bank in its entirety, in terms of operational control, the bank was independent of the building society, being run by an Isle of Man board, a majority of w h o s e members had to be Isle of Man residents. The decision not to make Mr. Tully available had been that of the Isle of Man bank, and was beyond the control of the board of the building society. Mr. Fingleton stated that he had no difficultly with the witness attending, but he stated that it may have been the position that the Isle of Man bank, of which he was also a director, considered it had already furnished sufficient compliance with the Tribunal in corresponding with it, and making documentation available. 16.56 Mr. Eddie Holly testified in relation to the purchase and refurbishment arrangements entered into with Mr. Lowry in relation to the Carysfort Avenue premises, although stating that the primary involvement in this regard had been that of his late brother, Mr. Michael Holly. A considerable amount of the agreed building refurbishment works had been carried out by the time of Mr. Lowry's resignation from the Government, w h e r e u p o n Mr. Michael Holly, who had been a REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 471 friend of Mr. Lowry, made contact with him, ultimately with a view to both buying back the premises from Mr. Lowry, and doing so at a price that would reflect the costs incurred by him. Mr. Holly stated that his late brother had never informed him that he had been aware that Mr. Lowry had funds available to him from Mr. Austin to meet the refurbishment costs. 16.57 Other comparatively brief witnesses were also heard. Mr. Michael O'Leary, a neighbour, friend and co-executor of Mr. Austin, stated that the estate had been an easy one to administer, as Mr. Austin had been a very orderly person, had known that his health was terminally failing for two years, and had departed with his affairs well in order. No knowledge or documentation of any loan made by Mr. Austin to Mr. Lowry had at the time been acquired by Mr. O'Leary. Mr. Denis O'Connor, accountant to Mr. Lowry, testified that he had sought to make full disclosure of all material matters relating to Mr. Lowry within the Terms of Reference, at the time of his 1999 evidence, but that these and other matters had only come belatedly to his notice, w h e r e u p o n he had sought to have the Tribunal informed of all such matters as promptly as possible. Helen Malone, the business partner of Mr. Aidan Phelan, dealt with Ms. steps undertaken by her in late 1998, at the request of Mr. Phelan, to give effect to the intended transfer of the Marbella premises, and to the delays that occasioned belated and backdated one documentation. Mrs. Maureen Austin, w i d o w requested of by Mr. an Austin, was of those witnesses whose testimony was affected person, following notification of Provisional Findings in late 2 0 0 8 . As the information she had first furnished to the Tribunal during 2001 private investigations did not reflect adversely on affected persons, the Tribunal had, in the first instance, indicated its intention to accept that information. S h e stated that she recalled a decision on the part of her late husband and herself to sell the Marbella property in 1996 to Mr. Denis O'Brien, and purchase instead a property in the South of France. S h e recalled that they continued to have access to the premises until after the Ryder Cup, and that she had cleared out personal belongings from it in or around October, 1997. She had been aware that her husband intended to assist Mr. Lowry in regard to his acquisition of a property at Carysfort Avenue, Blackrock, and recalled an occasion w h e n Mr. Austin had referred to the premises, w h e n driving past it. She had thought this may have been in a context of providing some sort of guarantee, but would never have thought that her husband had intended to lend Mr. Lowry ? 1 4 7 , 0 0 0 . 0 0 . She recalled her husband having had some difficulty in locating papers relative to the property transaction during his last years of illness and treatment, and knew of no other equivalent transaction paid for by Mr. O'Brien. She had only become aware of the account in Jersey, into which the ? 1 5 0 , 0 0 0 . 0 0 had been paid, after her husband's death. She could not help as to w h y he should have requested payment to be made f r o m an off-shore account, as her husband at that time had retained an Irish bank account. She knew nothing of any loan agreement or REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter repayment acknowledgement involving 10 her husband and Mr. Lowry, and no Page | 472 related documents had been in his papers after his death. 16.58 In arriving at its conclusions, Chapter 5 reviews certain particular aspects of the evidence heard, including the markedly clandestine and covert manner in which the relevant money was moved from Mr. O'Brien's account to Mr. Lowry's account in the Isle of Man. The second disquieting element, and ultimately one of the most telling elements, was the complete absence of any disclosure of the relevant events, in the case of Mr. O'Brien, initially at the time of the IPO of Esat Telecom, notwithstanding the inquiries directed into potentially relevant payments, and in the case of Mr. Lowry, in failing to disclose to the Tribunal, or even his own advisers, these matters, whilst representing to the Tribunal, in the context of its initial 1999 inquiries, that he had afforded access to all relevant information, w h e n he must have known that the transaction and the off-shore bank account in Irish Nationwide, in the Isle of Man, were palpably relevant. Whilst disclosure was made in 2 0 0 1 of certain events by both Mr. Lowry and Mr. O'Brien, it is a matter of high probability that these transactions would, in any event, have been discovered by the Tribunal at that time, in the course of examination of Mr. Austin's accounts. All o f t h e witnesses heard purported to be able to testify only in relation to one transaction, either the loan, or the property sale, and the Tribunal was deprived of the opportunity to hear the crucial evidence that would have been forthcoming f r o m Mr. Austin, as the only person apparently privy to all that had transpired, and had been intended, in regard to the m o v e m e n t of funds. Similarly, the evidence of Mr. Aidan Phelan that, in 1997, at the time of the IPO, whilst he may have r e m e m b e r e d the Marbella purchase, he did not advert to the account opened in his name in the Isle of Man, is not acceptable, in the light of the many unique aspects of the account, the payments from it, and a time span of conspicuous brevity. 16.59 If, notwithstanding concealment of two transactions by both Mr. O'Brien and Mr. Lowry, the Tribunal was to accept the proposition that w h a t was disclosed were unrelated transactions, coincidentally involving the s a m e money, it is impossible to accept that the late Mr. Austin, an able business executive of political acuity, who was fully aware of all that was involved in each instance, and was a friend to both Mr. O'Brien and Mr. Lowry, would have even countenanced a connection between the two transactions, that could compromise his two friends, unless he felt that his entire actions reflected w h a t was requested of him. 16.60 In the light of the evidence of Mrs. Austin, and the contents of a file note of Mr. Perera, Mr. Austin's Gibraltar agent, it s e e m s reasonable to conclude that Mr. Austin had intended to sell his Spanish holiday home, and indeed sold it to Mr. O'Brien. However, there is no rational basis upon which the Tribunal could REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 473 conclude that this sale was accounted for by the transmission in July, 1996, of ? 1 5 0 , 0 0 0 . 0 0 , from Austin's Channel Mr. O'Brien's covert account in the Isle of Man, to Mr. Island account. The transfer of funds in July, 1996, is not accounted for by a sale contended to have taken place in that month, but in respect of which nothing concrete was done to effect it until January of 1998. Had the sale actually taken place in 1996, and been properly d o c u m e n t e d either then, or within a reasonable time thereafter, can it be doubted but that it would have been referred to at the time of the IPO, by w a y of explanation for a payment of ? 1 5 0 , 0 0 0 . 0 0 , a payment that would then have been amply supported appropriate legal documentation? That this payment of ?150,000.00 by was relevant to the IPO inquiries then being conducted is incontrovertible. appears there was a sale of the property, there could be no more Whilst it eloquent testimony to the fact that this payment of ? 1 5 0 , 0 0 0 . 0 0 was not made in the purchase by Mr. O'Brien of any such property, than that no reference w a s made to it at the time of the IPO, w h e n it could have been so readily explained, had the position as contended for by Mr. O'Brien and by Mr. Phelan been true. 16.61 The evidence disclosed the making of a carefully planned and covert payment of ? 1 4 7 , 0 0 0 . 0 0 by Mr. O'Brien to Mr. Lowry, through the agency of Mr. Phelan, a nd the late Mr. Austin, that was hastily repaid out of fear of possible disclosures at the time of establishment of the McCracken Tribunal. Having regard to the content of Mr. O'Brien's conversations with Mr. Maloney at the time of the IPO of Esat Telecom, the Tribunal rejects the proposition that W o o d c h e s t e r Bank could have been the "intermediary" at that time alluded to by Mr. O'Brien, "stuck". and views Mr. Austin as the person with w h o m such funds became 16.62 Having regard to all the circumstances, including the absence of any commercial purpose for the payment, the content of w h a t was stated by Mr. O'Brien to Mr. Maloney, the absence of disclosure, and secretive manner of dealings, already noted, the Tribunal has accordingly concluded that a payment of ? 1 4 7 , 0 0 0 . 0 0 was made by Mr. O'Brien to Mr. Lowry, through Mr. Phelan and Mr. Austin, during a period w h e n Mr. Lowry held public office, in circumstances giving rise to a reasonable inference that the motive for making the payment was connected with the public office of Minister for Transport, Energy and Communications, then held by him, within the meaning of paragraph (e) of the Terms of Reference. Further, the source of the ? 1 4 7 , 0 0 0 . 0 0 lodged to the Irish Nationwide (IOM) Limited account, being an account held in the name of Mr. Lowry, was the proceeds of the payment made by Mr. O'Brien to Mr. Lowry, through the conduit of off-shore accounts in the name of Mr. Phelan and the late Mr. Austin. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 10 THE MANSFIELD TRANSACTION 16.63 property Chapter venture 6 addresses in the North the of involvement England, at of Mr. Michael Lowry in a The Page | 474 Mansfield, Derbyshire. acquisition of the property in Mr. Lowry's name, had been completed in March, 1999, with funds transferred from a London bank account of Mr. Denis O'Brien, with Credit Suisse First Boston, to Mr. Lowry's UK solicitors, for that purpose. Those funds were transmitted, through the agency of Mr. Aidan Phelan, Mr. O'Brien's close associate, and through w h o m funds had already been channelled off-shore from Mr. O'Brien to Mr. Lowry in 1996. The completion of the sale took place in March, 1999, only three months before Mr. Lowry first gave evidence to the Tribunal in regard to his financial affairs, in June, 1999. In s u b s e q u e n t evidence, Mr. Lowry stated that he did not in 1999 consider the transaction relevant to the Tribunal. It was following the reporting to the Tribunal of a further UK property venture, in which Mr. Lowry also became involved later in 1999, that the Mansfield transaction was notified to the Tribunal by Mr. Aidan Phelan. 16.64 Before recounting the evidence relating to the Mansfield transaction itself, Chapter 6 also refers to some initial dealings had by Mr. Lowry, which appeared to be relevant to his subsequent involvement in the UK property ventures. The first o f t h e s e relates to the circumstances in which Mr. Lowry stated that he came to acquire a mobile telephone, all such communications facilities having been s u s p e n d e d after his traumatic withdrawal f r o m G o v e r n m e n t Office. Through Mr. Denis O'Connor, a friend of long standing and later his accountant, it was with Mr. Aidan Phelan that he was put in contact, w h o acted for a major distributor, and what was arranged was that, with a view to privacy and confidentiality, Mr. Phelan obtained a telephone and account directly from that client, on a basis that Mr. Lowry was not the disclosed subscriber. However, Mr. Lowry inadvertently made such disclosure w h e n contacting Eircell, leading to a S u n d a y World article publicising the matter. 16.65 This association with Mr. Phelan according to their evidence, led to Mr. Lowry and Mr. Phelan socialising together on occasions, and also to discussions between t h e m and Mr. O ' C o n n o r as to Mr. Lowry's refrigeration company, Garuda Limited, entering into a strategic alliance. Although nothing came of a number of meetings arranged by Mr. Phelan in this regard, he was paid a fee of ? 4 , 8 4 0 . 0 0 , being ? 4 , 0 0 0 . 0 0 plus V A T , by Mr. Lowry for the consultancy services undertaken. They testified that, as their acquaintanceship developed, Mr. Lowry and Mr. Phelan came to discuss many matters, although seemingly eschewing sensitive matters such as the developments within addressed in other chapters. Esat Digifone in 1997, which are REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.66 10 In October or November, 1997, through a mutual friend, Mr. Lowry was Page | 475 made aware that a Mr. Kevin Phelan, a property development consultant, wished to make contact with him. A meeting in M o n a g h a n followed, in which Mr. Kevin Phelan explained to Mr. Lowry that he had satisfactorily facilitated a number of Irish investors in the UK property market, viewed Mr. Lowry as a good prospect, and inquired as to his interest. Contact was renewed in June or July, 1998, w h e n Mr. Kevin Phelan indicated that he had a small development opportunity Mansfield, which could be of interest, and also introduced Mr. Lowry to in Mr. Christopher Vaughan, a Northampton solicitor w h o had acted in other similar transactions. Whilst interested, Mr. Lowry indicated his financial constraints, w h e r e u p o n Mr. Kevin Phelan stated that he was skilled in putting combinations of investors together. At this time, Mr. Kevin Phelan had also been dealing with Mr. Aidan Phelan and Mr. Denis O'Brien, in connection with two substantial UK property ventures, but Mr. Lowry testified in 2 0 0 1 that he was not then so aware. It was in s u b s e q u e n t evidence to emerge that the interaction between Mr. Lowry and Mr. V a u g h a n was appreciably more extensive than a single meeting in Northampton in relation to the Mansfield transaction in S e p t e m b e r , 1998, as testified by Mr. Lowry, but indeed extended to discussions regarding a much more substantial Doncaster Rovers transaction, of a nature and detail that disposed Mr. V a u g h a n to view Mr. Lowry as having a "total involvement" a matter which is returned to in a later chapter. in that transaction, 16.67 As to the Mansfield transaction, Mr. Kevin Phelan negotiated a S t g . ? 2 5 0 , 0 0 0 . 0 0 price with the vendors, and it was agreed that Mr. Lowry would pay a deposit of 10% of that amount to acquire the property, leaving Mr. Kevin Phelan, according to Mr. Lowry, to obtain investors for the remaining 90%, a course that he assured Mr. Lowry he would be able to achieve. 16.68 Mr. Lowry duly put Mr. V a u g h a n in funds with the Stg.?25,000.00 deposit in December, 1998, using monies withdrawn from one of his personal bank accounts in Thurles. No further funds had then been arranged, but Mr. Lowry felt disposed to rely on Mr. Kevin Phelan arranging suitable investors by the 18 th March, 1999, completion date, and was seemingly content to undertake whatever risk was involved, extending not only to forfeiture of his deposit, but to an order for payment of the balance of the purchase price. 16.69 What Mr. Lowry testified as having transpired was that Mr. Aidan Phelan, then thought by Mr. Lowry, according to his evidence in 2001, to have had no prior connection with his unrelated namesake, was introduced as the investor w h o would provide the balance of the purchase price. However, in later evidence relating to Doncaster Rovers, Mr. Lowry accepted that he had in fact REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 476 been aware of dealings between Mr. Aidan Phelan and Mr. Kevin Phelan from at least as early as S e p t e m b e r , 1998. 16.70 According to the evidence of Mr. Michael Lowry and Mr. Aidan Phelan they met, and in a letter to Mr. Lowry of 15 th March, 1999, produced to the Tribunal, Mr. Aidan Phelan seemingly confirmed his interest in the Mansfield project and other opportunities, referred to a suggestion from Mr. Lowry of a 75/25 partnership in Mr. Phelan's favour, but indicated a preference for 90/10, with some provision for Mr. Lowry and Mr. Kevin Phelan being "rewarded disproportionately on the upside". Further discussion apparently led to agreement to complete the purchase on this 9 0 / 1 0 basis. 16.71 At this time, as a senior and trusted associate of Mr. Denis O'Brien, Mr. Aidan Phelan had been immersed in large corporate ventures pursued by Mr. O'Brien, including one relating to Versatel T e l e c o m NV, in respect of which it appeared Mr. Aidan Phelan had carried out extensive work. Both Mr. Aidan Phelan and Mr. Denis O'Brien testified that discussions between the two in and around December, 1998, had resulted in agreement between t h e m that, w h e n there was liquidity in Mr. O'Brien's stock in Versatel, a percentage fee should be payable to Mr. Phelan, at a rate of 3%, up to a m a x i m u m of $1.5 million. A brief m e m o r a n d u m to such effect was produced to the Tribunal bearing the date of 22 n d December, 1998, from Mr. Phelan to Mr. O'Brien, with Mr. O'Brien's assent signified, and also a second such m e m o r a n d u m from Mr. Phelan to Mr. O'Brien, dated 25 t h March, 1999, recording apparent agreement that Mr. Phelan should make a Stg.?300,000.00 drawing as an advance on Versatel fees, on Mr. O'Brien's Credit Suisse First Boston London account. 16.72 account On the same day, 25 t h March, 1999, S t g . ? 3 0 0 , 0 0 0 . 0 0 was debited from that account by Mr. Phelan, and transmitted directly to Mr. V a u g h a n ' s client in Northampton, where it was credited to Mr. Lowry. Mr. Vaughan Mansfield forthwith applied the preponderance of that s u m to discharge the purchase balance, in addition to smaller related sums. 16.73 In evidence, Mr. O'Brien stated that he had no knowledge of Mr. Phelan's intended application of the fees withdrawn from his account, and only became aware of any alleged connection on his part w h e n the two UK property ventures were brought to the attention of the Tribunal in March, 2001. Had he known at the outset of the proposed use, it w o u l d not have concerned him, as Mr. Phelan was entitled both to the money, and to do business with w h o e v e r he wished, but the matter did not in any event arise. Mr. O'Brien also acknowledged in evidence that no subsequent payment of Versatel fees, in accordance with the m e m o r a n d u m bearing the date of 22 n d December, 1998, had since been made, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 477 and that no documentation, other than the two informal m e m o r a n d a submitted to the Tribunal, was available, whether by way of invoice, receipt, accounting entry, VAT or other tax-related entry. This significantly contrasted with the formality of the mere ? 4 , 0 0 0 . 0 0 fee transaction between Mr. Aidan Phelan and Mr. Lowry, earlier referred to. 16.74 possible Mr. Lowry and M r . A i d a n Phelan testified that, at the time o f c o n c l u d i n g the Mansfield purchase, they decided that a more formal basis of a g r e e m e n t for future ventures was desirable. Accordingly, a joint venture draft agreement was furnished by Mr. Vaughan, and was signed by both Mr. Lowry and Mr. Aidan Tribunal, Phelan at the latter's offices. The document, as produced to the recorded an agreement to carry on the business of property development together, and following a number of standard provisions, recited that profits and losses of the venture should belong in shares of 9 0 % for Mr. Aidan Phelan, and 10% for Mr. Lowry, subject to a performance-related incentive to Mr. Lowry, as should be agreed between them. 16.75 Certain correspondence was also produced to the Tribunal, in particular letters f r o m Mr. Kevin Phelan to Mr. Lowry, during the latter part of 1998, in each of which Mr. Kevin Phelan referred to Mr. Lowry as the intending purchaser without any qualification, or any reference to any possible procurement of other potential investors. 16.76 The Tribunal was provided with a letter dated 26 t h March, 1999, from Mr. Lowry, informing him that completion of the Mansfield Mr. V a u g h a n to purchase had been effected earlier that day, enabled by the balance of the price having been furnished by Mr. Aidan Phelan. Mr. V a u g h a n added that the property acquired was in Mr. Lowry's sole name, but subject to his agreement with Mr. Aidan Phelan, and in this regard indicated that he would advise Mr. Aidan Phelan to enter a caution on the register, to provide against Mr. Lowry dealing with the property without Mr. Phelan's consent. A caution in essence is a d o c u m e n t lodged at the Land Registry, to prevent land or property being sold without notice to the cautioner. In evidence Mr. Lowry stated that he had discussed the position with Mr. Phelan, but both felt that their agreement sufficiently defined their respective interests. Accordingly, the Mansfield property w a s registered in the sole name of Mr. Lowry, a position that remained in place for approximately three years, until after the matter was drawn to the Tribunal's attention. Lowry, in July of 2 0 0 2 , he indicated that, whilst In later testimony of Mr. his 10% he still retained Mansfield interest, he had a few months previously transferred its registered ownership to Mr. Aidan Phelan, at the latter's request. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.77 10 The matter of Capital Gains Taxation was touched upon in some of the Page | 478 evidence, and it appeared that, at a time when the only UK property in which Mr. Lowry acknowledged an interest was his 10% share in Mansfield, he made an inquiry of the tax partner in Mr. Denis O'Connor's firm, Brophy Butler Thornton, in relation to Capital Taxation with regard to UK property. In evidence, Mr. O'Connor agreed that the making of such a request for advice would probably be on the basis of anticipation of some relatively substantial Capital Gains Tax liability, and that it would scarcely be worth the trouble of consulting an accountant as to such liability, i n the context of a mere 10% interest in the Mansfield property. At the time of that evidence in 2001, the Tribunal was of course entirely unaware of what was only much later to emerge in the evidence of Mr. Christopher Vaughan in 2009, that, it was in fact contemplated in late 2000 that the Mansfield property, together with the subsequently acquired Cheadle property, would be sold together in a single transaction, with the proceeds to accrue to the benefit of Mr. Lowry. In this regard, it must be observed that the version of evidence tendered in 2001 by Mr. Lowry and Mr. Aidan Phelan, and the documentation submitted in support of that version, was wholly at odds with documentation and evidence that came to light in 2009, primarily represented by the belated attendance of Mr. Vaughan. This critical aspect, attributable primarily to the wholesale falsification of Mr. Christopher Vaughan's files, is considered in detail in later chapters, and will be referred to at a subsequent point in this Executive Summary. 16.78 amongst Having assessed all of the evidence heard, the Tribunal concluded, other findings, that the source of the Stg.?300,000.00, the preponderance of which funded the balance o f t h e Mansfield purchase price, was the account of Mr. Denis O'Brien with Credit Suisse First Boston, London, and that, further within the Terms of Reference of the Tribunal, Mr. Lowry received payment of that sum from Mr. O'Brien, through the agency of Mr. Aidan Phelan, in circumstances giving rise to a reasonable inference that the motive for making the payment was connected with the public office of Minister for Transport, Energy and Communications, formerly held by Mr. Lowry. THE CHEADLE TRANSACTION 16.79 It was disclosure to the Tribunal by Investec Bank of this transaction, a UK property venture undertaken by Mr. Michael Lowry under the name of a company, Catclause Limited, that led to other affected persons informing the Tribunal o f t h e earlier Mansfield and Carysfort transactions. Investec, which over the course of 1999 and 2000 had taken over the Irish bank Woodchester, discovered early in 2001 that an outstanding loan, by which it had financed the purchase of the Cheadle property, appeared to record connections between Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 479 Lowry and Mr. Denis O'Brien, and following initial reference to the Central Bank, Investec very properly referred it to the Tribunal. 16.80 Mr. Lowry informed the Tribunal that, following his dealings with Mr. Kevin Phelan and Mr. Aidan Phelan which gave rise to the Mansfield purchase, this larger transaction came to his attention through an associate of Mr. Kevin Phelan, but that, on raising it with Mr. Aidan Phelan, the latter t o o k a more cautious view, but nonetheless offered to loan Mr. Lowry sufficient o f t h e balance remaining in Mr. Christopher V a u g h a n ' s client account, of the S t g . ? 3 0 0 , 0 0 0 . 0 0 remitted from Mr. O'Brien's Credit Suisse First Boston account, to discharge payment of the deposit. This was done, an agreement for sale entered into, on 14 th September, 1999, for a price of Stg.?445,000.00, and a closing date of 30 t h November, 1999, fixed. Mr. Lowry had in or around August, 1999, met a Mr. Michael Tunney, then in the latter stages of a senior career within Woodchester, at a meeting in the Radisson Hotel, Dublin, arranged by Mr. Aidan Phelan, and it appears to the Tribunal that the potential of funding f r o m that bank was addressed in their conversations on that occasion. In late December, 1999, the closing date for completion of the sale had passed, the vendors were clamouring for completion, and, following the matter having been initiated by Mr. T u n n e y with Mr. Michael Cullen, a senior executive within Woodchester, payment of the required loan facility of S t g . ? 4 2 0 , 0 0 0 . 0 0 was made to Mr. V a u g h a n on 21 s t December, 1999. Mr. V a u g h a n duly proceeded to complete the transaction. Despite the loan having been made to Catclause, the property was not registered in its name. Whilst evidence as to communications between Mr. V a u g h a n and conflicting and uncertain in this regard, w h a t in the event Mr. Tunney was transpired was that Mr. V a u g h a n registered the property in the names of himself and his wife, also a solicitor, on a basis that they would hold it as trustees. 16.81 Certain unusual features emerged from the dealings between Mr. Tunney and Mr. Cullen. Despite the undoubted interest of Mr. Lowry as principal of Catclause, it was the evidence of Mr. Cullen, which the Tribunal accepts, that no reference was made to him by Mr. Tunney of any involvement on the part of Mr. Lowry in the borrowing or purchase; further, despite the fact that Mr. Lowry and his adult daughter were registered as directors of Catclause, it was conveyed in documentation produced to the bank that Mr. Aidan Phelan and his business partner, Ms. Helen Malone, were in fact directors of the company, and a letter apparently sent in relation to the property by an English auctioneer to Mr. Lowry was also furnished to the bank in a form in which the portion of the letter containing his name and address had been removed. As to the directors named, the explanation offered by Mr. Lowry, Mr. Phelan and Ms. Malone in evidence was that, w h e n the documentation was required, Mr. Lowry was in a remote part of his constituency and unavailable, w h e r e u p o n Mr. Phelan assented to Ms. Malone's proposal that both of t h e m should be named as directors of Catclause on an REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 480 interim or alternate basis on account of urgency, a course implemented, although not later rectified, before Catclause was a b a n d o n e d as the purchasing vehicle. 16.82 It was also conveyed to Mr. Cullen, and shortly thereafter to a bank colleague, Mr. Tony Morland, by Mr. Tunney, at the time of the making of the loan application, that Mr. Denis O'Brien was aware of the loan, and in the instance, that this w a s " a proposed Denis O'Brien transaction", latter which afforded comfort to Mr. Cullen that the loan would not be allowed to get into difficulties, as he was aware of Mr. T u n n e y having, like Mr. Aidan Phelan, been associated with Mr. O'Brien in prior substantial transactions with the bank, which had always been resolved satisfactorily. Apart from the absence of any documentary or verbal references to Mr. Lowry having been conveyed to Mr. Cullen, Mr. Morland, or Mr. Ian W o h l m a n , the senior UK-based Investec executive involved in the loan application, the bank file relating to the transaction later w e n t missing, and has not since been located. 16.83 despite During the period of the Investec takeover of Woodchester, certain procedures for the approval of new W o o d c h e s t e r loans had been set in being, but concerns and misgivings expressed by both Mr. Morland and Mr. W o h l m a n in this instance, it s e e m s that these were circumvented by Mr. Tunney and Mr. Cullen in proceeding to advance the loan money without delay. Mr. Accordingly, the sale w a s closed in circumstances whereby, other than Tunney, the three senior individuals involved within the bank had no knowledge of any interest on the part of Mr. Lowry in the transaction. 16.84 The crucial matter of w h o was disclosed as the substantive individual behind Catclause as purchaser also arose in a conflict of testimony between Mr. Aidan Phelan and Mr. Tunney, with regard to w h a t was stated by each, w h e n the former brought the initial proposal to the latter in the first instance. Mr. Phelan testified that he made it clear that Mr. Lowry was the individual behind Catclause, whereas Mr. Tunney contended that no such information was imparted, and that he was led to the belief that it was Mr. Phelan himself who w a s the true purchaser. This aspect, and other conflicts of evidence, are considered in detail in Chapter 7, but w h a t became clear as the months of 2 0 0 0 passed was a notable lack of urgency on the part of either bank or borrower. Despite it having been a condition of the loan that a guarantor would be provided, and also that a first charge would be taken out on the property, neither was insisted upon, and when the individual w h o had in the first instance been held out as a prospective guarantor in the event proved unwilling to execute an enforceable guarantee, it seems to have occasioned minimal controversy within the bank. Likewise, the agreed repayment date in the s u m m e r of 2 0 0 0 passed by, without any repayment of principal or interest. Although aware of the procedural shortcomings and REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 481 frailties in the manner in which the loan was granted, there appeared to be a feeling within the bank that, in all the circumstances, it w a s not exposed to any significant credit risk. Repayment was sought from 16 th August, 2000. Mr. Aidan Phelan in an Investec m e m o r a n d u m , dated Two sale proposals, each of which would have yielded a satisfactory profit, were under consideration, and ultimately it was not until early 2001, by which time both sales had failed, that Mr. Morland instituted an investigation into the transaction. repayment was sought from Mr. Phelan, which was 17 th On the day after August, 2000, a meeting was held in Jury's Hotel, Dublin, between Mr. Phelan, Mr. Lowry, Mr. Christopher V a u g h a n and Ms. Helen Malone. A note o f t h e meeting, prepared by Ms. Malone, was headed " U K Property ML", and from its content appeared to suggest that Mr. Lowry retained a continuing beneficial involvement in both the Cheadle and Mansfield transactions. W h e n questioned in that regard, Mr. Lowry's response was to indicate shortcomings in Ms. Malone's note as an accurate record o f t h e meeting. 16.85 Investec In late February, 2001, the bank learned for the first time, as far as the officials were concerned, that Mr. Lowry had an involvement in Catclause, with Mr. Lowry and his daughter being its registered directors, and not Mr. Phelan and Ms. Malone, as had previously been represented to the bank. Meeting urgently with Mr. Aidan Phelan on 28 t h February, 2001, Mr. Cullen and Mr. Morland were informed by Mr. Phelan that the bank had nothing to be unduly concerned with, as this was a DOB transaction, and he would ensure the bank was looked after. Although this was noted as part of a detailed m e m o r a n d u m prepared by Mr. Morland, Mr. Phelan later denied in evidence that he had used Mr. O'Brien's name in that fashion. It was only on the day following that meeting that the bank received formal confirmation as to the identity of the directors of Catclause, and a number of meetings and conversations were had with Tunney, who had appeared "shocked", been a director of the company. Mr. w h e n first informed that Mr. Lowry had Yet in subsequent conversations, with both Mr. Morland, and thereafter Mr. W o h l m a n , the response of Mr. T u n n e y was to ask Mr. Morland whether he realised that the loan was a "Denis O'Brien" transaction, and when later speaking by telephone to Mr. W o h l m a n from the Swiss Alps, where he was on holidays in the same resort as Mr. O'Brien, Mr. T u n n e y sought to reassure Mr. W o h l m a n , as "Denis was behind it", then identifying that person as Mr. Denis O'Brien. These and the other matters Shortly thereafter, summarised led to the matter being reported to the Tribunal. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C ha pte r Mr. Aidan 16 Phelan repaid to the bank the entire amount of the loan and Page | 482 accumulated interest. 16.86 Mr. O'Brien's evidence w a s to the effect that he had not been involved in the Cheadle transaction, had no knowledge of it, and did not become aware that his name may have been invoked in regard to it in dealings with the bank, until March, 2001. W h e n so informed, he stated that he had contacted Mr. Cullen in Investec, and expressed his anger that his name had been used within the bank without any reference to him. As to such references to him within the bank, his position was that those references were untrue. W h e n put that he was not accurately if a scarcely suggesting that Mr. W o h l m a n and Mr. Morland were recording w h a t "realistic had been stated to them, Mr. O'Brien responded that, view" was w a n t e d , banks sometimes put file notes onto their files that suited their position. 16.87 the The testimony of Mr. Lowry, substantially confirmed by Mr. Phelan, was in essence to the effect that, having obtained f r o m Mr. Phelan the loan to fund deposit on the purchase, he returned to Mr. Phelan seeking further assistance in relation to the balance. Mr. Phelan informed him that he could arrange funding through Investec bank, but that the bank would require as security a charge over the property in addition to a guarantee from a third party. Following application to Mr. Tunney, w h o m he had met at the prior Radisson Hotel meeting, a prospective guarantor, Mr. John Daly, a friend to Mr. Lowry of long standing, was proffered, and the required balance was released by the bank to enable the purchase to be completed by Mr. Vaughan. However, the Tribunal was informed that Mr. Daly declined to execute an enforceable guarantee, leaving Mr. Lowry with no option but to approach Mr. Phelan once again, who stated that he would take over the entire transaction. Thereupon, w h a t was a d v a n c e d to the Tribunal by Mr. Lowry was that he retained no beneficial interest in the Cheadle property, merely being under a moral obligation to assist in moving the property on, in the light of all that had transpired with Mr. Phelan. Catclause was accordingly a b a n d o n e d as the purchasing vehicle. W h e n put to Mr. Lowry that no documentation furnished to the bank appeared to make any mention of his involvement as purchaser, he responded that he and his daughter had been registered as directors of Catclause, and that the particulars to that effect were publicly discoverable. 16.88 careful In its consideration of the quite lengthy evidence, the Tribunal has had regard to certain of the correspondence belatedly produced by Mr. Christopher V a u g h a n , in the course of the latter part of his 2 0 0 9 evidence. Much of w h a t there emerges by w a y of a contemporary record, as already noted in a previous chapter dealing with the Mansfield transaction, is significantly at REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 483 variance with much evidence heard, and falsified documentation produced, in addition to other correspondence having been withheld. Although the evidence of Mr. Michael Cullen in relation to the abridged manner in which he approved the loan facility merited the reproof expressed by Mr. Wohlman, the Tribunal nonetheless found his evidence, and in particular that of Mr. Wohlman and Mr. Morland, to be persuasive, dispassionate and convincing, specifically in the context of it obviously having been contrary to the bank's interest. It would certainly be a perverse finding to hold that the bank officials fabricated that evidence, and having regard to the frequency and consistency at all stages of the transaction with which Mr. Michael Tunney and Mr. Aidan Phelan expressed the support of Mr. O'Brien, both being persons then involved at a senior and close level with Mr. O'Brien, it does not appear to the Tribunal that their content or effect was either unauthorised or reckless, but rather that those representations made at the time of the inception of the loan were material and significant in inducing acceptance. 16.89 In its substantive conclusions, the Tribunal has found that the source Mr. Denis O'Brien's Credit Suisse First Boston of the of the Stg.?300,000.00 was account in London, and that further, within the Terms of Reference Phelan in circumstances falling within Term of Reference (e). Tribunal, Mr. Lowry received payment of that sum through the agency of Mr. It follows logically that a similar conclusion is drawn in regard to the portion o f t h e Stg.?300,000.00 which was used by Mr. Lowry as the Cheadle deposit. Further, the support for the Stg.?420,000.00 loan provided by Mr. O'Brien amounted to an indirect payment or benefit to Mr. Lowry, in circumstances falling within Term of Reference (e). 16.90 In conclusion, the extent of the part taken by Mr. Aidan Phelan, in this and the preceding four chapters, should not be ignored. Whilst it may have been coincidental, in connection with the provision of a mobile phone for Mr. Lowry following his resignation from Ministerial Office, that the phone should have been provided by Mr. Phelan, known to be an intimate associate of Mr. Denis O'Brien, it can scarcely have been coincidental that the same individual, with responsibility for much of Mr. O'Brien's personal and business affairs, should have Mr. Lowry. been involved on successive occasions in the transmission of Mr. O'Brien's funds to FALSIFICATION O F M R . C H R I S T O P H E R V A U G H A N ' S FILES 16.91 On two separate occasions, the first in March, 2002, the second in June, 2009, the Tribunal became aware for the first time of the existence of documentation relating to both the Mansfield and Cheadle property transactions, which had never previously been produced by any person to the Tribunal, despite REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter the fact that the Tribunal's inquiries 10 into both those transactions had been Page | 484 conducted and, so far as the Tribunal was then concerned, concluded in the course of 2001. The circumstances surrounding the belated revelation of this material are examined in detail in Chapter 8, which is effectively divided into two parts, the first dealing with the documents that emerged in early 2002, and the second dealing with the substantial additional documentation that came to light for the first time in 2009. 16.92 Vaughan On 21 s t March, 2002, The Irish Times journalist, Mr. Colm Keena, provided to the Tribunal solicitor copies of two letters written by Mr. Christopher to Mr. Kevin Phelan, dated respectively 12 th July, 2000, and 5th September, 2000, and which had been sent to Mr. Keena. Versions of the same letters were already in the possession of the Tribunal, having been provided to it by both Mr. Christopher V a u g h a n and Mr. Kevin Phelan in early 2001, as part of their files relating to the Cheadle transaction. However, the versions previously produced by both Mr. V a u g h a n and Mr. Kevin Phelan were significantly different from the letters provided by Mr. Keena in March, 2002. Mr. Keena became known as the "long form" The letters provided by letters, whilst the letters already in form" versions. The "long the Tribunal's possession were referred to as the "short form" letters contained references to Mr. Lowry, in connection with the Cheadle form" versions of the letters form" versions had been of the "long form" transaction which were not contained in the "short previously produced. entirely letters. reconstituted, It was also clear that the "short and were not simply a m e n d m e n t s 16.93 In the course of its private investigative work, the Tribunal pursued explanations for these letters from Mr. V a u g h a n , Mr. Kevin Phelan, Mr. Aidan Phelan and Mr. Michael Lowry, and ultimately public hearings were held in the course of 2002, although both Mr. V a u g h a n and Mr. Kevin Phelan refused to attend as witnesses, and could not be compelled to do so as they resided outside the jurisdiction. Nonetheless, Mr. V a u g h a n forwarded to the Tribunal, by w a y of purported explanation for the existence of the two different versions of the letters, an exchange of correspondence between him and Mr. Kevin Phelan, including a letter dated 23 r d April, 2002, from Mr. Kevin Phelan to Mr. Vaughan, and form" Kevin purporting to provide an innocent explanation for the existence o f t h e "long letters. Phelan's exchange However, solicitors further and exchanges Mr. Vaughan, of correspondence immediately between this and Mr. preceding particular did not of correspondence, were withheld f r o m the Tribunal, emerge until a number of years later. That correspondence contained assertions made on behalf of Mr. Kevin Phelan to the effect that Mr. V a u g h a n had provided altered documentation to the Tribunal, assertions which were identical in nature to the very matters then being examined by the Tribunal. Had this further correspondence been provided to the Tribunal, it would have been impossible to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 485 represent Mr. Kevin Phelan's purported explanation in his letter of 23 r d April, 2002, as being truthful. Further, as is addressed in Chapter 12 of the Report, it subsequently came to the attention of the Tribunal a number of years after the letter of 23 r d April, 2002, was provided by Mr. V a u g h a n to the Tribunal, that at the very time that this exchange of correspondence between Mr. V a u g h a n and Mr. Kevin Phelan had taken place, a payment totalling S t g . ? 6 5 , 0 0 0 . 0 0 had been made to Mr. Kevin Phelan in connection with a property transaction in which Mr. Michael Lowry had an interest. The Tribunal has separately concluded in Chapter 10 that, were it not for the making of this payment to Mr. Kevin Phelan, he would not have written the letter of 23 r d April, 2002, which w a s forwarded by Mr. V a u g h a n to the Tribunal as a purported innocent explanation for the existence of the "long form" and "short form" letters. 16.94 The evidence heard in the course of 2 0 0 2 is set out in Chapter 8. In the absence of Mr. V a u g h a n and Mr. Kevin Phelan, both Mr. Michael Lowry and Mr. Aidan Phelan, w h o gave evidence in relation to the "long form" and "short form" letters, informed the Tribunal that they could not understand, and could not explain their existence. The Tribunal was nonetheless satisfied, on the basis of all the information available to it, that the "short form" versions of the two letters were created at a time subsequent to their purported 2 0 0 0 dates, and were devised to substitute and supersede the original and accurate "long form" so as to remove references to Mr. Michael Lowry's true letters, involvement in the Cheadle transaction, and so as to mislead the Tribunal, and to permit a false version of the events surrounding that transaction to be advanced in evidence to the Tribunal. 16.95 In the course of 2009, following the notification of the Tribunal's Provisional Findings, Mr. Christopher V a u g h a n belatedly made himself available as a witness to the Tribunal, and in the course of his attendance, a large body of further documentation e m e r g e d for the first time in circumstances which are set out more fully in Chapter 8. These documents had either been removed entirely from the files provided to the Tribunal, some eight years previously, or had, in c o m m o n with the two "long form" letters examined earlier, been substituted with altered versions of correspondence, from which references to the involvement of Mr. Michael Lowry in the UK properties had been removed. Prior to the emergence of this material, Mr. V a u g h a n had, in the course of his evidence to the Tribunal, purported to provide detailed explanations as to how the "short versions of the two letters of 12 th July, 2000, and 5th form" S e p t e m b e r , 2000, had form" versions which come into existence, and insisted that it was the "short conveyed the accurate position, the "long him in error. form" letters having been written by REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.96 However, following the 10 emergence of the further extensive Page | 486 documentation, it became clear that the "long form" letters were accurate, which, in the case of the letter of 5 t h September, 2000, Mr. V a u g h a n was obliged at that late stage to accept. He also accepted that those letters which belatedly emerged, and which had been removed altogether from his files, all of which contained references to the involvement of Mr. Lowry in the Cheadle and Mansfield properties, which were at variance with evidence given to the Tribunal in 2 0 0 1 concerning those transactions, were accurate letters which conveyed the true position. It being clear that the files he had provided to the Tribunal in relation to the properties in 2 0 0 1 had been significantly falsified, Mr. V a u g h a n testified that he had left those files with Mr. Aidan Phelan, following a meeting he had attended at his office in Dublin on 15 th March, 2001, at a time w h e n it had become clear that the Cheadle transaction was imminently to be brought to the attention o f t h e Tribunal by Investec Bank. 16.97 The Tribunal has concluded that the falsification of Mr. V a u g h a n ' s files occurred on or after the meetings in Mr. Aidan Phelan's office in Dublin on 15 th March, 2001, and the Tribunal is satisfied that the falsification was a course decided upon and implemented, with the full knowledge of Mr. Aidan Phelan, Mr. Michael Lowry, Mr. Christopher Vaughan and Mr. Kevin Phelan, and was undertaken with the intention of concealing references to Mr. Michael Lowry in connection with the Mansfield and Cheadle transactions, and of ensuring that the contents of Mr. V a u g h a n ' s files could be presented in a form which appeared to be consistent with a false account of Mr. Michael Lowry's involvement, which it was intended would be and was, conveyed to the Tribunal. This was motivated by a desire to obscure from the Tribunal a clear financial connection between Mr. Denis O'Brien and Mr. Michael Lowry, and the payments by the former to the latter. DONCASTER ROVERS FOOTBALL CLUB TRANSACTION 16.98 Mr. In the course of the Tribunal's investigations into matters relating to Lowry in 2001, including the UK properties at Mansfield and in Michael Cheadle, the Tribunal had been informed of another property transaction Doncaster. The Tribunal had been assured that Mr. Lowry had no connection with that transaction, it being an acquisition by Mr. Denis O'Brien solely, and nothing emerged from the evidence transaction was warranted. in 2 0 0 1 to suggest that further scrutiny of the 16.99 On 11 th January, 2003, a number of articles appeared in The Irish Times newspaper relating to a property transaction concerning the purchase and development of the stadium of Doncaster Rovers Football Club. The Irish Times REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 487 articles related to a letter, dated 25 t h S e p t e m b e r , 1998, from Mr. Christopher Vaughan, who was instructed in the matter, to Mr. Michael Lowry, in which Mr. Christopher V a u g h a n referred to a "total involvement" the Doncaster Rovers transaction. At the time on the part of Mr. Lowry in articles, the Tribunal of the believed it had completed its investigations into the UK property transactions, and other "money mobile GSM trail" matters, and was in the course of lengthy inquiries into the process. The and Tribunal began private its inquiries public into the in licence Doncaster transaction, ultimately commenced sittings September, 2004, although the hearings were then postponed Judicial Review proceedings brought by Mr. Denis O'Brien, by reason of the challenging Tribunal's decision to proceed to public hearings in relation to Doncaster. These proceedings were finally dismissed by the S u p r e m e Court in February, 2006, and the Tribunal, having published Part I of its Report in December, 2006, resumed hearings in February, 2007. By that time, a substantial amount of further information and material had come to the Tribunal's attention, which had not previously been disclosed prior to its initial public hearings in S e p t e m b e r , 2004. 16.100 Matters concerning the Doncaster transaction are touched upon in Chapters 9, 10 and 11 of this Volume. Chapter 9 includes an outline of the background to the transaction, as well as its details, and thereafter, in the main, contains an analysis of a number of occasions on which persons associated with Mr. Lowry described him as having an involvement in, or connection with the Doncaster transaction, including the letter of 25 t h S e p t e m b e r , 1998, from Mr. V a u g h a n to Mr. Lowry. 16.101 The Doncaster project involved a proposal w h e r e b y Doncaster Rovers Football Club ground, Belle Vue, located in the centre of Doncaster, w o u l d be acquired, with the club being relocated to a new stadium, and the lands at Belle Vue being redeveloped for retail purposes, subject to the necessary planning permission being secured from the local council. The promoter was Mr. Kevin Phelan, w h o had also been behind the Mansfield and Cheadle transactions. Ultimately, the investor was Mr. Denis O'Brien, who, for reasons of commercial sensitivity, wished to keep his name out of the project, and it was Mr. Aidan Phelan who accordingly fronted it on his behalf. In fact, as was only belatedly discovered by the Tribunal in circumstances more fully set out in Chapter 9, two long-standing and close acquaintances of Mr. Lowry namely, Mr. Bill Maher and Mr. Patrick Doherty, were also involved in different capacities in the embryonic stages of Doncaster, prior to its introduction to Mr. Denis O'Brien. Both featured in evidence heard concerning transactions e x a m i n e d in further detail in Chapter 2 of this Volume. The Tribunal was assured that their involvement in Doncaster was entirely coincidental, and unrelated to Mr. Lowry. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.102 10 The sale of Doncaster t o o k place by way of transfer of shares from the Page | 488 vendor companies and majority shareholders, Dinard Limited and Shelter Trust Anstalt, to a vehicle on behalf of a trust controlled by Mr. Denis O'Brien, Westferry Limited. The transaction completed on 18 th August, 1998. 16.103 A little over one month later, on 23 r d and 24 t h S e p t e m b e r , 1998, Mr. Michael Lowry travelled to Northampton and met with Mr. Christopher V a u g h a n and Mr. Kevin Phelan. Whilst there was significant controversy on the issue, the Tribunal is satisfied that Mr. Paul May, a businessman who it was intended would subsequently act as Chairman of Doncaster Rovers Football Club, w a s also in attendance at a meeting with Mr. V a u g h a n , Mr. Kevin Phelan and Mr. Lowry, on the evening of 23 r d S e p t e m b e r , 1998, a meeting which occurred in Mr. May's house. Mr. Lowry had a further meeting with Mr. V a u g h a n on the following morning, 24 t h S e p t e m b e r , 1998, and Mr. V a u g h a n then drove Mr. Lowry to a medical appointment in Leicester, in the course of which they had further discussions. 16.104 It was following this visit by Mr. Lowry to the UK that Mr. V a u g h a n wrote involvement" his letter of 25 t h S e p t e m b e r , 1998, to Mr. Lowry, referring to a "total on the part of Mr. Lowry in the Doncaster transaction. The Tribunal's inquiries into this matter were initially hampered to s o m e extent by the fact that Mr. V a u g h a n continued to refuse to make himself available as a witness, and being resident outside the jurisdiction, could not be compelled to do so. However, w h e n Mr. V a u g h a n did eventually make himself available as a witness in 2009, the Tribunal was able to examine the circumstances of Mr. Lowry's visit to Northampton, and the matters which gave rise to Mr. V a u g h a n ' s letter of 25 t h September, 1998, in more detail. A significant portion of Chapter 9 is taken up with an analysis of those matters, by reference not only to the evidence heard from Mr. V a u g h a n and Mr. Lowry, but also by reference to a number of accounts Mr. V a u g h a n gave at different times and to different persons, including the Tribunal, concerning the events that led him to write his letter of 25 t h S e p t e m b e r , 1998. Whilst it is not proposed here to set out in detail that analysis, or the evidence heard by the Tribunal, it is worth recording that it appeared to the Tribunal that, in almost all of the recorded accounts given by Mr. V a u g h a n , at a time prior to the letter of 25 t h September, 1998, coming to the attention of the Tribunal, Mr. V a u g h a n indicated that he had written the letter based on w h a t he had been told by Mr. Lowry. However, in his responses to the Tribunal, once the letter had come to its attention, Mr. V a u g h a n suggested that he had written the letter mistakenly, based on the fact that Mr. Kevin Phelan had been willing to discuss the transaction in Mr. Lowry's presence. Doncaster REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.105 10 For his part, Mr. Lowry always insisted that there was no basis on Page | 489 which Mr. V a u g h a n could have formed the impressions which led to the letter of 25 t h S e p t e m b e r , 1998, as Mr. Lowry had no knowledge of, or involvement in, Doncaster, nor did he have any discussions or dealings in the course of his visit to Northampton in S e p t e m b e r , 1998, concerning the transaction, other than insofar as he may have offered to assist Mr. V a u g h a n in making contact with Mr. Aidan Phelan, who Mr. V a u g h a n led him to believe he was having difficultly in reaching. For almost the entirety of his eventual evidence to the Tribunal in 2009, Mr. V a u g h a n appeared reluctant to accept that his letter was based on anything Mr. Lowry had told him. Nonetheless, at the conclusion of that evidence, Mr. V a u g h a n changed his position, and testified that, in writing the letter of 25 t h S e p t e m b e r , 1998, he had formed a genuine opinion of Mr. Lowry's "total involvement" in Doncaster, based on w h a t he had been told by Mr. Lowry. He also retracted his earlier evidence to the effect that he had, at the time, been mistaken in the impression he recorded in that letter. 16.106 Having regard to all the circumstances and evidence, and in particular having regard to the contents of Mr. V a u g h a n ' s letter itself, and the level of detailed interaction between Mr. V a u g h a n and Mr. Lowry in relation to Doncaster which that letter records, including the provision by Mr. V a u g h a n to Mr. Lowry of confidential and sensitive documentation concerning the transaction, and having regard to other surrounding circumstances, including the fact that the crucial meeting on the evening of 23 r d S e p t e m b e r , 1998, t o o k place in Mr. Paul May's house, a fact originally withheld from the Tribunal, but which clearly suggested that the meeting related to Doncaster, and not any other UK transaction, the Tribunal is satisfied that Mr. V a u g h a n was under no misconception w h e n he wrote to Mr. Lowry on 25 t h S e p t e m b e r , 1998, and his understanding and impression of Mr. Lowry's "total involvement" in the Doncaster transaction was based on w h a t Mr. Lowry told him. 16.107 references The remainder of Chapter 9 sets out further instances of apparent to Mr. Lowry in the course of the Doncaster project. Taken chronologically, the first such reference appears in a fax from Mr. Kevin Phelan to Mr. Aidan Phelan, dated 11 th August, 1999, at a time when, according to the evidence heard, Mr. Kevin Phelan was effectively dropping out of m a n a g i n g the project. The fax contained, in one of a series of bullet points, a heading "ML", under which w a s a reference to Mr. Kevin Phelan referring all queries regarding Doncaster to Mr. Aidan Phelan. The fax was subsequently to take on a particular significance in the context of a dispute that arose between Mr. Kevin Phelan and Westferry, in connection with Doncaster Rovers, and which was ultimately settled in the course of 2002, through the intercession of Mr. Denis O'Connor, Mr. Lowry's accountant and adviser, by the payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 to Mr. Kevin REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 490 Phelan. In the course of those negotiations, this fax of 11 th August, 1999, came to light, having been sent by Mr. Kevin Phelan's solicitors to Westferry's solicitors, William Fry, with the latter advising that appropriate inquiries w o u l d have to be made regarding the reference to "ML", in the context of Doncaster. The fax is examined in Chapter 9, insofar as it contains on its face a reference to Mr. Lowry in connection with Doncaster. It is returned to in Chapter 10, in the context o f t h e significance of its emergence in the course of negotiations between Mr. Kevin Phelan and Westferry, and the inquiries thereupon carried out. It further features in Chapter 11, in the context of the consideration by the Tribunal of the fact that the fax, the negotiations in the course of which it emerged in 2002, and the inquiries then directed by William Fry, were withheld from the Tribunal until 3 r d November, 2004, almost two and a h a l f y e a r s later. 16.108 The next reference to Mr. Lowry in the course of the Doncaster project occurred in a letter from Mr. Kevin Phelan to Mr. Aidan Phelan of 30 t h August, 2000, which was written shortly after the meeting of 17 th August, 2000, in Jury's Hotel in Dublin, attended by Mr. Aidan Phelan, Mr. Michael Lowry, Mr. Christopher V a u g h a n and Ms. Helen Malone, and referred to in detail in earlier chapters of this Volume relating to Mansfield and Cheadle. August, 2000, was headed "Ref. Mr. Kevin Phelan's letter of 30 t h projects", and Doncaster/Altrincham/Luton referred to recent discussions had by Mr. Kevin Phelan with Mr. Michael Lowry. The letter then proceeded to deal almost exclusively with matters relating to Doncaster. Both Mr. Aidan Phelan and Mr. Michael Lowry testified that they Mr. Kevin Phelan's response to strong criticism believed that the letter was levelled against him at that time, in relation to his conduct of the Mansfield and Cheadle transactions, and that his complaints in connection with Doncaster were his w a y of "returning serve", but did not mean that Mr. Lowry had any discussions with him in that regard. Nonetheless, the letter on its face suggests that the discussion, which Mr. Kevin Phelan had with Mr. Lowry on foot of which he wrote the letter, can only have been material to the subject matter of his criticisms, if it related to Doncaster. 16.109 The final reference to Mr. Lowry in the context of Doncaster, 9, occurred at a meeting on 10 th September, 2002, in examined London, in Chapter between Mr. Denis O'Connor, Mr. Lowry's adviser, Ms. Ruth Collard, of Messrs. Carter-Ruck, solicitors for Westferry, and an accountant also acting for Westferry, Mr. Craig Tallents. The meeting occurred by reason of Mr. O ' C o n n o r ' s then involvement in attempts to settle an ongoing dispute, between the vendors of Doncaster and Westferry, over certain monies which had been retained following the sale, and in respect of which disagreement had arisen, including in relation to monies claimed by the vendors concerning the securing of a continuation of the lease on the car park adjoining Belle Vue Stadium. The circumstances in which Mr. O'Connor involved himself in this dispute are examined in Chapter 10. Having REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 491 regard to all the available evidence, the Tribunal is satisfied that, at the time of this meeting, Mr. O ' C o n n o r was aware that Mr. Kevin Phelan was in possession of information which could be damaging, principally to Mr. Denis O'Brien and Mr. Michael Lowry, if it came to the attention of the Tribunal, and more particularly, the Tribunal is satisfied that Mr. O'Connor was aware that Mr. Kevin Phelan had made available to representatives of the Doncaster vendors, namely Mr. Ken Richardson a nd Mr. Mark ^Veaver, a copy of Mr. V a u g h a n ' s letter of 25 t h September, 1998, recording a "total Doncaster project. 16.110 involvement" on the part of Mr. Lowry in the Ms. Ruth Collard, who gave evidence to the Tribunal, made a note of the meeting on 10 th September, 2002, at which Mr. O ' C o n n o r attended, and recorded that Mr. O'Connor said that Mr. Lowry "did have a connection" with Doncaster, and had been in a room w h e n discussions had taken place between Mr. Kevin Phelan and Mr. Ken Richardson regarding the lease on the car park adjoining the stadium. An analysis of the evidence given by both Ms. Collard and Mr. O'Connor on this matter is set out in Chapter 9, but it should be pointed out that Mr. O ' C o n n o r strongly denied ever having said anything of the sort, and stated that he could not have said such a thing, as he never believed that Mr. Lowry had any connection with the Doncaster project. For her part, Ms. Collard stood over the accuracy of her note, and pointed out that the matter of the car park lease had been one of the main issues in the litigation that she had had to deal with, and she would have been particularly attentive to any mention of a meeting relating to it. The Tribunal has concluded that Mr. O'Connor did say at that meeting w h a t is recorded in Ms. Collard's attendance note, that is, that Mr. Lowry did have a connection with Doncaster, and had been at a meeting at which the lease was discussed. 16.111 Final conclusions in relation to Doncaster are postponed, in the body of this Volume, until the end of Chapter 10, which addresses a number of disputes, primarily between Mr. Kevin Phelan and individuals and firms connected with the UK property transactions examined by the Tribunal, that arose from March, 2 0 0 1 onwards, and in the resolution o f w h i c h Mr. Denis O'Connor played a central role. DISPUTES AND SETTLEMENTS O N UK PROPERTIES 16.112 March, Having concluded in Chapter 8 that a course was decided upon in 2001, whereby Mr. Christopher Vaughan's files in connection with Mansfield and Cheadle would be falsified, prior to their provision to the Tribunal, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 492 so as to obscure connections between Mr. Michael Lowry and Mr. Denis O'Brien in relation to those transactions, the Tribunal in Chapter 10 t h e n traced developments, in large part directed towards that end, that occurred f r o m that date onwards, beginning with a meeting at the Regency Airport Hotel on 27 t h March, 2001, the purpose of which, the Tribunal was told, was to brief Mr. Denis O'Connor on Mansfield and Cheadle, so that Mr. O'Connor would be armed with the necessary information to assist the Tribunal on Mr. Lowry's behalf. Mr. Kevin Phelan also attended, albeit peripherally, at that meeting, and Mr. O'Connor met him there. From that day forward, Mr. O ' C o n n o r a s s u m e d a central role in seeking to appease Mr. Kevin Phelan, who was in dispute with virtually all those connected with the UK properties, and who, as events unfolded, demonstrated a preparedness to use his knowledge of the falsification of documentation, and the false versions of the ownership of UK properties advanced to the Tribunal, for his own purposes. 16.113 In his dealings with Mr. Kevin Phelan, Mr. O ' C o n n o r met with him in June, 2001, and subsequently wrote to Mr. Aidan Phelan, outlining Mr. Kevin Phelan's then claims. Around the same time, Mr. O'Connor, at Mr. Lowry's request, travelled to the UK and met Mr. Kevin Phelan, the stated purpose of which trip was to visit those UK properties with which Mr. Lowry was connected. In the course of this visit, Mr. O'Connor was brought by Mr. Kevin Phelan to view the Doncaster site, and was given a run-down of the project. 16.114 In the s u m m e r of 2001, following evidence given by Mr. Aidan Phelan at the Tribunal's hearings concerning Mansfield and Cheadle, Mr. Kevin Phelan became increasingly hostile to Mr. Aidan Phelan, and was angered by a number of matters stated by Mr. Aidan Phelan in the course of his evidence. Strong correspondence ensued between Mr. Kevin Phelan and Mr. Aidan Phelan, in which, amongst other things, Mr. Kevin Phelan sought the return of d o c u m e n t s of his, which he claimed Mr. Aidan Phelan had in his possession. 16.115 Then, in S e p t e m b e r , 2001, Mr. Denis O ' C o n n o r negotiated and entered Initially, into agreements with Mr. Kevin Phelan relating to UK property projects. the Tribunal was told that two agreements were negotiated, relating to Mansfield and Cheadle. It subsequently emerged from documents, eventually made available to the Tribunal by Mr. Aidan Phelan in 2009, but which had been in his possession since at latest March 2002, that further agreements were entered into in September, 2001, in relation to Altrincham, a transaction which the Tribunal never had cause to examine in any detail, and, more significantly, in relation to Doncaster, with these agreements also having been negotiated and signed by Mr. Denis O'Connor. The agreements of S e p t e m b e r , 2001, were ultimately never acted upon, as sales of the properties, on which they were REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter conditional, did not proceed. are set out in Chapter 10. 16.116 October, 10 Details of these agreements, and the negotiations Page | 493 C o m m e n c i n g from the early months of 2001, significant tensions had also developed between Mr. Kevin Phelan and Mr. Christopher Vaughan, and in 2001, Mr. Kevin Phelan made a formal complaint regarding Mr. V a u g h a n to the Office for the Supervision of Solicitors in England. In early 2002, Mr. Kevin Phelan's hostile correspondence continued, and he instructed a firm of solicitors, Messrs. W o o d c o c k & Sons, in Bury, Lancashire. Very limited extracts of correspondence from Woodcock & Sons incidentally came to the Tribunal's attention, in the course of Mr. O'Brien's legal proceedings seeking to halt the Tribunal's inquiries into Doncaster, and had not been produced to the Tribunal in the course of its private inquiries leading up to its first public hearings in September, 2004. A large amount of further correspondence f r o m W o o d c o c k & Sons, both to Mr. Christopher V a u g h a n and to Mr. Aidan Phelan, containing information and comprising attached documentation, all of which was centrally relevant to the Tribunal's inquiries, was not produced to the Tribunal until 2009, more than seven years later. It e m e r g e d that the correspondence sent by W o o d c o c k & Sons in early 2 0 0 2 contained assertions relating to the alteration of Mr. V a u g h a n ' s files, as produced to the Tribunal, as well as assertions, in the correspondence sent to Mr. Aidan Phelan, relating to an involvement of Mr. Lowry in the Doncaster transaction, including that Mr. Lowry was entitled to split 4 0 % of the profits o f t h e project with Mr. Kevin Phelan. 16.117 This correspondence included a letter of 21 s t March, 2001, from W o o d c o c k & Sons, to Mr. Vaughan, enclosing copies of two different versions of five letters from Mr. V a u g h a n ' s files concerning the Cheadle transactions, only the falsified versions of which had been provided by Mr. V a u g h a n to the Tribunal. was at the same time that Mr. Colm Keena furnished the Tribunal with the It "long form" and "short form" documents which he had received, and which became the subject of Tribunal inquiries, set out in Chapter 8. Mr. Kevin Phelan at this time was using the The Tribunal is satisfied that existence of the falsified documentation, and the threat that it might come to the attention of the Tribunal, to secure advantage for himself in his dealings with others, including Mr. Lowry. 16.118 The Tribunal discovered that, at this time, that is, in March and April, 2002, Mr. Kevin Phelan was paid Stg.?65,000.00, which the Tribunal was told represented fees relating to one of Mr. Lowry's other property interests, known as Vineacre, of which s u m more than S t g . ? 5 6 , 0 0 0 . 0 0 was paid on 22 n d April, 2002. It was on the following day, 23 r d April, 2002, that Mr. Kevin Phelan wrote to Mr. Christopher Vaughan, purporting to provide an innocent explanation for the existence of the "long form" and "short form" correspondence, which explanation REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 At the same time, Mr. V a u g h a n Page | 494 was forwarded by Mr. V a u g h a n to the Tribunal. withheld from the Tribunal the correspondence he had j u s t previously received from W o o d c o c k & Sons, on behalf of Mr. Kevin Phelan, in which the assertions about altered documentation were made. Shortly before the provision by Mr. Kevin Phelan of his purported innocent explanation of 23 r d April, 2002, W o o d c o c k & Sons wrote to Mr. V a u g h a n indicating that all allegations and claims against him were withdrawn. The Tribunal has concluded that the exchange of correspondence between Mr. V a u g h a n and Mr. Kevin Phelan, which was provided to the Tribunal by Mr. Vaughan, was a choreographed falsehood, in which Mr. Kevin Phelan would not have agreed to participate but for the payment to him of Stg.?65,000.00. The Tribunal has concluded that this choreographed falsehood was negotiated and orchestrated by Mr. O ' C o n n o r and Mr. Lowry, with the objective of misleading the Tribunal, and the purpose of which was to secure Mr. Kevin Phelan's co-operation advanced to the Tribunal. in the false version of events and explanations 16.119 It appears that Mr. Kevin Phelan, also around the same time, leaked correspondence concerning the Doncaster project to Mr. Mark confidential Weaver, one of the representatives of the Doncaster vendors, who were then in dispute with Westferry. Mr. W e a v e r visited Mr. Christopher V a u g h a n ' s office in February, 2002, and indicated that he was in possession of such material, which might be d a m a g i n g to Mr. V a u g h a n and Westferry in the context of the ongoing litigation, and further suggested that he had also in his possession recording Mr. Lowry's involvement in Doncaster. a letter 16.120 Shortly thereafter, and following the payment of S t g . ? 6 5 , 0 0 0 . 0 0 to Mr. Kevin Phelan, Mr. O'Connor became involved, through Mr. Denis O'Brien Senior, who had taken over the running of the Doncaster project from Mr. Aidan Phelan on behalf of Westferry, in negotiations with Mr. Kevin Phelan with a view to settling his claim for fees against Westferry. It was Mr. Aidan Phelan w h o had agreed Mr. Kevin Phelan's entitlements at the outset of the project, and he testified that these were limited to a share in any profits generated. Significantly, he told the Tribunal that he was always of the belief that Mr. Kevin Phelan was owed no fees in connection with Doncaster. 16.121 Mr. Owen O'Connell, the solicitor in William Fry acting for Westferry at the time, testified that Mr. O'Brien Senior informed him that Mr. Denis O'Connor had proposed that the Westferry settlement with Mr. Kevin Phelan w o u l d form part of a global settlement with Mr. Kevin Phelan, with Mr. Lowry contributing a payment relating to a different property. The a m o u n t of the payment to Mr. Kevin Phelan from Westferry w a s to be S t g . ? 1 5 0 , 0 0 0 . 0 0 , and there was no evidence of any negotiation on this figure. W h e n queried in the course of private inquiries by REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 495 the Tribunal about his role in these negotiations, Mr. O'Connor repeatedly insisted to the Tribunal that he had no role whatsoever. Following the delayed production of the files concerning the negotiations, it became clear that Mr. O ' C o n n o r had in fact played the central role in negotiations with Mr. Kevin Phelan on Westferry's behalf. He was also involved at the same time in negotiations with Mr. Kevin Phelan on behalf of others, including Mr. Aidan Phelan, Brian Phelan & Company, accountants, which w a s Mr. Aidan Phelan's former firm, Mr. Craig Tallents and Mr. Lowry. 16.122 Whilst those negotiations were relatively complex, and are examined in some detail in Chapter 10, apart from the significance of Mr. O ' C o n n o r ' s role in them, the Tribunal also had regard to the fact, previously mentioned, that the fax of 11 th August, 1999, from Mr. Kevin Phelan to Mr Aidan Phelan, containing the reference to "ML" in a Doncaster context, emerged in the course of those negotiations, and caused William Fry to direct that inquiries should be made to ensure that there was no connection between Mr. Lowry and the Doncaster transaction. Indeed, the requirement for a confirmation from Mr. Kevin Phelan that there was no such connection almost collapsed the entire negotiations. Following a particularly tense and hostile meeting in England at the end of July, 2002, between Mr. Kevin Phelan and his solicitor, and Mr. O'Connor, Woodcock & Sons wrote to William Fry formally withdrawing from the negotiations on the grounds that their client was now being asked: "to provide the impossible." Also of significance is the fact that this crucial stage in the negotiations occurred precisely at the same time that the Tribunal w a s hearing evidence in relation to the "long Denis form" and "short much of form" which correspondence, including evidence from Mr. was directed to advancing the innocent O'Connor, explanation set forth in Mr. Kevin Phelan's letter of 23 r d April, 2002. Neither at that time, nor for more than two years thereafter, was the Tribunal aware of the d o c u m e n t containing the reference to "ML" in relation to yet another UK property transaction, which the Tribunal had been previously informed had no connection with Mr. Lowry, namely Doncaster. Nor w a s the Tribunal aware of the inquiries which William Fry felt it necessary to direct, consequent on that reference; nor that these inquiries had failed to elicit a satisfactory explanation for the reference. "ML" This information did not come to the Tribunal's attention until after such time as Mr. O'Brien had issued proceedings, through William Fry, acting as his solicitors, seeking to halt the Tribunal's Doncaster inquiries. 16.123 In August, 2002, Mr. Kevin Phelan, notwithstanding W o o d c o c k & S o n s ' reference earlier assertions of impossibility, provided an explanation for the "ML" in the fax of August 1999, to the effect that it did refer to Mr. Lowry, but was REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 496 erroneous, in that the reference should have been in the context of Mansfield, and not Doncaster. The negotiations were promptly concluded with Westferry, and Mr. Kevin Phelan w a s paid Stg.?150,000.00. 16.124 In mid-2002 it s e e m s that Mr. Kevin Phelan also provided a copy of Mr. Vaughan's letter dated 25 t h September, 1998, containing the Christopher reference to Mr. Lowry's "total and Mr. Mark Weaver. mediation meeting involvement" in Doncaster, to Mr. Ken Richardson This d o c u m e n t was produced by t h e m in the course of a 2002, aimed at concluding the litigation rise to a in S e p t e m b e r , between the Doncaster vendors and Westferry, which in turn gave complaint of blackmail, being made by Mr. Denis O'Brien Senior to the London Metropolitan Police. In a witness statement prepared by Mr. O'Brien Senior to support his complaint in November, 2002, Mr. O'Brien Senior stated that in the w e e k prior to the mediation, he was faxed a copy of the letter of 25 t h September, 1998, and received a message, via Mr. Denis O'Connor, which he was told originated from Mr. Ken Richardson and Mr. Mark Weaver, that a copy of the letter would find its w a y to people he did not w a n t to see it, unless he settled the litigation in respect of Doncaster on terms which were favourable to the vendors. In this statement it was also said that Mr. O'Connor had informed Mr. O'Brien Senior that the information about this matter had come from Mr. Kevin Phelan. Whilst Mr. O'Connor, in his evidence, rejected w h a t was recorded in Mr. O'Brien Senior's statement, and insisted that he had never had sight of the letter of 25 t h September, 1998, until it became public by reason of The Irish Times articles in January, 2003, the Tribunal has nonetheless concluded that he was fully aware of the existence and contents of both the letter of 25 t h September, 1998, and also the fax of 11 th August, 1999, containing the "ML" Doncaster, both of which documents had reference in the context of Tribunal. been withheld from the Indeed, the Tribunal is satisfied that Mr. O ' C o n n o r ' s activities and efforts, dating from March, 2001, were directed to neutralising the risk of d a m a g i n g information coming to the attention of the Tribunal as a result of the actions of Mr. Kevin Phelan. The Tribunal acknowledges that Mr. O ' C o n n o r was not, in the actions which he took, acting on his own account, but rather was acting as a facilitator for, and an agent of his client, Mr. Michael Lowry, and to the extent that he assisted in the implementation of the strategy of deceiving the Tribunal devised in March, 2001, he was doing the bidding and seeking to serve the interests of others, primarily Mr. Lowry, and secondarily Mr. Denis O'Brien. 16.125 The Tribunal has concluded that the payment of S t g . ? 6 5 , 0 0 0 . 0 0 to Mr. Kevin Phelan in March and April, 2002, in connection with a property interest of Mr. Michael Lowry, was for the principal purpose of presenting a contrived falsehood to the Tribunal. This entailed the withdrawal of assertions which had been made by Mr. Kevin Phelan against Mr. Christopher V a u g h a n in connection with the provision to the Tribunal of falsified correspondence, and at the same REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 497 time, the furnishing by Mr. Kevin Phelan to Mr. Christopher V a u g h a n of an untrue innocent explanation for the correspondence, which existence of the "long form" to the and "short by form" Mr. explanation was forwarded Tribunal Christopher V a u g h a n , w h e n it was known to be untrue. 16.126 was The Tribunal has further concluded that the payment of S t g . ? 1 5 0 , 0 0 0 . 0 0 to Mr. Kevin Phelan by Mr. Denis O'Brien, through Westferry, primarily intended to ensure that Mr. Kevin Phelan would not further undermine the false version of Mr. Lowry's involvement in the UK properties already tendered in evidence to the Tribunal in 2001, and the false explanation already presented, with the complicity of Mr. Kevin Phelan, for the existence and provision to the Tribunal o f t h e falsified "short form" correspondence. 16.127 As regards its substantive inquiries into Mr. Michael Lowry's association with, and role in, Doncaster, the Tribunal has had regard to all the relevant circumstances, which are fully set forth in Chapters 9 and 10. The Tribunal has concluded by reference to all matters considered in those chapters, and in particularto: (i) the events of 23 r d and 24 t h S e p t e m b e r , 1998, w h e n Mr. Lowry travelled to the UK; (ii) the contents of Mr. V a u g h a n ' s consequent letter of 25 t h S e p t e m b e r , 1998, recording a "total involvement" on the part of Mr. Lowry in Doncaster; (iii) Mr. Denis O'Connor's statement to Ms. Ruth Collard and Mr. Craig Tallents at the meeting on 10 th September, 2002, in London, that Mr. Lowry had a connection with Doncaster; (iv) the extensive concealment of various matters centrally relevant to Doncaster; that Mr. Lowry did have an involvement in the Doncaster transaction, which it was intended would entail a payment to, or the conferral of a pecuniary advantage on him, the source of which was the ultimate beneficial owner of Doncaster, that is, Mr. Denis O'Brien. DELAYS, NON-DISCLOSURES AND LAWYERS 16.128 Doncaster The manner and in which certain critical documentation from the concerning Tribunal, is Rovers, other matters, was withheld examined in detail in Chapter 11, particularly having regard to the actions of a REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 498 number of solicitors acting for persons or entities before the Tribunal. Although not an exhaustive analysis of all the delays to the Tribunal's w o r k that were, over its lengthy duration occasioned, Chapter 11 deals with three particular instances, where critical information was withheld from the Tribunal, thereby causing delays to, and undermining its work. 16.129 The first such instance examined by the Tribunal concerns misrepresentations made by Messrs. LK Shields, solicitors acting for Westferry and Mr. Denis O'Brien Senior, to the Tribunal, on three separate occasions, to the effect that the London Metropolitan Police had concerns about files being provided to the Tribunal relating to the blackmail complaint made by Mr. Denis O'Brien Senior on behalf of Westferry, following the mediation between Westferry and the representatives of the Doncaster vendors in S e p t e m b e r , 2002. The effect of these misrepresentations to the Tribunal by LK Shields, and which were accepted by the Tribunal as reflecting the true position, was to delay significantly the provision of files relating to that blackmail complaint, and accordingly to undermine the Tribunal's work. 16.130 The Tribunal's request for such material was first made in January, misrepresentations made by Westferry's 2003, but, largely by reason of the solicitors, LK Shields, the material was not ultimately secured by the Tribunal until 8 t h February, 2005, over two years after its initial request. This occurred because the Tribunal had, shortly before, in early December, 2004, having made direct contact with the London Metropolitan Police, ascertained for the first time that the representations made by LK Shields were incorrect, and that the police had no concerns regarding the provision of material London the relating to blackmail complaint to the Tribunal. W h e n the Tribunal immediately thereafter made inquiries of LK Shields as to how they had made representations to the contrary, LK Shields refused to engage with the Tribunal, relying on the fact that Mr. Denis O'Brien's Doncaster litigation remained ongoing, and refused to provide any response until such time as Mr. O'Brien's t h e n Appeal to the S u p r e m e Court had been determined. 16.131 2003. Accordingly, it was not until two years later, in February, 2007, that the Tribunal was provided with a sequence of correspondence dating from February, This c o m m e n c e d with two letters, each dated 14 th February, 2003, from Ms. Ruth Collard, of Carter-Ruck, English solicitors acting for Westferry, the first to Mr. Denis O'Brien Senior, and the second to William Fry, at that time acting for Westferry. In those letters, she had indicated that the police had no concerns about the release of the blackmail material sought by the Tribunal, and that it was a matter for Mr. Denis O'Brien Senior. Mr. O'Brien Senior's response to Ms. Collard's advice, was to request her to alter both letters, so that, as altered, they REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 499 would give the false impression that the police did have concerns. Ms. Collard made the alterations sought by Mr. O'Brien Senior, and those altered letters were sent to him and to William Fry. 16.132 In S e p t e m b e r of that year, w h e n LK Shields took over from William Fry, as solicitors representing Westferry and Mr. O'Brien Senior, in their dealings with the Tribunal, Mr. Owen O'Sullivan, of William Fry, took the precaution of sending a fax to Mr. Hugh Garvey, of LK Shields, specifically drawing to his attention both the original and altered versions of Ms. Collard's correspondence of February, 2003, addressed to William Fry. Notwithstanding, this communication from the solicitor previously acting, LK Shields made representations to the Tribunal, based only on the contents of the altered version of the correspondence, whilst disregarding the contents of the original version, without making any inquiries as to the reason for the alterations having been made, in circumstances those alterations were directed by the client, Mr. O'Brien Senior. where 16.133 Evidence was heard f r o m Mr. O'Brien Senior, w h o acknowledged that Evidence was also he had directed the changes to Ms. Collard's correspondence. heard from Ms. Collard of Carter-Ruck, and Mr. Garvey of LK Shields, and that evidence, together with that of Mr. O'Brien Senior, is examined in Chapter 11. In summary, Ms. Collard told the Tribunal that she had thought quite carefully about making the changes requested by Mr. O'Brien Senior. She believed that he was trying to minimise the effect of w h a t she had told him about the police having no concerns, but she also believed that, whatever Mr. O'Brien Senior was seeking to achieve, could not be achieved, as his solicitors would have in their possession both the original and altered versions of her correspondence. She acknowledged that the altered versions gave a very different impression. Mr. Garvey testified that he did not know to w h a t extent he had examined the two versions of Ms. Collard's letter to William Fry, w h e n responding to the Tribunal, and, in any event, he suggested that any culpability rested with Ms. Collard and Carter-Ruck, as they never corrected him in relation to w h a t had been conveyed to the Tribunal, even though they were subsequently provided with all correspondence that passed between LK Shields and the Tribunal. He also told the Tribunal that LK Shields' he had letters to the Tribunal were written, on the basis of the instructions received. 16.134 and Whilst there was a t e n d e n c y in the evidence heard from Mr. Garvey if any blame or culpability arose for this Ms. Collard to suggest that, it should that Mr. misrepresentation, difficult to accept lie elsewhere, the Tribunal has found that it is Garvey overlooked or failed to appreciate the significance of w h a t had been highlighted to him by Mr. Owen O'Sullivan, in the course of transmission of documents relating to Westferry from William Fry to LK Shields. If he did overlook the matter, Mr. Garvey certainly ought to have read and REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 500 appreciated w h a t had transpired, particularly as he subsequently wrote on three separate occasions to the Tribunal, conveying a position according only with Ms. Collard's altered letter. In writing to the Tribunal, in October, 2006, in strident terms, denying on behalf of his clients that they had misled the Tribunal, Mr. Garvey was certainly by that time in possession of all relevant information, and the Tribunal has found it incomprehensible that he then wrote in these terms. Ms. Collard, in altering her original letter, must also have known that the altered form materially misrepresented the true situation and, given her extensive dealings with the Tribunal over a lengthy period thereafter, she must also have been aware that the incorrect position had been conveyed to the Tribunal. It is beyond doubt that the course of events surrounding the alteration of Ms. Collard's letters, and the misrepresentations then made, occasioned difficulties, lengthy delays and significant expense to the Tribunal. needless 16.135 The second instance of delays to the Tribunal's w o r k examined in Chapter 11 relates to the failure to provide to the Tribunal a copy of the fax dated 11 th August, 1999, previously referred to, from Mr. Kevin Phelan to Mr. Aidan Phelan, containing the reference to "ML" in the context of Doncaster. The fax had emerged in the course of settlement negotiations between Westferry and Mr. Kevin Phelan in mid-2002. 16.136 The receipt of the fax by Westferry, in the circumstances already outlined caused concerns, with Mr. O'Brien Senior immediately identifying it as a possible reference to Mr. Lowry, and concluding that it had to be s o m e form of intimidation or blackmail by Mr. Kevin Phelan. Mr. Owen O'Connell and Mr. O w e n O'Sullivan, the solicitors in William Fry dealing with the matter quite properly, t o o k the view that they had been put on inquiry as to the "ML" reference, and informed Mr. O'Brien Senior to that effect. The ensuing inquiries and the significance of the "ML" reference in the context o f t h e ongoing negotiations with Mr. Kevin Phelan, are examined in Chapter 11, and also in Chapter 10. 16.137 As regards the non-disclosure its emergence of in both the document, the and the circumstances surrounding mid-2002, Tribunal heard O'Brien evidence from both Mr. O'Brien Senior and Mr. Owen O'Connell. Mr. Senior testified that the failure to bring the matter to the Tribunal's attention had nothing to do with him, and it was for William Fry to tell him that the information had to be given to the Tribunal. He was in the hands of his solicitors. Mr. O'Connell did not recall discussing the matter with Mr. O'Brien Senior at the time, but he did discuss it with his colleague Mr. O w e n O'Sullivan, and they considered whether they should formally advise Mr. O'Brien Senior to notify the matter to the Tribunal, but decided against doing so. In evidence, he testified that his firm was in an unusual position vis-a-vis the Tribunal, in that almost all of its advice came REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 501 into the possession of the Tribunal, with the consequence that formal advice to Mr. O'Brien Senior would have been t a n t a m o u n t to a direction that he notify the Tribunal, and it was clear that Mr. O'Brien Senior was absolutely a d a m a n t that he did not w a n t to receive that advice. In expanding on this, Mr. O'Connell made it clear that at no point did Mr. O'Brien Senior state to Mr. O'Connell, or anyone else, that he did not w a n t to receive the advice, but it was clear, from the context of everything that had gone before that both Mr. O'Brien Senior and his son, Mr. Denis O'Brien, were a d a m a n t that Mr. Lowry had no involvement in Doncaster. The only contrary evidence, reference in the fax of 11 th of which William Fry was aware, was the "ML" August, 1999, and Mr. O'Connell t o o k the view that giving formal advice to bring that matter to the attention of the Tribunal was not justified. 16.138 As regards the litigation brought by Mr. O'Brien against the Tribunal, with William Fry acting as his solicitors, Mr. O'Connell testified that he w a s not a litigation lawyer, and w a s not involved in the proceedings, but a c k n o w l e d g e d that, when seeking equitable relief, such as the injunction sought by Mr. O'Brien in regard to Doncaster, applicants and their lawyers were required to make all information in their possession available to the Court by w a y of full disclosure. Mr. O'Connell stated that he was unaware that the existence of the "ML" reference was not disclosed to the Court, w h e n the application was made. 16.139 The manner in which the fax of 11 th August, 1999, eventually came to the attention o f t h e Tribunal, was lengthy and s o m e w h a t complicated, and is set out in full in Chapter 11. Suffice to say at this juncture that, following The Irish Times articles concerning Doncaster on 11 th January, 2003, and the subsequent c o m m e n c e m e n t of the Tribunal's private inquiries into the matter, the fax, and related documents, were withheld from the Tribunal until 3 r d November, 2004, almost two years later. 16.140 Having quite properly directed an internal inquiry into the "ML" reference upon its e m e r g e n c e in mid-2002, and having received an explanation for the reference which was not, as a c k n o w l e d g e d by Mr. O'Connell, particularly persuasive or satisfactory, a decision was then taken by William Fry not to refer the d o c u m e n t to the Tribunal, without consulting or advising Mr. O'Brien Senior further. The Tribunal has found that William Fry's decision in this regard cannot withstand serious scrutiny. The rules of legal professional privilege relating to advices given to clients apply with equal force in a tribunal context, as they do in the Courts, but in any event, it could hardly be suggested as a tenable course of dealings that, because it is felt that a client is reluctant to receive and act on particular advice, no advice to that effect is given, and a course is therefore adopted which accords with the client's perceived preference. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 502 16.141 Not only was the d o c u m e n t not provided, but the legal advisers, whilst unsatisfactory aware of the d o c u m e n t and its troublesome potential, and the outcome of inquiries conducted into it, proceeded on a basis, not merely of withholding disclosure from the Tribunal, but of urging in repeated correspondence that no sufficient basis for embarking upon public sittings in relation to Doncaster existed, and then making application to the High Court, on behalf of their client, Mr. Denis O'Brien, without disclosure in that regard. 16.142 Whilst the submissions received on behalf of William Fry in relation to this issue were useful and constructive, and the Tribunal acknowledges that Mr. O'Sullivan and Mr. O'Connell, in the course of other dealings with the Tribunal, and in the case of Mr. O'Connell, in the course of evidence given, have acted both diligently and fairly, nonetheless in failing to make the d o c u m e n t available, whilst urging the Tribunal to desist from public sittings in relation to Doncaster, and bringing and maintaining Judicial Review proceedings, without such disclosure, the solicitors and their clients fell short of the level of cooperation with the Tribunal professed by them, and contributed to significant delays thereby occasioned. 16.143 The final instance examined in Chapter 11 concerning dealings between the Tribunal and lawyers acting for affected persons, relates to the eventual attendance of Mr. Christopher V a u g h a n , as a Tribunal witness, in the course of 2009. Initially, it had been hoped that Mr. V a u g h a n ' s evidence would be disposed of within one week, in April of that year, but by reason of his evidence overrunning the initial estimated time-frame, it was necessary to postpone the balance of his testimony until June, 2009. 16.144 Vaughan In the intervening evidence period, on 23 r d approximately June, 2009, four weeks before Roche Mr. & resumed Messrs. Oliver Company, solicitors of County Tyrone, acting on behalf of Mr. Kevin furnished to Mr. Duncan Needham, for of Messrs. Vaughan, Max a Engel, Phelan, of of solicitors body Northampton, documentation. England, acting Mr. considerable A m o n g this, there was in particular a number of copy letters written by Mr. Vaughan, referable to Mansfield, Cheadle and Doncaster, several of which letters, as examined in more detail in Chapter 8 and elsewhere, had either been previously provided to the Tribunal in an altered form, where references to Mr. Lowry's involvement in property transactions had been deleted, or alternatively had never been produced previously to the Tribunal in any form, and also contained references to an involvement of Mr. Lowry, inconsistent with information and evidence previously furnished to the Tribunal. It appears that these documents were provided by Oliver Roche & Company, on behalf of Mr. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 503 Kevin Phelan, in protest at certain reported references to their client by Mr. V a u g h a n in the course of his April evidence. 16.145 that the Company, W h e n Mr. V a u g h a n ' s evidence resumed in June, 2009, he accepted copy correspondence furnished, in the interim, by Oliver Roche & his comprised true copies of letters actually written by him, and relevant" counsel acknowledged that the material furnished was "obviously Tribunal. to the Further, at the conclusion of his evidence, Mr. V a u g h a n accepted that, not emerged, the Tribunal would have been had the further documentation invited to draw important conclusions from portions of his earlier evidence that he had to accept, in the light of the further documentation, would have been entirely incorrect. 16.146 Needham There were certain communications between Mr. Needham, on Mr. V a u g h a n ' s behalf, and the solicitor for the Tribunal, following the receipt by Mr. of the documentation in question, which dealings are detailed in Chapter 11. These began with a telephone call from Mr. Needham on 2 n d June, 2009, in which he inquired whether the Tribunal had received any correspondence from Mr. Kevin Phelan's solicitors since Mr. V a u g h a n ' s earlier evidence. The Tribunal solicitor responded that he could not confirm or deny this, as the Tribunal was unable to c o m m e n t on its dealings with other 2nd affected persons. By letter of the same day, June, 2009, Mr. N e e d h a m wrote to the Tribunal in broadly similar terms, and enclosed a copy of a letter of complaint from Oliver Roche & C o m p a n y of 1 s t May, 2009, and Mr. N e e d h a m ' s response of 10 th May, 2009. Mr. Needham repeated his inquiry as to receipt by the Tribunal of correspondence from Mr. Kevin Phelan, and his request for provision of copies of any such correspondence. 16.147 Mr. N e e d h a m wrote to the Tribunal again on 12 th and 16 th June, 2009, with a further telephone call on 17 th June, 2009, on each occasion repeating his earlier inquiries and requests. The Tribunal's response on all occasions was to a like effect as its initial response. It was not until the late afternoon of Monday 22 n d June, 2009, the day prior to the resumption of Mr. V a u g h a n ' s evidence, that the Tribunal received, by hand, from Mr. Needham, the relevant documentation, under cover of a letter from him, dated 19 th June, 2009. 16.148 Nathan abroad Regarding the delay in furnishing the Tribunal w h a t were undoubtedly material and important documents, the Tribunal was informed by Mr. S t e p h e n QC, w h o retarded acted for the Mr. Vaughan, that his professional of a consultation with commitments and Mr. he holding Mr. V a u g h a n Needham, to enable Mr. Nathan to provide Mr. V a u g h a n with the advice deemed necessary in order to consider whether the documentation in question REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 504 ought to be furnished to the Tribunal. Whilst it is difficult not to find fault with such a delay in failing to forward promptly to the Tribunal what, on any appraisal, were significant documents, it is accepted that the belated furnishing of these documents was contributed to by Mr. Nathan's overseas c o m m i t m e n t s , and his solicitor's produced. inability to consult him until shortly before the documents were Whilst it is acknowledged that Mr. Needham wished to obtain the Vaughan, advice of counsel before committing himself to advising his client, Mr. to bring this material to the notice of the Tribunal, and further that counsel was abroad for a period of time, during which Mr. Needham was unable to make contact with him, nevertheless it is regrettable that what, as Mr. V a u g h a n knew, was a copy of a portion of his file, a portion as yet undisclosed to the Tribunal, should have been withheld for so long. delay, and fact of actual though However, in terms of both the length of belated disclosure, this instance is distinguishable from other instances addressed in Chapter 11. SHARES F O RFRIENDS AND FAMILY 16.149 Chapter 12, the final chapter on the Tribunal's investigations into financial matters pertaining to Mr. Michael Lowry, relates to the acquisition of shares in Esat Telecom, on behalf of the late Mr. David Austin who, as found by the Tribunal, was in 1995 and 1996, a conduit both for a donation by Esat Digifone to Fine Gael, and for a payment by Mr. Denis O'Brien to Mr. Michael Lowry. The instructions in relation to the acquisitions investigated by the Tribunal were provided, not by Mr. Austin, but by Mr. Denis O'Brien, and were effected through the agency of Messrs. Donaldson Lufkin & Jenrette, a firm of US Stockbrokers, and in particular Mr. Peter Muldowney. Mr. Muldowney is an Irish individual w h o has been based for some years in the US, who had close personal and professional ties to Mr. O'Brien, and w h o refused either to attend as a witness, w h e n requested by the Tribunal, or to provide direct assistance to the Tribunal in its private inquiries. The dealings in question were discovered by the Tribunal, consequent on a full investigation of Mr. Austin's finances conducted by the Tribunal in the course of its confidential inquiries. W h a t prompted Tribunal attention was that, in each instance, Mr. O'Brien, as had been the case in the Carysfort transaction, w a s the source of all, or part of the funds, which financed the share acquisitions in Mr. Austin's name. The latter of the two transactions had in addition significant features of irregularity, which warranted close Furthermore, in determining that inquiries scrutiny. be into these transactions should pursued at public sittings, the Tribunal had regard to the proximity of apparent dealings between Mr. O'Brien and Mr. Austin in connection with the initial share acquisition, to the confirmation provided by Mr. Austin in November, 1997, regarding the $ 5 0 , 0 0 0 . 0 0 Esat Digifone donation to Fine Gael, the provision of which was a condition of Esat Digifone's support for the Esat T e l e c o m IPO. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.150 10 The first of these share dealings, according to w h a t the Tribunal was Page | 505 told, arose in the context of provision made at the time of the Esat T e l e c o m IPO for the reservation of 5 % of the shares offered for the category of a Friends and Family S c h e m e . Whilst the IPO proceeded in November, 1997, it was not until the following 18 th February, 1998, that 6 , 6 0 0 shares were acquired, on behalf of Mr. Austin, on the instructions of Mr. O'Brien, and placed on an account in Mr. Austin's name with Donaldson Lufkin & Jenrette. This shareholding, which by reason of the appreciation in value of Esat T e l e c o m shares over the three months that they had traded on the S t o c k Market, cost $150,000.00, rather than the $ 1 0 0 , 0 0 0 . 0 0 that it would have cost if purchased at the time of the IPO. The differential, that is $50,000.00, was funded by Mr. O'Brien, so that Mr. O'Brien covered one third of the cost of Mr. Austin's share purchase. 16.151 Tribunal, As Mr. Austin was long deceased by the time the Tribunal discovered this transaction, and as his executors had no information of assistance to the it was primarily to Mr. O'Brien that the Tribunal's inquiries were addressed. It was Mr. O'Brien's evidence that Mr. Austin had conveyed to him at the time of the flotation in November, 1997, his desire to acquire $ 1 0 0 , 0 0 0 . 0 0 worth of Esat T e l e c o m shares. Mr. O'Brien agreed that he would arrange for Mr. Austin's participation through the Friends and Family S c h e m e , and that he would attend to the acquisition on his behalf. Mr. O'Brien's evidence w a s that he overlooked the matter, and following an inquiry made by Mr. Austin in that regard, realising his oversight, he purchased an equivalent number of shares on the market, and absorbed the $ 5 0 , 0 0 0 . 0 0 price differential personally. In other words, Mr. O'Brien made provision of $ 5 0 , 0 0 0 . 0 0 for Mr. Austin's benefit from his own funds. These shares remained in Mr. Austin's name as o f t h e date of his death, even though it seems that he had instructed Donaldson Lufkin & Jenrette to transfer t h e m into the name of his wife, s o m e three w e e k s prior to his death. 16.152 elements The second of these two share transactions was bizarre in its apparent of error, misunderstanding and irregularity. It entailed instructions furnished by Mr. O'Brien directly to Mr. Peter Muldowney, of Donaldson Lufkin & Jenrette, to purchase 12,000 Esat T e l e c o m shares on the stock market, at a cost of $294,000.00. These funds were transferred by Mr. Aidan Phelan, Mr. O'Brien's accountant and associate, w h o had also been a conduit for payments off-shore from Mr. O'Brien to Mr. Lowry. It was Mr. Phelan's understanding at the time he made those arrangements that the funds were being transferred to cover the cost of the purchase of Esat T e l e c o m shares for Mr. Austin. 16.153 The 12,000 shares, having been paid for by Mr. O'Brien, were placed and remained in Mr. Austin's account with Donaldson Lufkin & Jenrette until 16 th November, 1998, some fifteen days after his death, w h e n the shares were REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 506 transferred out of Mr. Austin's account, to that of Mr. Noel Walshe, Mr. O'Brien's father-in-law. Despite the death of Mr. Austin, that step w a s taken by Donaldson Lufkin & Jenrette on foot of a letter dated 13 th October, 1998, from Mr. Austin, addressed to Mr. Aidan Phelan, asking Mr. Phelan to arrange for the transfer of the 12,000 shares to Mr. Walshe, furnishing the latter's account number. Mr. Aidan Phelan, although testifying that those instructions would have been passed on by his secretary, had no recollection of receiving them. 16.154 Mr. O'Brien gave evidence in relation to this transaction in June, 2001, and again in October, 2001, by which time additional documentation had been secured by the Tribunal. Differing versions of events were advanced on those two occasions. A full account of Mr. O'Brien's evidence, and that of Mr. Phelan and Mr. Walshe, is set forth in Chapter 12. In brief, it was Mr. O'Brien's evidence that the shares had been purchased in Mr. Austin's name in error. In June, 2 0 0 1 , the error was that of Mr. Aidan Phelan, who, according to Mr. O'Brien, had arranged the purchase of the shares on his instructions, and it was all as a result of miscommunication between the two agents acting on his behalf, that is, Mr. Phelan and Mr. Peter Muldowney of Donaldson Lufkin & Jenrette. By October, 2001, w h e n Mr. O'Brien resumed his evidence, he testified that he believed that it was he who had given verbal instructions to Mr. Peter Muldowney in early September, 1998, to purchase those shares, not for Mr. Austin, but for the account of Mr. Walshe. Although Mr. O'Brien could not recall discussion between t h e m of Mr. Austin, Mr. Muldowney had written to the solicitors representing the estate of Mr. Austin, indicating that they had also discussed Mr. Austin in the course of that exchange, and that the shares had been placed in Mr. Austin's account in error. In other words, in October, 2001, the error was that of Mr. Peter Muldowney alone. The Tribunal requested, but was never furnished with a transcript of that telephone call. Mr. Muldowney declined to attend as a witness, and refused to participate in a conference telephone call with the Tribunal in the course of its private inquiries. Although Mr. O'Brien seemingly discovered the error, from conversations with Mr. Aidan Phelan, from which it appeared that the shares had been placed in Mr. Austin's account, Mr. O'Brien did not, however, inform Mr. Phelan that an error had been made, and he did nothing to rectify it at that point. 16.155 The Tribunal has concluded from the evidence heard, and from all of the surrounding circumstances, that the likelihood is that the 12,000 shares purchased in S e p t e m b e r , 1998, on the instructions of, and funded by Mr. O'Brien, were in fact intended for Mr. Austin's account. This, and the earlier share acquisition, were transactions which most certainly warranted close scrutiny by the Tribunal, given their affinity to earlier material transactions examined, and the roles of Mr. Austin and Mr. Aidan Phelan as conduits for the passage of funds from Mr. O'Brien to Mr. Michael Lowry. It must nonetheless be recorded that, REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 507 despite infirmities in the accounts of events forthcoming, there was no evidence that connected this transaction, or indeed the initial share acquisition on behalf of Mr. Austin, of which $ 5 0 , 0 0 0 . 0 0 was f u n d e d by Mr. O'Brien, to Mr. Michael Lowry, within the meaning of the Tribunal's Terms of Reference, or in any other respect. THE MARLBOROUGH HOUSE ARBITRATION 16.156 Whilst the contents of this Volume are largely directed to the Tribunal's money trail inquiries made pursuant to paragraphs (e) and (f) of its Terms of Reference, there is one aspect of its inquiries into acts and decisions falling within the ambit of paragraph (g) of its Terms of Reference, which is unrelated to the balance of the Tribunal's inquiries into that paragraph, but which forms the subject matter of Chapter 13 of this Volume. Those inquiries concerned a matter which ought to have been brought to the attention o f t h e McCracken Tribunal, as it related to dealings between Mr. Ben Dunne and Mr. Michael Lowry, and had it been, the inquiries of the McCracken Tribunal might well have taken a different course. 16.157 Michael Chapter 13 relates to evidence heard by the Tribunal in relation to Mr. Lowry's intervention in 1995, w h e n he held office as Minister for Transport, Energy & Communications, and w h e n he was Chairman o f t h e trustees of Fine Gael, in an arbitration then being conducted to fix the revised rent payable in respect of a substantial building known as Marlborough House, located in Marlborough Street, Dublin. The parties to the arbitration were Mr. Ben Dunne, who had recently acquired the landlord's interest in the property for ?5.4 million, and T e l e c o m Eireann, which had held the tenant's interest for some years, and of which Mr. Lowry, as Minister for Communications, was ultimate shareholder. The arbitrator was Mr. Gordon Gill, a partner in Sherry FitzGerald, Estate Agents and Auctioneers, and it was through Mr. Mark FitzGerald, who was a trustee of Fine Gael, and had a long-standing family history of association with the party, and who was a partner of Mr. Gill, that Mr. Lowry endeavoured to intervene. 16.158 The Tribunal has concluded that Mr. Lowry sought, through Mr. FitzGerald, to influence Mr. Gordon Gill in the discharge of his remit as arbitrator so as to bring about a result in which the rent would be increased from ? 5 . 0 0 per square foot to ? 1 0 . 0 0 per square foot instead of the ? 6 . 0 0 per square foot that was actually fixed by Mr. Gill. As the approximate square footage o f t h e premises was 8 5 , 0 0 0 feet, this would have resulted in an increase in the annual rental, above that actually fixed, by a s u m of ? 3 4 0 , 0 0 0 . 0 0 (EUR431,711.00). This would have resulted in the capital value of Mr. Dunne's interest increasing to ? 1 2 . 7 5 REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 508 million (EUR16.19 million), more than doubling Mr. Dunne's investment of ? 5 . 4 million (EUR6.86 million), m a d e j u s t months earlier. 16.159 Chapter 13 recounts the circumstances in which this matter came to the attention of the Tribunal, and recites in s o m e detail the evidence of those centrally involved, that is, Mr. Mark FitzGerald, Mr. Michael Lowry, and to a lesser degree, Mr. Ben Dunne, together with the evidence of two witnesses w h o were more peripherally concerned, that is, Mr. Gordon Gill, the arbitrator, and Mr. Killian O'Higgins, a colleague of Mr. FitzGerald, in w h o m he confided at the time concerning Mr. Lowry's overtures. 16.160 In brief, the evidence of the two protagonists, was directed to three between them, over a very short duration, c o m m e n c i n g with a interactions telephone call by Mr. Lowry to Mr. FitzGerald in late March, or early April, 1995, and proceeding to two meetings between them. Whilst Mr. FitzGerald and Mr. Lowry agreed that those contacts had taken place, there was a critical conflict between t h e m over w h a t had occurred. 16.161 It was Mr. FitzGerald's evidence that Mr. Lowry initially telephoned him called Gill" was involved with a Dublin building off inquiring whether " a man O'Connell Street, of which Telecom Eireann was tenant, to which Mr. FitzGerald responded that Mr. Gordon Gill was a colleague of his, that he knew nothing of the matter, but would make inquiries. Mr. FitzGerald then ascertained that Mr. Gill had been appointed arbitrator to fix the revised rent. A short number of days later, Mr. Lowry again telephoned Mr. FitzGerald, and asked him to meet him in a premises in Kildare Street, near Mr. FitzGerald's office. They met over coffee, and it was at this meeting, according to the testimony of Mr. FitzGerald, that Mr. Lowry informed hi m that Mr. Dunne had recently purchased Marlborough House, and wanted to secure an increase in the rent payable from ? 5 . 0 0 per square foot, to ?10.00 per square foot. Mr. Lowry referred to Mr. Gill's appointment as arbitrator, and asked Mr. FitzGerald if he could organise for Mr. Gill to revise the rent to this level. Mr. FitzGerald responded emphatically in the negative, to which, according to his evidence, Mr. Lowry responded: "what are 'we' going to do, as Ben Dunne has contributed Fine Gael?" ?170,000.00 to Mr. FitzGerald understood Mr. Lowry's reference to "we", as meaning Fine Gael. 16.162 The third interaction, 6th again within a matter of days, which Mr. FitzGerald believed was on April, 1995, occurred in the context of Mr. Lowry's request that Mr. FitzGerald show him a property which Sherry FitzGerald had on REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter its books for sale. 10 Having shown the property to Mr. Lowry, in the c o m p a n y of the Page | 509 Sherry FitzGerald colleague dealing with it, Mr. Lowry asked Mr. FitzGerald to drive him back to his Department, and en route, Mr. Lowry again raised the Marlborough House arbitration and repeated his request. Mr. FitzGerald, in the same vein as before, emphatically reiterated his refusal to interfere with Mr. Gill's arbitration. 16.163 The conflict in the evidence of Mr. FitzGerald and Mr. Lowry centred on Lowry's w h a t occurred on those occasions of contact. Put simply, it was Mr. evidence that the Marlborough House arbitration had not featured at all on either of the occasions on w h i c h he met Mr. FitzGerald, that is, on the first occasion, when they met for coffee in Kildare Street, and on the second occasion, w h e n Mr. FitzGerald drove Mr. Lowry back to his Department. Mr. Lowry testified that the Mr. Lowry arbitration only arose in the course of their initial telephone contact. accepted that, in the course of that contact, he did ask Mr. FitzGerald to raise the arbitration of the Marlborough House arbitration with Mr. Gill, but not for the purposes of seeking to influence the revised rent. His request was directed solely to Mr. FitzGerald asking Mr. Gill to expedite the arbitration process, and nothing more. He had never asked Mr. FitzGerald to seek to influence Mr. Gill in the level of revised rent fixed by him, and he denied that he had ever made the statement attributed to him by Mr. FitzGerald, concerning Mr. Dunne having contributed ? 1 7 0 , 0 0 0 . 0 0 to Fine Gael. 16.164 with Mr. In his evidence, Mr. Ben Dunne confirmed that he had made contact Lowry in connection with the arbitration of the revised rent for He Marlborough House, which he had recently acquired for ? 5 . 4 (EUR6.86) million. did request Mr. Lowry, w h o he believed would know Mr. Mark FitzGerald, through their mutual association with Fine Gael, to approach Mr. FitzGerald. Consistent with Mr. Lowry's evidence, it was Mr. Dunne's testimony that this approach was not intended to relate to the revised rent to be fixed by Mr. Gill, but to encourage the expedition of the arbitration process. The request made by him was "looks spontaneous, he a c k n o w l e d g e d that for s o m e o n e reading his evidence, it terrible", 16.165 but he testified that that was the w a y he did business. The evidence of Mr. Killian O'Higgins was confined to a conversation he had with Mr. FitzGerald, w h e n the latter confided in him that Mr. Lowry had asked him to influence Mr. Gill to fix the revised rent for Marlborough House at ? 1 0 . 0 0 per square foot, and that Mr. FitzGerald had refused, and their discussion and agreement that Mr. FitzGerald should not relay that matter to Mr. Gill at that point, as Mr. Gill would then have been obliged to resign as arbitrator. Mr. Gill's evidence was directed to two matters: firstly, his conduct of the arbitration, and his fixing of the revised annual rent at ?640,000.00 (EUR812,632.00), REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 510 approximating to a little over ? 6 . 0 0 per square foot, on 26 t h May, 1995; secondly, to Mr. FitzGerald informing him, after the conclusion of the arbitration, of Mr. Lowry's earlier intervention. Mr. O'Higgins' and Mr. Gill's evidence, of w h a t Mr. FitzGerald had told t h e m in 1995, was consistent with Mr. FitzGerald's testimony o f w h a t had occurred. 16.166 As set forth in Chapter 13, the Tribunal has concluded that, having considered all of the evidence heard, having assessed the direct evidence, and having had regard to the circumstantial factors that emerged, the influence that was sought to be exercised by Mr. Michael Lowry on Mr. Gordon Gill, through Mr. Mark FitzGerald, was with a view to a substantial e n h a n c e m e n t of the rent, rather than merely expediting the process. Apart from the absence of any motive having been suggested w h e r e b y Mr. FitzGerald might have been inclined to give false or unreliable evidence of a nature potentially d a m a g i n g to Mr. Lowry and Mr. Dunne, the Tribunal views Mr. FitzGerald's reticence in volunteering the relevant information concerning the Marlborough House arbitration, for w h a t he himself envisaged as likely to be "an unpleasant task", as understandable, and indeed as enhancing, rather than diminishing the weight of his testimony. 16.167 In finding that Mr. Lowry sought to influence the revised level of rent payable for Marlborough House, it must be recorded that, not merely was this patently improper conduct on his part, but it was in addition a particularly grave dereliction of duty. As Minister entrusted with telecommunications matters, Mr. Lowry in effect stood in the shoes of T e l e c o m Eireann, as tenant of Marlborough House, and for him to have sought to procure unwarranted rent increases, that would have improperly enriched Mr. Dunne over a seven year period, and thereby burdened public funds within his Ministerial remit, amounts to a grave conflict of duty and interest. Indeed, w h a t was contemplated and attempted on the part of Mr. Lowry and Mr. Dunne was profoundly corrupt, to a degree that was nothing short of breathtaking. 16.168 Both the McCracken Tribunal and this Tribunal have found that Mr. Dunne was the source of funds in bank accounts held in the name of, and/or for the benefit of, Mr. Lowry, including accounts of Fine Gael, of which Mr. Lowry was trustee. The requests made by Mr. Lowry of Mr. FitzGerald were acts, calculated to confer, or procure, or to direct Mr. Gordon Gill to confer, a benefit upon Mr. Dunne, a person w h o w a s a source of money to Mr. Lowry, within the meaning of paragraph (g) of the Tribunal's Terms of Reference. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 10 HOW REVENUE TAXED MR.MICHAEL LOWRY 16.169 Chapter 14 outlines the Tribunal's findings arising from the balance of Page | 511 its inquiries pursuant to paragraph (j) of its T e r m s of Reference. Deleting the portions applicable to Mr. Haughey, the T e r m of Reference reads: " (j) and Whether in a timely the Revenue Commissioners the powers availed fully, properly in of as manner in exercising available to them Lowry collecting the funds or seeking paid to to collect Michael the taxation Lowry and/or due by Mr. Michael Garuda Limited trading Streamline Tribunal paragraph Enterprises Report (e) and above." identified any other in Chapter relevant 5 of the Dunnes or gifts Payments at payments identified The Tribunal's inquiries focused on the actions of Revenue in seeking to collect taxation due by Mr. Lowry and/or his company, Garuda, arising from the payments identified in Chapter 5 of the Report of the McCracken Tribunal, and of any other relevant payments or gifts identified by this Tribunal, pursuant to its inquiries on foot of paragraph (e) of its Terms of Reference. 16.170 which Chapter 14 identifies the payments made to Mr. Lowry and/or Garuda gave rise to potential instances of taxation in respect of which the discharge of Revenue's remit was investigated by the Tribunal. These included all payments within the four categories identified by the Report of the McCracken Tribunal, that is: (i) payments amounting in total to ? 4 1 , 0 0 0 . 0 0 made between 1989, and December, 1992, to December, Dunnes Mr. Lowry personally from a Stores account in Bank of Ireland, Marino, at the direction of Mr. Ben Dunne; (ii) cheques issued by Dunnes Stores between November, 1988, and March, 1993, in favour of Garuda, under its trade name of Streamline Enterprises, either cashed by Mr. Lowry, or lodged by him to his own bank accounts, amounting in total to S t g . ? 1 5 5 , 7 3 9 . 0 0 and ? 6 , 0 0 0 . 0 0 ; (iii) bonus payments made by Dunnes Stores to Mr. Lowry between October, 1990, and May, 1992, and amounting in total to S t g . ? 6 5 , 0 0 0 . 0 0 and ?90,000.00; (iv) payments relating to the refurbishment of Mr. Lowry's home at Holycross, County Tipperary, which had cost Dunnes Stores ? 3 9 5 , 1 0 7 . 0 0 . REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 16.171 10 The potential payments identified by this Tribunal in the course of Page | 512 evidence heard are also identified in Chapter 14. In brief, they are: (i) a further payment of ? 1 5 , 0 0 0 . 0 0 in November, 1992, from the Dunnes Stores account with Bank of Ireland, Marino; (ii) a payment of ? 2 5 , 0 0 0 . 0 0 by Mr. Bill Maher, of Maher Meat Packers in the UK in December, 1992; (iii) a payment o f ? 1 5 , 0 0 0 . 0 0 by W h e l a n Frozen Foods; (iv) a payment of ? 3 5 , 0 0 0 . 0 0 by Mr. Patrick Doherty in 1995; (v) a deposit of S t g . ? 1 0 0 , 0 0 0 . 0 0 made with Allied Irish Banks in the Channel Islands in S e p t e m b e r , 1991; (vi) funds of ? 1 4 7 , 0 0 0 . 0 0 lodged to an Isle of Man account in the name of Mr. Lowry in Irish Nationwide (IOM) Limited, in October, 1996; (vii) the acquisition of properties in the UK at Mansfield and Cheadle, f u n d e d in part by S t g . ? 3 0 0 , 0 0 0 . 0 0 provided by Mr. Aidan Phelan from an account of Mr. Denis O'Brien; (viii) the possible involvement of Mr. Lowry in the acquisition of Rovers Football Club in August, 1998. 16.172 Doncaster The Tribunal heard the evidence of Revenue officials on two occasions: in April, 2006, in relation to the the ultimate settlement of the initially in March, 2001, and subsequently investigations undertaken by Revenue, and liabilities of Mr. Lowry and of Garuda. Chapter 14 traces in some detail Revenue consideration of those liabilities, Revenue dealings with Mr. Lowry's and Garuda's tax agents, and the matters which informed Revenue's decision to accept a discounted payment from Garuda. 16.173 Revenue's investigation of the tax affairs of Mr. Lowry and Garuda Following media coverage, and Mr. Lowry's c o m m e n c e d in November, 1996. resignation as Minister, on 2nd December, 1996, Mr. Lowry's then tax agents notified Revenue of possible errors or omissions in Mr. Lowry's tax returns, and those of Garuda, and in the following April, 1997, a submission w a s made to Revenue of additional tax liabilities, in which it was indicated that the aggregate undeclared income was a m o u n t e d to made on approximately ? 5 0 0 , 0 0 0 . 0 0 . A Revenue never payment that of this ?100,000.00 account. accepted REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 513 notification and submission constituted a voluntary disclosure by Mr. Lowry or Garuda, for the purposes of the mitigation of penalties, or the capping of interest. 16.174 Revenue's investigation was delayed by difficulties in accessing relevant records, both of Mr. Lowry and Garuda. Those difficulties were twofold. Firstly, Mr. Lowry had availed of the then recent tax amnesty, and Revenue was precluded by law from investigating his affairs prior to the tax year 1992/1993, without an Order of the Appeal Commissioners, which Order was obtained in November, 1997. Secondly, Revenue was unable to access the relevant Garuda records, which were in the possession of various inspectors, and at one point in the possession of the Tribunal. It was not until 2 0 0 2 that those records were secured, and then only after High Court proceedings instituted by Revenue to that end. 16.175 In the meantime, Revenue had determined that its investigation should proceed on both a civil and criminal footing, and Mr. Lowry was duly cautioned in the latter regard, in February, 1998. The spectre of possible criminal prosecution undoubtedly inhibited both Revenue and Mr. Lowry in progressing the recovery of the outstanding liabilities, as did Revenue's caution in raising assessments, or proceeding to settlement, in the face of the renewal of this Tribunal's investigations into Mr. Lowry's financial affairs in 2001. 16.176 It was not until S e p t e m b e r , 2002, that the parties engaged with each Mr. Lowry had in the meantime paid in 1997, and 1998, an Revenue other meaningfully. additional aggregate ? 3 4 2 , 0 0 0 . 0 0 on account of outstanding taxes. had raised protective assessments, w h e r e b y the entire liability was assessed on both Mr. Lowry and Garuda, to enable Revenue to keep both options open. This was done even though it was Revenue's view f r o m an early stage that, by reason of the evidence heard by the McCracken Tribunal, that the larger part of the undeclared funds had been intended for Garuda, rather than Mr. Lowry, and by reason of the d o c u m e n t a r y records, for tax purposes, the liabilities were primarily those of Garuda, notwithstanding that the funds had been largely retained by Mr. Lowry personally. 16.177 Following a series of interactions, on 31 s t March, 2003, Mr. Lowry's tax agents furnished proposals for discussion purposes, and submitted a figure of ? 1 , 0 9 6 , 1 8 4 . 2 4 for the entire of the outstanding tax liability. That calculation was based on the assumption that a voluntary disclosure had been made, and that there was an entitlement to mitigation of penalties by 95%, and that interest should be capped as of 31 s t March, 1998. This figure, and its underlying assumptions, were rejected by Revenue. By August, 2003, Revenue finalised its computation of the liabilities of Mr. Lowry personally, and of his c o m p a n y Garuda. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 514 Revenue assessed Mr. Lowry's liability at ? 1 7 3 , 0 7 4 . 0 0 , being in respect of some additional Residential Property Tax, Income Tax on the payments identified by this Tribunal from Maher Meat Products and W h e l a n Frozen Foods, plus interest on undeclared bank deposits, both Irish and off-shore. total assessed, inclusive of interest to March, In the case of Garuda, the 2003, and penalties, was ? 1 , 7 0 8 , 6 2 0 . 0 0 being in respect of VAT, PAYE, and PRSI relating to the payments identified by Revenue from the McCracken Report, the public sittings of this Tribunal, and its own examinations. 16.178 Chapter 14 details the evidence heard by the Tribunal regarding the considerations underlying Revenue's calculation of the relative liabilities of Mr. Lowry and of Garuda, and in particular the factors which led Revenue to the conclusion that it of was those obliged, liabilities under to the tax code, to apportion to Mr. the preponderance Garuda, rather than Lowry, notwithstanding his appropriation and retention of the greater part of the funds received f r o m Dunnes Stores. The Tribunal is satisfied that Revenue's approach was not only a reasonable one, but was the only course that could have been taken. 16.179 Negotiations by reference to Revenue's assessments then proceeded over a number of years, and it was not until 2 0 0 7 that a final binding settlement was concluded, although the agreed liability had been discharged in full by Mr. Lowry by May, 2005. The negotiations were progressed on the footing that agreement in principle would be reached, payment would be made by Mr. Lowry, and that a recommendation would ultimately be made by Revenue to the Board of the Revenue Commissioners that the settlement should be approved. That approval could not be sought until possible criminal prosecutions of Mr. Lowry, and of Garuda, had been determined, either by such prosecutions concluding, or by the Director of Public Prosecutions determining that no prosecutions should be instituted against t h e m . It was the latter eventuality that came to pass, and following formal confirmation to that effect, the recommendation and settlement were approved by the Board of Revenue, and thereupon became binding on Revenue. 16.180 The terms of settlement with regard to Garuda entailed the discharge of a total liability of EUR 1 , 2 6 1 , 2 5 0 . 0 0 , in respect of under-declaration of VAT and PAYE/PRSI, comprising EUR 7 0 6 , 6 1 2 . 0 0 for tax, and EUR 5 5 4 , 6 3 8 . 0 0 for interest and penalties. As to Mr. Lowry personally, the aggregate liability discharged for underdeclaration of Income T a x was EUR 1 9 2 , 1 2 0 . 2 4 , comprising EUR 6 3 , 5 1 6 . 0 9 for tax, and EUR 1 2 8 , 6 0 4 . 1 5 for interest and penalties. As required by s . 1 0 8 6 of the Taxes Consolidation Act, 1997, particulars of the settlement, amounting in total to REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 10 Page | 515 EUR 1 , 4 5 3 , 3 7 0 . 2 4 , were set forth in the list of Revenue defaulters published in Iris Oifigiuil on 25 t h S e p t e m b e r , 2007. 16.181 The settlement formally concluded in 2 0 0 7 entailed a waiver of the balance of EUR 4 4 7 , 0 0 0 . 0 0 due by Garuda. Revenue's agreement to this waiver arose from a contention made by Mr. Lowry's tax agents of inability to pay the full assessment on the part of Garuda. This assertion, made in 2003, led to detailed examination Garuda's by Revenue position of all relevant and prospects, accounts and documents examination, regarding Revenue trading f r o m which concluded that a genuine incapacity had been established. The alternative to a partial waiver, that is, liquidation of Garuda on the petition of Revenue, was considered, but was rejected, as it would be lengthy, and unlikely in the ultimate to yield an a m o u n t equivalent to that which had been offered on behalf of Garuda. 16.182 Chapter 14 concludes with a finding that, in the investigations, assessments and negotiations carried out by Revenue in relation to the relevant unpaid tax liabilities, Revenue in general terms discharged its duties in a manner that was diligent and professional. Given the difficulties involved in the case, the eventual resolution was justified and satisfactory, and the delay in bringing the negotiations to finality primarily related to tension arising as a result of deploying criminal and civil proceedings at the same time, and Revenue cannot be faulted in this regard. 16.183 The chapter closes with certain observations regarding the desirability of a change in the taxation code to cater for circumstances, such as those which arose in this instance, where Mr. Lowry, w h o owned and controlled Garuda, appropriated and personally benefited from the payments intended by Dunnes Stores for Garuda, and yet escaped all personal liability for taxation on those payments. Further, it is observed that, in circumstances involving both civil and criminal investigations by Revenue, there is much to r e c o m m e n d provision being made for the separation of civil and criminal liability, to the extent of enabling payments to be made by a taxpayer, subject to a criminal investigation, and to be accepted by Revenue, demonstrably without prejudice to such criminal investigation, or any potential criminal culpability. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h a p t e r 10 CONCLUDING 16.184 matters Page OBSERVATIONS | 516 Chapter 15 seeks to draw together and consolidate the substantive addressed in earlier chapters. It touches briefly on a number of characteristic features that appeared common to most, if not all, o f t h e individual transactions and dealings addressed in the preceding chapters. Its length is such as to render a summary superfluous. An appreciation of its content is essential to an understanding of the Tribunal's overall conclusions. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 C h ap ter 3 Page | 517 A p p e n d i c e s to Chapter 3 THE ESAT/TELENOR $50,000.00 DONATION TO FINE GAEL Index 1. 2. 3. Letter dated 4 t h July, 1995, from Mr. David Austin to Mr. Michael Lowry; Mr. J o h a n s e n ' s "post-it" note of December, 1995; Letter dated 14 th December, 1995, from Mr. David Austin to Mr. Arve Johansen enclosing invoice o f t h e same date; The First Invoice issued by Telenor to Esat Digifone dated 3 r d January, 1996, for Norwegian Kroner 316,000.00; The S e c o n d Invoice issued by Telenor to Esat Digifone backdated to 31 s t December, 1995, for $50,000.00; Credit Note issued by Telenor to Esat Digifone dated 24 t h January, 1996, for $50,000.00; The Third Invoice issued by Telenor to Esat Digifone dated 27 t h March, 1996, for ? 3 1 , 3 0 0 . 0 0 . 4. 5. 6. 7. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 David F.T. Austin 99 S a l t h i l l A p a r t m e n t s Monkstown Co. D u b l i n Iffjoit private & donfiAental 4 July 1995 Michael Lowry, T.D., Minister for Transport, Energy and Communication. Office of the Minister for Transport, Energy and Communications Dublin 2. Copy Dear Michael, I would like to propose that we meet to discuss the following in greater detail, perhaps my secretary could contact your office to ascertain your availability for the afternoon of either the 20th or the 21st of July. However, I have set out below some brief details on my ideas for a Fund Raising event in the United States for the Fine Gael Party in November of this year:- 1. A Private Taoiseach A maximum Suggested Dinner to be held on Thursday as the Guest of Honour. of thirty US Business 9th of November 1995, with the 2. 3. 4. Executives to be invited. $7,500. Club in New York or Park cost per head - I am recommending a Private later. My choice of venue would be either Plaza Hotel, this is to be confirmed 5. There should be a small committee formed, chaired by Peter Sutherland and I would liaise directly with Peter with the support of Maurice Buckley in the US. We could then call upon certain people on an adhoc basis, who may be able to provide us with some help to us in order to achieve the thirty names. I will personally look after arrangement for the dinner the organisation etc., and make the necessary 6. C H A P T E R 3, A P P E N D I X (1) I I R R R lam suggesting that the followingpeople should be in attendance for the Dinner in the USA:The Taoiseach Mr John Bruton, Ministers Lowry, Barrett, Yeats, Kenny and Peter Sutherland. The party could for the duration of their stay at the Fitzpatrick Manhattan Hotel in New York and I would suggest that they could f l y out on the morning ofthe dinner from Dublin. This is unless the Taoiseach has prior engagements or wishes to make alternative arrangements. I feel there should be invitations ofthe highest quality and an accompanying letter issued to each guest, some of which may need to be signed by either the Taoiseach or Peter Sutherland, or perhaps some ofthe Ministers as I Jeel that this would reinforce the support behind the event. I I I R R R As you know I have briefly discussed the idea of Fund Raising in the United States with the Taoiseach and yourself. I have since had further discussions with Peter Sutherland and we have dec.ded to secure names from both sides o f t h e Atlantic, that would be of an interest to us here in Ireland, and who would be interested in attending this very exclusive dinner. At these initial stages o f t h e organisation, I have approached Solomon, Smurfits, Pamarco and Pratt all of whom have show a definite interest in their involvement. I attach a draft A List for your ' perusal, of those people whom I feel that we should make contact with over the coming months with a view to extending an invitation, I would appreciate your comments on these. I do not feel that it would be necessary to have a large committee on this side. With the support and commendation of the Taoiseach and yourself, I feel that the best course of action to follow would be to make contact with prospective guests on a one to one basis. For instance it would be people such as Dan Tully of Merrill Lynch, who have just set up their first operation here in Dublin at the IFSC who would be interested to make definite contact and to avail of the opportunity to discuss their ' future within Ireland under a Fine Gael Government, and I am sure that there are many others in a 1 similar position. I am dictating this from Spain as I am taking a few day break, however, should you have any queries on the above, please do not hesitate to contact me. Again, I am open to all suggestions and would appreciate any comments that you might have. As you are aware this will not be an easy task. I I I I I 1 Ibovij forWard t0 discussing this in further detail w i t h y?u soon on the dates that I have suggested Kind regards, (Dictated by David F.T. Austin. and signed in his absence) Back to report C H A P T E R 3, A P P E N D I X (1) D62/\/ab( 267 GL 22 -f 34, //Epi 14 ,1 ;1.>lo +4722779835 X400:9soaiini0ni^nv<MivMi;f>9sl*nenAMa(<<(nax^ This invoice is issued in: USD to Please remit the above iiicailaucu amount into our bank account: USD: 5006 04 42107 SWIFT adreu: DNBANOKK Den Norske Bank Pastbox 1171 Sestram N-0107 OSLO NORWAY NOK: 7029 OS 20051 Please note that the quoted date format is of Norwegian standard DD:MM:YY Telanor Invest AS Punl address: Talaphena: omcauMreas: P.O. But 6 0 71 *47 22 77 Q 30 B U h r h tg a n ma es t &LOIsv*pL Talvfas N-0184 Oslo N-0130 Ooto *47 22 77 99 3S X400: Gcpo*imaiMk-irwaAOUA/ G && Telenor E i g t DigEphone Sooth block. Molt House Grand canal Quay Datc. DUBIJN2-IHELAND T enns of paymeat: 27.03 96 P ^ a S T ^ Customer so: 27.03.96 110015 INVOICE Product no: Product descriptions 1000084 Numberi 1 ConsultancyfeeTelenor Invest AS Oidresmn Price: 31.300,00 Amount 31.300,00 31.300,00 This invoice is issued in: IEP Picue remit the above mentioned amount into our bank account: USD: 5006 0442107 NOK: 7029 OS 20051 S W I F r adreai: DNBANOKK Hen Norihc Bank Poatbox 1171 Scntrum N-0107 OSLO NORWAY Pleat* nau that the quoted date format is ofNarwegtan standard DD:MM:YY C H A P T E R 3, A P P E N D I X (1) C h a p t e r 10 Page | 527 A p p e n d i c e s to Chapter 5 FROM CARYSFORT T O MARBELLA Index 1. Extract Account statement from in I n v e s t e c Mr. D e n i s O ' B r i e n ' s Radio Investment Bank), NV Bank (formerly W o o d c h e s t e r showing w i t h d r a w a l of ?407,000.00 o n 3 r d J u l y , 1996. 2. E x t r a c t s t a t e m e n t f r o m Mr. A i d a n Phelan's Account in A l l i e d 10 th J u l y , Irish 1996 B a n k s (Isle of M a n ) s h o w i n g credit of ?407,000.00 o n a n d s h o w i n g t h e ?50,000.00 c h e q u e p a y m e n t to Mr. D a v i d A u s t i n o n 10 th J u l y , 1996, a n d t h e transfer of ?100,000.00 to Mr. A u s t i n o n 19 th J u l y , 1996. 3. E x t r a c t s t a t e m e n t f r o m Mr. D a v i d A u s t i n ' s Irish P o u n d A c c o u n t in B a n k of Ireland ( J e r s e y ) s h o w i n g credit of ?100,000.00 o n 26 th J u l y ( v a l u e d a t e 19 th J u l y , ) 1996 a n d credit of ?50,000.00 o n 7 t h A u g u s t , 1996. 4. B a n k Draft in t h e a m o u n t of ?147,000.00 i s s u e d b y B a n k of Ireland ( J e r s e y ) d a t e d 16 th O c t o b e r , 1996. 5. Confirmation document from O c t o b e r , 1996. 6. Mr. M i c h a e l L o w r y ' s a c c o u n t o p e n i n g d o c u m e n t a t i o n for his a c c o u n t in Irish N a t i o n w i d e ( I O M ) Limited. 7. Mr. 1997. Michael Lowry's Irish Nationwide ( I O M ) Limited 5th customer February, Irish N a t i o n w i d e ( I O M ) recording that ?147,000.00 w a s c r e d i t e d to Mr. M i c h a e l L o w r y ' s A c c o u n t o n 21 s t w i t h d r a w a l r e q u e s t f o r t h e a m o u n t of ?148,816.93, d a t e d REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 8. 10 Page | 528 C o n f i r m a t i o n d o c u m e n t f r o m Irish N a t i o n w i d e ( I O M ) L i m i t e d r e c o r d i n g that ?148,816.93 w a s w i t h d r a w n f r o m F e b r u a r y , 1997. Mr. L o w r y ' s a c c o u n t o n 7 t h 9. Declarations Nominees b a c k d a t e d to of T r u s t 12 th by Finsbury Holdings Limited & Finsbury Limited in f a v o u r of W a l b r o o k Trustees ( I O M ) Limited A u g u s t , 1996. 10. D e c l a r a t i o n s of T r u s t b y W a l b r o o k T r u s t e e s ( I O M ) L i m i t e d in f a v o u r of Mr. D e n i s O ' B r i e n d a t e d 15 th M a y , 2001. 11. 12. H a n d w r i t t e n L o a n A c k n o w l e d g e m e n t d a t e d 24 th O c t o b e r , 1996. H a n d w r i t t e n letter d a t e d 27 th F e b r u a r y , 1997, f r o m Mr. D a v i d A u s t i n to Mr. Michael Lowry acknowledging repayment of ?147,000.00 plus interest. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Inveslcc Bank (UK) L i m i t e d (Irish Anderson I louse Branch) Investec I Harhmit Master I'lace I n t e r n a t i o n a l l i n u n c i i i l Services C e n t r e Dublin I Ireland Telephone * 353 I 6 7 0 1970 Facsimile + 3 5 1 670 I HO 5 RADIO INVESTMENTS NV ATT: PADDY HALPENNY SOUTH BLOCK THE MALT HOUSE GRAND CANAL QUAY DUBLIN 2 Statement Date: Statement Number: Page Number: Account Holder: Account Number: Account Title: Currency: 23 May 2001 oINTERIM* 4 RADIO INVESTMENTS NV 01D/02/067599/01 CALL DEPOSIT IEP STATEMENT OF ACCOUNT (TRY ITE VALUE DEBIT CREDIT DATE BALANCE DESCRIPTION >6 ^ Balance Brought Forward ' Tul ATTHDRAWAL TO AIB D U B L I N 407,000.00 -00-67 03 Jul 96 I n v o i t - i IVjmW U ' M l.imrtvil A immi'T'i u-guUitci) lof i n v e s t m e n t b u s i n e s s in t h e by i h r SI A I he I i>u<u S u n k i:\ch.nijie A u i l m u s e J IMSIMUIMHI H t h e I :K umlef t h e K.mkin^ \ < IV.S? I V .iln>>*e Ki-.tffvicicil to h v l a m l Mumhvf 'MM42V C H A P T E R 3, A P P E N D I X (1) Ki ^i-u-rv.! K i . n u h ootlr.c AIDAM PHEXJUf 32 PITCHERS WXV HYAUWB MASS VSK oas.oil A/C: avsato.'./js . jjuut CAUL DEPOSIT FILE COPY >> CONVERSION RAT(R) : i EURO PAGE NO; 0001 10JUL96 BROUGHT FORWARD 10JUL9S i VCR F I R S T TO LAST 1RSOOOO CHQ F/O DAVID AUSTIN ISSUED 10/7/9? 10S,000.00 18JUL9S 0/0 BIEST TRADIMG fPAKISTAN) LTD i0 7,00 0 0 2 19JUL9S TT TO BANK OP IRELAND, JERSEY A/C DAVID AUSTIN 4 IR3S CHARGE 130,335.00 2SJUL 9 S 29JUL96 2"7MAR9T !\2MAY97 17MAV9 9 CLOSING ENTRY M AIDAN PHSLAH S 22 PITCHERS W Y A HYAMKE MASS 02501 USA C H A P T E R 3, A P P E N D I X (1) Statement of Account with MR DAVID AUSTIN [DECEASED) & MRS MAUREEN AUSTIN CAPITAL A/C Bank of Ireland Jersey Bank of Ireland House P.O. Box 416 Francis Street St. Helier Jersey JB4 9WD Channel Islands I n t e r n a t i o n a l D i a l l i n g C o d e +44 1534 C l i e n t S e r v i c e s (01534) 6 3 8 6 0 0 F a x : (01534) 737916 T e l e p h o n e : G e n e r a l (01634) Telex: 4192428 S W I F T Address: B I G T J E S X http://www.boijersey.com A/C Name: A/C Number: Details: Date: Statement: AUSTIN MR DAVID & MRS MAUREEN - CAPITAL A/C 66064 4 -IRISH POUNDS DEPOSITS GENERAL RESIDENT -Balance at close of business on l-Nov-1998 1-Nov-1998 Interest Accrued and Outstanding at -Rate 5.12500% per annum -Term fixed to 3-Jul-1997 Status : Closed 0 . 00 0 . 00 Date of Statement: 4-MAY-2001 Date Particulars Value Date Debit Credit Balance HAPPY NEW EURO. COMIN 26 Jul 96 7 Aug 96 19 Aug 96 19 Aug 96 19 Sep 96 19 Sep 96 16 Oct 96 21 Oct 96 21 Oct 96 21 Nov 96 21 Nov 96 18 Dec 96 18 Dec 96 17 Jan 97 17 Jan 97 17 Jan 97 23 Jan 97 SWIFT RECD PER AIB JERSEY SOURCE OF FUNDS FROM ACCOUNT 66064 DES 2 GBP AT RATE OF 0 . 9746 : INTEREST CREDIT RENEWAL - NEW RATE : 4.45000 - NEW TERM : 19-Sep-1996 IMF INTEREST CREDIT REHEWAL - NEW RATE : 4.45000 - NEW TERM : 21-Oct-1996 IMF REPAID BY CHEQUE IFO MR DAVID AUSTIN TO HOME ADDRESS 01/01/02 - WJ 'RE READY. ARE Y )U? < 19 Jul 96 100,000.00 50,000.00 425 .75 100,000.00 150,000.00 150,425.75 150,425.75 150, 994.28 ISO,994 .28 3,994.28 568.53 147,000.00 23 10 12 12 Jan Feb Feb Feb 97 97 97 97 SOURCE OF FUNDS BY SWIFT PER INBS (IOM) : 140,816.93 153, 342 . 32 18 Feb 97 18 Feb 97 18 Feb 97 11 Mar 97 14 Mar 97 M a i l To: HOLD CORRESPONDENCE Statement Period: l-Dec-1994 To l-Nov-1998 Statement Produced On: 4-MAY-2001 L C H A P T E R 5, A P P E N D I X (3) A wholly owned subsidiary of Bank of Ireland. Incorporated in the States of Jersey. Reg. No. 2108. Statement of Account with Customer: MR DAVID AUSTIN (DECEASED) & MRS MAUREEN AUSTIN CAPITAL A / C Bank of Ireland Jersey Bank of Ireland House P.O. Box 416 Francis Street St. Helier Jersey JE4 9WD Channel Islands I n t e r n a t i o n a l D i a l l i n g Code +44 1S34 Client Services (01534) 638600 Fax: (01534)737916 Telephone: General (01534) 638630 Telex: 4192428 SWIFT Address: B1GTJESX http://www.boijersey.com \/C Names \/c Number: AUSTIN MR DAVID & MRS MAUREEN - CAPITAL A/C 66064 4 details : 3ate: Statement: -IRISH POUNDS DEPOSITS GENERAL RESIDENT l-Nov-1998 -Balance at close of business on l-Nov-1998 Interest Accrued and Outstanding at -Rate 5.12500% per annum -Term fixed to 3-Jul-1997 Status : Closed 0.00 0.00 Date of Statement: 4-MAY-2001 Date Particulars Value Date Debit Credit Balance HAPPY NEW EURO. C0MIH 3 01/01/02 - WJ ' RE READY. ARE Y >U? i 18 Mar 97 18 Mar 97 18 Mar 97 18 Apr 97 18 Apr 97 IB Apr 97 23 Apr 97 23 Apr 97 28 Apr 97 CHARGES : REPAID BY CHEQUE SENT TO : BANK OF IRELAND LOWER BAGGOT STREET BRANCH DUBLIN 2 IRELAND A/C ATT.MARIUS GALLAGHER 2 0 . 00 33,000.00 150,312.32 117,312.32 19 May 97 19 May 97 19 May 97 19 Jun 97 19 JUn 97 19 Jun 97 23 23 3 3 Jun Jun Jul Jul 97 97 97 97 INTEREST CREDIT REPAID BY SWIFT SENT TO ACC BANK A/C 16297216 114,518.69 114,518.69 0.00 Mail To: HOLD CORRESPONDENCE Statement Period: l-Dec-1994 To l-Nov-1998 Statement Produced On: 4-MAY-2001 CHAPTER 5, APPENDIX (3) A w h o l l y o w n e d s u b s i d i a r y of B a n k of I r e l a n d . I n c o r p o r a t e d in t h e S t a t e s of J e r s e y . Reg. No. 2108. xlonaddv 's ualdvuo Bank of Ireland (Jersey) Limited lbizh Dctuher 96 Templar House. Don Rand. Si, Helier, Jersey, JE4 SWZ Channel Islands Davin ,Wm wmwuses mes mars I I I OO nn 5 BANK OHRELAND .E 3 r* A NATDIIY LD IRISH NATIONWIDE (I.O.M.) LIMITED PO Box 188, 5 Hill Street, Douglas, Wsof Man, (M9? 1 US Telephone 01424 673373 Fax 01624 A732&3 MR MICHAEL LOWRY C / O I R I S H NATIONWIDE IOM LTD PO BOX 1 8 8 5 HILL STREET DOUGLAS I M 9 9 1UG DATE: ACCOUNT: PAGE: 30/10/1996 023/01/01505/ 1 WE WISH TO ADVISE THAT THE UNDERMENTIONED ENTRIES HAVE BEEN POSTED TO THE ABOVE INSTANT ACCESS A / C - IND ACCOUNT: VALUE DATE 21/10/1996 DETAILS CHEQUE DEPOSIT 1 1 1 5 0 7 A/C 84100087 S / C 9 0 - 1 3 - 9 4 AMOUNTS IEP******147,000.00CR 4.5 P.A. THE BALANCE I S NOW I E P * * * * * * 1 4 7 , 0 0 0 . 0 0 C R THE CURRENT INTEREST RATE ON THE ACCOUNT I S THIS) CONFIRMATION REQUIRES NO SIGNATURE iLKLimiTH V 6 l.o M FN N I L H . I A CA C M I S N F B B N N Wfi C S O M I O A K G Jt S SO I N RF^L^Vr.t-iuC I T MP. ISLE C MN N . 0 4 A . niF^l^vTi;.ftC-f* Ul'r<> ^ V i-zA [From: K I Ov o . j (Date: LIMITED 1 i Pages: F O R M F O R . a O L J J O - m s a S L I J J A C U T N M E T B C M L T D B T E C MA Y C O N U B R O E O PE E Y H O P N A C C O U N T S ACCOUNT TYPE REQUIRED ( L A E TIM. B X TE S O) International Offshore - Guaranteed Bond Jntcr national Offshore - Money Market I/we enclose. Q tyr Q 2yt o o 7 days or o o 3yr o 4yr o 5yr no of months (1-12) ^ . Irish Pounds/Sterling to open a n account ( L A E D L T A P O R T C R E C ) P E S EE E P R P I E U R N Y A PLEASE TICK BOX I wish to open an account now and transfer funds later o Iltle Full[name name A. ^ L * ^ . i C ^ U - i U J \ Date of birth i l / l / S < . Registeied address Correspondence address /time Telephone No. Business: Nationality: Operation of account 0 f a n y signature o all signatures 1 3 other ^LEASEI/EOFY! ... I I please tick this box if you would like withdrawals-by fax ( L A E C ML T A S P R T T X I D M I Y . P E S O TEE E A AE A N E N ) T FOR OFFICE USE Cheque details Bank NAME Amount Cheque no. Account, no. Son Code Keyed by Cheeked by Date o- " "vr . ' ' .( o r so o '.'.,,(C) . OIL if .>.'o XL! S'-tSi S CHAPTER 5, APPENDIX (6) PTO PAYMENT OF INTEREST Please add interest to the account o o o Please pay interest to the Irish Nationwide BuDding Society account Please pay interest to the Bank or Building; Society account no. Please pay interest to another Irish Nationwide 0OM) account _ ._.,.,,,_ o o o o o o o o o o o o o o o A o o o o o Account holders name _ Bank / Building Society name Bank / Building Sociely address DECLARATION: _... Bank sort code o o o o o o 1/we-declare that this investmenl of ? me as sole beneficial owner L J us as joint beneficial owners o o on behalf of a Company : . is being deposited in Irish Nationwide (l.O.M.) Limited (and it is not made as nominee for any other individual) me as a trustee for the following individual - Maine ~ ReUnion ship to Trustee. Date of Birth i/we confirm receipt of a copy of the Terms and Conditions and agree to be bound by them. I/we understand this deposit is governed exclusively under Isle of Man Law and funds will only be accepted at and repaid from the Company's main place of business in Douglas, Isle of Man. Signanire x A m i te In accordance will) tli* Data Protection Ad 1 8 Irish Nationwide (i.CLvl.) Lbnited nmy wish to said you information about new products and its associated bodies. 96 IF you do not -wish to zccchrc this information please tide the following box L-J Registered with, the Isle of Mun Financial Supeivision commission for Banking Business. AUTHORITY FOR VERIFICATION OF IDENTITY This section must be filled in to comply with Isle of Man Regulations. I/we authorise at. Bank/Building Sodeiy Bank account no L o o o o o o o o . (BANK ADDRESS) to provide Irish Nationwide (l.O.M.) Limited. P O Box 188, 5 Hill Street, Douglas, Isle of Man, IM99 IUG with a bank verification (R) of name address and signature. Name Addrcssomin BYYOURBANK) Signature 1 : ; CHAPTER11,APPENDIX (5A) 'oVV#w ti-'3;-. ...o;.. , . - ... '!.oo. " oo . . . o o o Wi< o 0 H 7i 02L30V/6\50S ,-- o- - """ O* II >>LI<>UIWL*(FI.<* < m Ol > o0 oo Signed; For Ctfftci Itee m z Date: D X zUuzh. Signature Vetfn&t I ^ R Cheeked By IRISH NATIONWIDE (I.O.MJ LIMITED to Box 188,5 Hill Street, DouBkn, ks of Man, W09 1 UG Tolephom 01624 473373 Fm 0T<<24 673263 KR MICHAEL LOWRY C / O I R I S H NATIONWIDE IOM LTD PO BOX 1 8 8 5 H I L L STREET DOUGLAS IM99 1UG DATE: ACCOUNT: PAGE: 07/02/1997 023/01/01505/ 1 WE WISH TO ADVISE THAT THE UNDERMENTIONED ENTRIES HAVE BEEN POSTED TO THE ABOVE INSTANT ACCESS A / C - IND ACCOUNT: VALUE DATE 07/02/1997 DETAILS TT WITHDRAWAL AMOUNTS IEP******148,816.93DR 2.0 P.A. THE BALANCE I S NOW I E P * * * * * * << ' * * * 1 6 4 . 5 3 C R THE CURRENT INTEREST RATE ON THE ACCOUNT I S i T H I S CONFIRMATION REQUIRES NO SIGNATURE CHAPTER11,APPENDIX (5A) TO: Walbrook Trustees (lorn) Lim Grosvenor House, 66/67 Athol Street, Douglas, Isle Of Man IM99 1XJ. WE: Finsbury Holdings Limited Suites 7b & 8b, 50 Town Range, Gibraltar. ( h e r e i n a f t e r called " t h e T r u s t e e s " ) (1) A D M I T that the shares specified in the S c h e d u l e hereto (hereinafter called " t h e s a i d s h a r e s " ) are y o u r absolute p r o p e r t y and they only stand registered in our n a m e at your r e q u e s t as y o u r n o m i n e e in trust f o r y o u absolutely and t h a t w e h a v e no beneficial interest w h a t s o e v e r in t h e s a i d shares. A G R E E to deal with the said shares and all d i v i d e n d s a n d interest t h e r e o f a n d a n y o t h e r b e n e f i t s or advantages accruing in respect thereof and to vote at all m e e t i n g s w h e t h e r of the B o a r d of D i r e c t o r s or of the C o m p a n y in respect o f the said shares in s u c h m a n n e r as you m a y direct. (2) (3) D E C L A R E and a g r e e that y o u h a v e the p o w e r from t i m e to time by w r i t i n g u n d e r y o u r h a n d to r e m o v e u s as s u c h T r u s t e e s a n d to appoint n e w T r u s t e e s in our place. S C H E D U L E a b o v e referred to 9 9 O r d i n a r y share(s) o f G B P 1.00 each, held w i t h i n S h a r e Certificate n u m b e r 4 . I n the U n d e r t a k i n g k n o w n as T o k e y I n v e s t m e n t s L i m i t e d . A C o m p a n y registered in G i b r a l t a r u n d e r the C o m p a n i e s O r d i n a n c e w i t h R e g i s t e r e d O f f i c e at Suites 7B & 8B, 50 Town Range, Gibraltar. rN W I T N E S S whereof the Trustees a f f i x e d this 12th d a y of August, 1996? C o m m o n Seal to b e h e r e u n t o T H E C O M M O N S E A L o f the within-named Trustees was hereunto affixed in the p r e s e n c e of:- LIM1T CHAPTER11,APPENDIX (5A) TO: Walbrook Trustees (Iom) Limit Grosvenor House, 6 6 / 6 7 Athol Street, Douglas, Isle Of Man I M 9 9 1XJ. WE: Finsbury Nominees Limited S u i t e s 7b & 8b, 50 T o w n Range, Gibraltar. ( h e r e i n a f t e r called "the Trustees") (1) A D M I T that the shares specified in the S c h e d u l e hereto ( h e r e i n a f t e r called "the s a i d shares") are y o u r absolute p r o p e r t y and t h e y o n l y stand r e g i s t e r e d in our n a m e at your request as y o u r n o m i n e e in trust f o r y o u absolutely a n d that w e h a v e n o beneficial interest w h a t s o e v e r in the said s h a r e s . A G R E E to deal w i t h the said shares a n d all d i v i d e n d s and interest t h e r e o f and a n y o t h e r benefits or a d v a n t a g e s a c c r u i n g in r e s p e c t thereof a n d to v o t e at all m e e t i n g s whether, o f the B o a r d of D i r e c t o r s or o f t h e C o m p a n y in respect of the s a i d s h a r e s in such m a n n e r as you m a y direct. (2) (3) D E C L A R E and agree that you h a v e the p o w e r from t i m e t o t i m e b y writing u n d e r y o u r hand to r e m o v e us as s u c h T r u s t e e s a n d t o a p p o i n t n e w T r u s t e e s in o u r place. S C H E D U L E a b o v e r e f e r r e d to 1 O r d i n a r y share(s) o f G B P 1 . 0 0 each, held w i t h i n S h a r e Certificate n u m b e r 3. In the U n d e r t a k i n g k n o w n as T o k e y I n v e s t m e n t s L i m i t e d . A C o m p a n y registered in G i b r a l t a r u n d e r the C o m p a n i e s Ordinance w i t h R e g i s t e r e d O f f i c e at Suites 7 B & 8B, 50 T o w n R a n g e , Gibraltar. I N W I T N E S S w h e r e o f the T r u c e s have caused th<<5ir C o m m o n Seal to b e h e r e u n t o a f f i x e d this 12th day of A u g u s t . 1996. THE C O M M O N SEAL ofthe w i t h i n - n a m e d Trustees was hereunto affixed in the p r e s e n c e of:- ) ) DIRECTOR F m S B ^ R Y i E C R E T A R l f i ^ LIMITED ) SECRETARY C H A P T E R 11, A P P E N D I X (5A) DECLARATION OF TRUST TO: M r Denis O'Brien W E W a l b r o o k Trustees ( I O M ) L i m i t e d o f G r o s v e n o r H o u s e , 66/67 A t h o l Street, Douglas, Isle o f M a n H E R E B Y D E C L A R E that t h e s h a r e s specified in t h e Schedule hereto, t h e Certificate in respect w h e r e o f h a v e been or will b e delivered to y o u , are n o w a n d h a v e a t all t i m e s since the said S h a r e s b e c a m e held to o u r o r d e r by F i n s b u r y H o l d i n g s L i m i t e d on 12 A u g u s t 1996 b e e n h e l d i n trust f o r y o u absolutely a n d H E R E B Y U N D E R T A K E to t r a n s f e r or otherwise deal w i t h t h e s a i d S h a r e s as y o u m a y f r o m t i m e to t i m e direct and to account t o y o u f o r all d i v i d e n d s o r o t h e r m o n e y s paid to u s i n respect o f the said Shares a n d to e x e r c i s e o u r voting p o w e r s a n d o t h e r rights in respect o f t h e said Shares i n such m a n n e r as y o u shall from t i m e to t i j n e direct. THE SCHEDULE above referred to Name of Company T o k e y I n v e s t m e n t s Limited Particulars of Shares 9 9 Ordinary shares o f ? 1 . 0 0 IN W I T N E S S whereof tibuLs D e c l a r a t i o n of Trust h a s b e e n s e a l e d b y us this 15th day of M a y 2 0 0 1 ( V>w>->- \i CHAPTER11,APPENDIX (5A) J,' D E C L A R A T I O N OF T R U S T TO: Mr Denis O'Brien W E W a l b x o o k Trustees ( I O M ) L i m i t e d o f Gros venor H o u s e , 66/67 A t h o l Street, Douglas, Isle of M a n H E R E B Y D E C L A R E that the s h a r e s specified in t h e Schedule hereto, t h e Certificate i n respect w h e r e o f h a v e b e e n or w i l l be d e l i v e r e d to you, are n o w and h a v e at all t i m e s since t h e s a i d S h a r e s b e c a m e h e l d to o u r o r d e r b y F i n s b u r y N o m i n e e s L i m i t e d o n 12 A u g u s t 1996 b e e n h e l d in trust f o r y o u absolutely a n d H E R E B Y U N D E R T A K E t o t r a n s f e r or otherwise deal w i t h the said Shares as y o u m a y f r o m t i m e to t i m e direct and to account t o y o u f o r all d i v i d e n d s or other m o n e y s p a i d to us i n r e s p e c t o f the said Shares a n d t o e x e r c i s e o u r voting p o w e r s a n d other rights in respect of t h e said Shares in s u c h m a n n e r a s y o u shall f r o m time to t i m e direct. T H E S C H E D U L E above r e f e r r e d t o N a m e of C o m p a n y T o k e y I n v e s t m e n t s Limited Particulars o f S h a r e s I Ordinary s h a r e of ? 1 . 0 0 IN W I T N E S S whereof this D e c l a r a t i o n of T r u s t has b e e n sealed by us this 15th day of May 2001 C H A P T E R 11, A P P E N D I X (5A) -- I U A ^ B W v ^ ^ V W W ^ U ^ A - S \ L ^ s ^ a , a vt-Q s ' /b, c ^ L j . ^feU. 1 S w a v i h c ^ O A ^ v ^ - V ^ s V UFTH, U C J r J L ^ J U - } <1 os^i-cJ--. ^ - w v ^ ^ t t v ^ k k U r v x ^ ^ W ^ ^ u , cAcctjL : ^ V -- 0 cl~V ^ o i . ^ - t u . 9 ^ i J L ^ V . Iv^sT0-^--l C H A P T E R 11, A P P E N D I X (5A) fc ^ ^ - ^ 1 -- -- I . ^ C>,, V- ^ W ^ V ^ W A \ JlS ^-v'sX-'i j ^ c ^ X -V V- c v t ^ CHAPTER11,APPENDIX (5A) C h a p t e r 11 Page | 545 A p p e n d i c e s to Chapter 6 THE MANSFIELD TRANSACTION Index 1. 2. 3. M e m o r a n d u m d a t e d 22 n d D e c e m b e r , 1998 to Mr. D e n i s O ' B r i e n f r o m Mr. A i d a n P h e l a n , re. S u c c e s s F e e . M e m o r a n d u m d a t e d 25 th M a r c h , 1999 to Mr. D e n i s O ' B r i e n f r o m Mr. A i d a n P h e l a n , re. A d v a n c e of F e e s . J o i n t V e n t u r e A g r e e m e n t d a t e d 30 th A p r i l , 1999, b e t w e e n Mr. A i d a n P h e l a n a n d Mr. M i c h a e l L o w r y . REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Memorandum To: Denis O'Brien . P ^ From: Aidan Phelan Date: Re: 22/12/98 Success Fee 7=F Dear Denis, ' Following our meeting earlier today in relation to a general review of projects of which I have been working on I have Summarised our discussion as follows: The t w o major projects I worked on for the year was the acquisition o f Planal S.A. and my continuing role in Versatel. Versatel concluded the high-yield offering in May last raising US$225m and has just completed a tack-on high yield offering in November raising a further US$150m. As you k n o w from the E G M earlier this month the Company intends to do further high yield offering early next year leading to an IPO in the second or third quarter. I have drawn little or no fees from the above projects and it was agreed particularly in relation to Versatel that when you have liquidity in your stock it will be a % fee. A l t h o u g h not cast in stone I'll receive a success fee if Versatel goes public at a price range of $10 to $12 per share. This will mean that your stake will b e worth $40m to $50m. As agreed I will receive a fee as you realise y o u investment and sell your stock. This fee is agreed at 3% up to a m a x i m u m of US$1.5m. CHAPTER 6 - APPENDIX (1) Memorandum To: From: Denis O'Brien Aidan Phelan 25/3/99 Advance of fees Data: R(R): Denis, As discussed on our call today. I am making a drawing today on the CSFB account in the a m o u n t of Stg?300k. This is an advance against the Versatel fees. 1 CHAPTER 6 - APPENDIX (2) THIS JOINT VENTURE AGREEMENT is made the 30th day of April 1999 BETWEEN AIDAN PHELAN of Orchard House, No 2 Clonskeagh Square Dublin 2 (1) and MICHAEL LOWRY of Abbey Road, Thurles, County TIpperary, Eire (2) jointly referred to as the Promoters. IT IS AGREED as follows 1.1 1.2 The Promoters shall carry on business together for the purpose of Property Development. The Venture has already commenced and this Agreement has been entered into to regularise the position until it is terminated as provided in this Agreement 2. 2.1 2.2 2.4 Neither Promoter shall without the consent of the other. Lend any Joint Venture money Release any debt due to the Venture Enter into any borrowing or other arrangements with Mortgage Lenders or Bankers in respect of any Assets or prospective Assets of the Joint Venture 2.5 3. Become Guarantor for any person. Financial The profits and losses of the Venture shall belong to the Promoters in the following shares:(i) (ii) Aidan Phelan-90% Michael Lowry - 10% 2.3 . Enter into any Contract for the sale or purchase of any property. CHAPTER 6 - APPENDIX (1) Subject to a performance related incentive payable to Michael Lowry which from time to time shall be agreed between the Promoters 4. Termination The Joint Venture may be terminated by either Promoter giving to the other not less than three months notice in writing at any time. On termination the Assets will be divided between the Promoters by Agreement but in default of Agreement to be determined by an expert appointed in default of Agreement by the President of the Institute of Chartered Accountants of Ireland. 5. If any property is acquired under the terms of this Agreement but is acquired in or registered at H M Land Registry in the name of one only ofthe Promoters it shall be held subject to the terms of this Agreement IN WITNESS whereof the parties have hereunto signed this Agreement the day and the year first before given. SIGNED as a Deed by the s AIDAN PHELAN in the Presence o f : SIGNED as a Deed by the said MICHAEL LOWRY in the Presence o f : (j^p UcJLq CHAPTER 6 - APPENDIX (1) Chapter 11 Page | 550 A p p e n d i c e s to Chapter 7 THE CHEADLE TRANSACTION Index 1. 2. 3. 4. 5. 6. 7. N o t e d a t e d 17 th A u g u s t , 2000 entitled "UKProperty Notes". ML, Meeting Letter d a t e d 9 t h A u g u s t , 2000, f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. Kevin Phelan. Letter d a t e d 1 8 th A u g u s t , 2000, f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. Kevin Phelan. Letter d a t e d 1 9 th S e p t e m b e r , 2000, f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. K e v i n P h e l a n . Letter d a t e d 21 st S e p t e m b e r , 2000, f r o m M e s s r s . G o l d s m i t h W i l l i a m s , S o l i c i t o r s to Mr. C h r i s t o p h e r V a u g h a n . Letter d a t e d 4 t h O c t o b e r , 2000, f r o m Mr. C h r i s t o p h e r V a u g h a n to Messrs. Goldsmith Williams. N o t e d a t e d 28 t h F e b r u a r y , 2000, entitled "Notes February, 2001 at offices of AP Consulting". of meeting held on 28th REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 i U K PROPERTY M L MEETING NOTES I I Date: 17th August 2000 ML-CV-AP-HM Present: o HILLTOP FARM Acquired: Cost: Registered Owner: Financed by: Action o o March 1999 Stg. 250K ML Partnership Investment AP M L to hold as Trustee. ST. COLUMBAS CHURCH Acquired: Cost: Registered Owner: December 1999 Stg. 4 4 5 K C V as Trustee Financed by: Investec loan f r o m partnership 44.5K original loan - 420K balance o/s at 16/8/00 - 444K Action o o o AP to obtain copy f r o m M L of letter of offer f r o m developers in relation to this site. Planning application to be submitted within 3 weeks. C V to arrange strike-off of Catclause - check CHAPTER 7, APPENDIX (1) >> "V -J I ' SOLICITOH' & N O R A IIY P U K I. I C Old Church Churnbct* Sandhill Road, Northampton NN5 5LK D 15620 NOSTHAMrrON 3 K Tel: 01604 758908. Fax: 01604 751960 (cTs) 11 M r Kevin Phelan Omagh 106:Giilygooly-Road FAX 01662 250744 County Tyrone 8T72 5QA Dear Kevin 'Re: H i l l t o p F a r m , Chcsterfictd 9th August 2000 Road, G i s p w e l l I refer to our recent discussion, as to this and I confirm that this Property was purchased on the 26th March 1999 from B Jephson (Mansfield) Limited and is registered with Title Number DY315408 the total funds required to complete the purchase were?3 0 0 , 0 0 0 . 0 0 . The Registered Proprietor is shown as Michael Anthony Lowry of Old Church Chambers, 23 Sandhill Road, St James, Northampton NN5 5LH. The Property is not mortgagedtoany third party and I am not aware of any charges or incumbrances over the Property, and in my opinion, it has a good and marketable title, The Property does have the benefit of an option to purchase the balance ofthe land owned by B Jepsort;(Mansfield) .Ltd being in Title Number DY200003. The Completion monies for this Property were sent to me by telegraphic transfer and there is no indication on my Client Account Bank statement as to the source of those funds. R e : St C o l u m b a ' s Church Hansworth This property was purchased in December 1999 for ?445,000. It is registered with Title Number GM759Q30. The Registered Proprietors are myself and another as Trustees 'for an unnamed beneficiary The Property has a good and marketable title AUn S "l*hc Old Rectory. H/vrrihim, Millnn Keynes MK19 ? DT I l'cl 'VlWfj Hv .^ppciuiOiK-nt only CHAPTER 7, APPENDIX (2) I hold the Land Certificate strictly to the order of G E Capital Woodchester Bank Ltd of Dublin as they provided ?420,000,00 towards the purchase price, ofthe Property and that is indicated on my Client Account Bank statement.. The deposit and other monies came from M. If you recall originally, Catclausc Limited was a Limited Company set up for the acquisition of this Property. , Therefore although.the Registered Proprietors ofthe Property are shown to be Trustees if anyone ever managed to see a copy ofthe Banking documentationwhich I believe refers to Catclause, and then did a company scarch against Catclause they would find out a link with M, It was on the advice of A P that Catclause .Limited was abandoned and the property put into the names of Trustees for reasons of secrecy. You have had ail the above information in my letters and FAXES at the time of the events. Surely the over-riding fact in relation to both of these property transactions, and .the reasons for the long delay before Completion days were fixed, was.to enable the loans on both Mansfield and St Columba's Church to be no more than short term bridging loans, as purchasers had already been lined up before the properties were acquired ? i had certainly understood from my lengthy conversation with M. in a car journey on the way to Leicester that no properties would be acquired unless purchasers had been found, so that the purchase monies were borrowed for a minimum period No doubt you wij[ let me have your further instructions as to purchasers as soon as possible. In particular I need to have the details of the neighbour at St Columba's Church for insurance purposes which is becoming urgent, if we do not wish the property to become uninsurable or for the insurance cover to be cancelled. CHAPTER11,APPENDIX (5A) CHRISTOPHER VAUGHAN SOLICITOR & NOTARY PUHI.IT: Old Church Chambers Sandhill Road, Northampton N N 5 5LH DX 15620 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Kevin Phelan Bsq.. 106 Gillvgooly Road Omagh County Tyrone BT72 5QA FAX 01662 750 744 18 t h A u g u s t 2 0 0 0 Dear Kevin, As no doubt Michael will have reported to you we had a very positive and useful meeting yesterday lunchtime. Michael fell that he knew where both these Properties were now going and a scheme has been devised to assist him financially and tax wise as well. Mansfield - Various documents have to be drawn up m respect of Mansfield ar.d -I will deal with this on my return from holiday, but a sale of the site is needed as soon as possible. No figure was actually discussed BUT I would imagine that to cover the outstanding loan and costs we are looking for a minimum of ?375,000. No doubt you will proceed with this a quickly as possible. St Cohimfoa"s Church - Michaei told us at the meeting that afirmoffer had been received for ?1,100.000.00 for this Property, subject to the obtaining of residential planning consent. Apparently the pla(TM)>ing application is io be made In the next two or three weeks, which I suspect will be a formality. My experience of all planning matters nowadays is that because Planning Fees are so enormous people simply do not submit applications until they have been more or less guaranteed by the planning officer that consent will be granted (C? C H A P T E R 7, A P P E N D I X (3) \l-cri . r- TK,'1 C h r i s t o p h e r V a u g h a n is r e g u l a t e d by t h e L a w S o c i e t y irs the C o n d u c t o f I n v e s t m e n t Business (~SIH R , . , t 4 - > . r << p - r l << - . . n V-fkMO 7I"Vr T,,l- mo(19 71/-.001 Q-- > - The scheme will be that Michael will purchase this Property from the Trustees about two months before completion of the sale to the Developer. So that contracts can be prepared both for the sale by the Trustees to Michael and by Michael to the Developer can you please let me know the identity of the Developer and if possible their solicitors so that I can write to then and ensure that there are no delays on the sale of this site. On the sale by the Trustees of that site their borrowing will have to be repaid and replaced by the loan that Michael is taking out on the site for a couple of months before completion to the Developer. He told us that a loan had been agreed in principle through a Company that he does business with in Manchester. In order for the Trustees to transfer the site to Michael they will need to receive about ?450,000 plus the Deposit originally paid of ?44,500 from Michael We are going to meet again to discuss both these sites almost certainly in the week commencing the 2nd October 20000 by which time it is hoped that Contracts will have been exchanged. Michael told me that he had absolutely no idea that he was meant to be reimbursing me the insurance premium on the St Columba's site, as apparently you had not told him about this. He is arranging to repay me separately so there is no need for you to both about that issue any longer. However, what is vitally urgent and what you have still not come back to me about is the identity of the people who are inspecting the property on a weekly basis. I explained at the meeting that the property insurance on this site was dependent upon a number of conditions one of which was that someone had to visit the property at least once every seven days. I cannot stress the importance of this as of course it exposes me personally if there should be a claim on the insurance of the property. I look forward to hearing from you as soon as possible. Yours sincerely, CHAPTER11,APPENDIX (5A) 03/2030 11:2S +-44-01&84751968 CHRISTOPHER VAUGHAN cs/s CH RIST OP H ER V ^ U G H AN S O L I C I T O R Sc N O T A R Y PUMI.IC: Old Church Chamixrs Sandhill Road, Northampton N N S 5LH ox 15620 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Kevin Phelan Esq Fax N o . 02882 250744 19 September 2000 Dear Kevin tr St C o l u t n b a s Church, 377 Wiimslow Road, Cheadle And Mansfield You indicated to me on the telephone on Monday 18th September that a Purchaser had been found for both sites for 1.3 million pounds. You did not tell me who the Purchaser was but said that I would be hearing from other Solicitors "who would want the title deeds". As I explained to you I cannot hand over the title deeds in respect of both properties without the consent of M L. With regard to St Columbas Church I am on undertaking to the Bank and obviously cannot release the deeds without being released from that undertaking, which will only be done by an undertaking from Solicitors which would satisfy the Bank and release me, or by me paying the outstanding debts to the bank in full. Perhaps you could let me have full instructions when they are available. I am sending a copy of this letter to Aiden Phelan. Yours sincerely C J VAUGHAN C H A P T E R 7 , A P P E N D I X (4) Christopher Vaugh<.:o -1 B (o u< J I T - L Goldsmith WilHants S o L f <" I I <) R s Please a; k for: J O H N JONES 42/44 Stanley Street Liverpool LI 6AL Telephone CIS1-231 1292 (20 lin*s) Fax: 01'S 1-2.36-"2074 DX No ! 4I S 6 LIVERPOOL Christopher V a u g h a n Solicitors Old Church Chambers Our ret": JEJ/B4.33300-1 Your ref: Sandhill Road Northjiinpton N K 5 SLH Dvste: 21 September 2 0 0 0 Dear Sirs LfRCHASE O F T W O LAND PARCELS F R O M M.LOWRY We act for B e r w c o d Park Associates. W e are instructed in connection with a purchase o f the abo> properties f r o m Michael L o w r y . for w h o m w e understand that y o u act. W e shall be g r a t e f u l if you will send us a draft contract as quick iy as possible. To er able t h e m a t t e r to proceed speedilv, w e understand v o u will be releasing the title det^ds to us upo receipt of this letter. W e undertake to hold those d e e d s t o your order pending completion of rhes matters. W e Jbok .forward to hearing from you. A n y correspondence prior to exchange is expressly subject t.i f o r m i l contract. Your s faithfully Goldsmith Williams O\b0Lf- Coidjirulh LL D Pur titer:. L C N P! J*, A T C ? O ^! H M Ou^wpfcer O. WH'iaTevLU >> T f f / I / . o o rcgitkiu^ !>y :ht L^ri .''tic.rr- th<< *oftk/>n. f r>J- ht*r.r.'m<'il i C H A P T E R 7, A P P E N D I X (5) (o-S C H R I S T O P H E R "VAUGHAN Solicitor & NOTARY Chambers NN5 5LH PUBLIC Old Church Sandhill Road, N o r t h a m p t o n Tel: 01604 758908 DX 15620 NORTHAMPTON 3 Fax: 01604 7 5 1 9 6 0 Messrs Goldsmith Williams Solicitors DX 14186 Liverpool JEJ/B4333001 4th October 2000 Dear Sirs. Re: Sale of Two Parcels of Land by Mr Lowry to Berwood Park Associates Thank you for your letter o f t h e 21s1 September 2000. I confirm that I act on behalf of Mr Lowry in respect of this transaction, i enclose herewith Land Registry Office Copy entries relating to: 1. The Site at Mansfield : and I also enclose Office Copies of the entries relating to the adjoining property over which Mr Lowry has an Option and a copy o f t h e Option Agreement dated the 26'" March 1999 and 2. St Coiumba's. 377 Wilmslow Road, Cheadle The total Consideration for this whole transaction is for your clients to pay my client the sum of ?1, 360,000 (One million three hundred and sixty thousand pounds) without any specific apportionment of the Purchase Price between the two properties (however, see below.) In addition, your clients are to make a contribution to my costs to be agreed, and to be paid on Completion T o g e t h e r with the Completion Monies to me. For various financial reasons the sale price of the site at Mansfield in the Contract is to be ?300.000 (Three hundred thousand pounds) and the sale price o f t h e site at St Coiumba's is to be ?1,060,000 (One million and sixty thousand pounds) ( o ' t o C H A P T E R 7, A P P E N D I X (6) C h r i s t o p h e r V a u g h a n is r e g u l a t e d b y the L a w Society i n the C o n d u c t o f I n v e s t m e n t B u s i n g s oAlso T h e O l d Rectory, Haversham, M i l t o n Keynes M K 1 9 7DT. Tel; 01908 226881. Bv -- You will see from the Office Copy entries of St Columba's that currently that property is vested in the names of Trustees, who are in the process of transferring the property into the name of Michael Lowry. Following Mr Lowry's acquisition of the St.Columba's Property, your clients will complete the purchase of it from him at the agreed purchase price of ?1,060,000 (One million and sixty thousand pounds.) My instructions are that it will be necessary for two separate Contracts in respect of each o f t h e properties to be prepared rather than one Contract in respect of both the Properties. I would be obliged if you could let me have details of your clients" full name(s) and address(es) for inclusion in the contracts. Perhaps you could please confirm to me that this complies with your understanding of the Transaction - if so. I will let you have the two draft Contracts. Yours faithfully. CHAPTER 11, APPENDIX (5A) Notes of meeting held on 28 th February 2001 at offices of AP Consulting Subject Present Catclause Loan dated 21 st December 2001. Aidan Phelan (AP), Michael Cullen (MC) and Tony Morland (TM). T h e Bank stated that the purpose of this meeting was a follow-up to the meeting in January between A P , MC and Michael Tunney (MT) and that the documentation and the security for the loan were still in an unsatisfactory condition. o AP apologised for n o t attending to the Banks request to formalise this facility however stated that f r o m a credit viewpoint the Bank had nothing to be unduly concerned with as this was a D O ' B transaction and he would ensure the Bank was looked after. AP would do everything necessary to sort o u t the Bank's documentation problems. o W h e n asked why the transaction had n o t closed and the loan repaid AsEJ informed the Bank that 'other business' events h a d taken precedence over this matter. o Security O AP enquired as to whether the Bank still required the guarantee of J o h n Daly. T h e Bank said it did n o t think so and asked h o w he had become involved in the transaction in the first instance. A P stated that T h e y were only trying to help M T out f r o m a credit viewpoint to enable the transaction to be banked in the first instance*, o O n the property itself the Bank informed A P that it had been brought to their attention that the property was registered ino Christopher Vaughan (CVS, the solicitor to Catclause) and his wife and that the Bank were finding it extremely difficult to extract information f r o m CVS in relation to this deal. T h e Bank also informed AP that they had requested CVS to forward the title deeds and a copy of the Trust Deed to their lawyers in Cardiff. o A P informed the Bank that CVS had been instructed n o t to reveal any information relating to matters concerning AP or D O ' B without instruction f r o m the principals themselves. H e acted for D O ' B on property transactions in the U K , such as the D o n c a s t e r Rovers' transaction, where confidentiality and privacy were required. AP would instruct him to co-operate with the Bank in this matter. W h e n asked by the Bank whether A P was prepared to disclose w h o m the 'other party' to the Trust D e e d was, A P declined to do so stating he "Never lied to his Bankers'. H e would get for the Bank a copy of the Trust D e e d by Friday 2nd March 2001. o The Batik asked f o r a copy of the Valuation/Marketing report that had been prepared on the property by Chesterton's in the UK. A P informed the bank that he only had a p o o r quality faxed copy and would arrange for a better copy to be sent to the Bank. o The Bank informed AP that certain information had come to their attention that brought into question the validity of certain of the documentation held by the b a n k AP promised to get a list of the directors and the particulars of t h e m too the Bank although he did think that the company had since been dissolved. o The Bank asked that AP prepare a statement for the Bank relating to this transaction and how it had come a b o u t and what were the intentions of the owners o f t h e property. AP promised to have all the required information to the Bank by Friday, 2nd March 2001, as he was going to the Isle of Man and then Canada at the end of the w e e k T h e Bank at n o time indicated to AP that they were aware o f w h o m the registered Directors of Catclause were as we had n o confirmation as yet f r o m Companies House in the U K CHAPTER 11, APPENDIX (5A) C h a p t e r 11 Page | 561 A p p e n d i c e s to Chapter 8 FALSIFICATION O F M R . C H R I S T O P H E R V A U G H A N ' S FILES Index 1. " S h o r t form" v e r s i o n of letter f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. K e v i n P h e l a n , 12 th J u l y , 2000, w h i c h w a s p r o d u c e d to t h e T r i b u n a l in Mr. C h r i s t o p h e r V a u g h a n ' s files in A p r i l , 2001. 2. " L o n g form" v e r s i o n of letter of 12 th J u l y , 2000, p r o v i d e d to t h e T r i b u n a l b y Mr. C o l m K e e n a in M a r c h , 2002. 3. " S h o r t form" v e r s i o n of letter f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. K e v i n P h e l a n of 5 t h S e p t e m b e r , 2000, w h i c h w a s p r o d u c e d to t h e T r i b u n a l in Mr. C h r i s t o p h e r V a u g h a n ' s files in A p r i l , 2001. 4. " L o n g form" v e r s i o n of t h e letter of 5 t h S e p t e m b e r , 2000, w h i c h w a s p r o d u c e d to t h e T r i b u n a l b y Mr. C o l m K e e n a in M a r c h , 2002. 5. List of d i f f e r e n c e s a s to w o r d i n g , s p e l l i n g , p u n c t u a t i o n a n d formatting b e t w e e n t h e " s h o r t form" a n d " l o n g form" of t h e letters of t h e 12 th J u l y , 2000. 6. List of d i f f e r e n c e s a s to w o r d i n g , s p e l l i n g , p u n c t u a t i o n a n d formatting b e t w e e n t h e " s h o r t form" S e p t e m b e r , 2000. 7. Letter f r o m Mr. C h r i s t o p h e r Vaughan to Mr. K e v i n Phelan of 5 t h a n d " l o n g form" of t h e letters of t h e 5 t h O c t o b e r , 1998, p r o d u c e d to t h e T r i b u n a l f o r t h e first t i m e b y Mr. A i d a n P h e l a n o n 25 th J u n e , 2009. 8. " S h o r t form" v e r s i o n of letter f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. K e v i n P h e l a n of 27 th A u g u s t , 1999, p r o d u c e d to t h e T r i b u n a l in Mr. C h r i s t o p h e r V a u g h a n ' s files in A p r i l , 2001. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 9. " L o n g form" 11 Page | 562 v e r s i o n of letter of 27 th A u g u s t , 1 999, p r o d u c e d to t h e T r i b u n a l for t h e first time b y Mr. A i d a n P h e l a n o n 25 th J u n e , 2009. 10. "Short form" v e r s i o n of letter f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. K e v i n P h e l a n of 12 th N o v e m b e r , 1999, p r o d u c e d to t h e T r i b u n a l in Mr. C h r i s t o p h e r V a u g h a n ' s files in A p r i l , 2001. 11. "Long 2009. 12. "Short form" v e r s i o n of letter f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. form" v e r s i o n of letter of 12 th N o v e m b e r , 1999, p r o d u c e d to t h e T r i b u n a l f o r t h e first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , K e v i n P h e l a n of 1 s t D e c e m b e r , 1999, p r o d u c e d to t h e T r i b u n a l in Mr. C h r i s t o p h e r V a u g h a n ' s files in A p r i l , 2001. 13. "Long form" v e r s i o n of 1 st D e c e m b e r , 1999, p r o d u c e d to t h e T r i b u n a l for the first t i m e b y Mr. A i d a n P h e l a n o n 25 t h J u n e , 2009. 14. Letter f r o m Mr. C h r i s t o p h e r V a u g h a n to Mr. K e v i n P h e l a n of 9 t h A u g u s t , 2000, p r o d u c e d to t h e T r i b u n a l f o r t h e first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , 2009. 15. Letter f r o m Mr. C h r i s t o p h e r V a u g h a n t o Mr. K e v i n P h e l a n of 18 th August, 2000, produced to t h e T r i b u n a l for t h e first time J u n e , 2009. P h e l a n of 19 th b y Mr. Christopher V a u g h a n on 16. 22 n d Letter f r o m Mr. C h r i s t o p h e r V a u g h a n t o Mr. A i d a n C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , 2009. S e p t e m b e r , 2000, p r o d u c e d to t h e T r i b u n a l f o r t h e first t i m e b y Mr. 17. Letter f r o m Mr. C h r i s t o p h e r V a u g h a n t o Mr. K e v i n P h e l a n of 19 th S e p t e m b e r , 2000, p r o d u c e d to t h e T r i b u n a l f o r t h e first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , 2009. 18. Letter f r o m M e s s r s . G o l d s m i t h W i l l i a m s , S o l i c i t o r s , to Mr. C h r i s t o p h e r V a u g h a n of 21 st S e p t e m b e r , 2000, p r o d u c e d to t h e T r i b u n a l f o r the first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , 2009. 19. Letter f r o m Mr. C h r i s t o p h e r V a u g h a n to M e s s r s . Goldsmith Williams, S o l i c i t o r s , of 4 t h O c t o b e r , 2000, p r o d u c e d to t h e T r i b u n a l for t h e first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , 2009. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 20. 11 Page | 563 Letter f r o m Mr. C h r i s t o p h e r V a u g h a n t o Mr. K e v i n P h e l a n of 18 th January, 2 0 0 1 , p r o d u c e d t o t h e T r i b u n a l for t h e first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 22 n d J u n e , 2009. 21. Letter f r o m Mr. C h r i s t o p h e r V a u g h a n t o Mr. K e v i n P h e l a n of 26 t h January, 2 0 0 1 , p r o d u c e d t o t h e T r i b u n a l for t h e first t i m e b y Mr. C h r i s t o p h e r V a u g h a n o n 21 st A p r i l , 2009. 22. F a x from Mr. A i d a n Phelan to Mr. K e v i n Phelan, with attached M e m o r a n d u m of 17 th M a r c h , 2001, p r o d u c e d to t h e T r i b u n a l for the first t i m e b y Mr. A i d a n P h e l a n o n 25 t h J u n e , 2009. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Mr Kevin Phelan 106 Gillygooley Road Omagh County Tyrone BT72 5QA Northern Ireland 12th July 2000 Dear Kevin St Columbas Church I enclose copy letter and policy schedule relating to this property which has only just been sent to me. You will recall that this property was purchased I my name as Trustee for Aidan Phelan. I have only appreciated upon reading the policy schedule the conditions as to the property whilst it is unoccupied. Could you please let me know, as a matter of urgency. 1. 2. 3. Have you managed to find a Purchaser. If not, is there now a Tenant in the house as discussed with you recently? Can you please ensure that the conditions be complied with immediately as the policy could be null and void and I could personally be liable for losses? Yours sincerely CHAPTER 6 - APPENDIX (1) F^HRISTOPHER^AUGHAN SOLICITOR & NOTARY PUBLIC: Old Church Chambers Sandhill Road, Northampton N N 5 5LH DX 15620 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Mr Kevin Phelan 106 Gillygooly Road Omagh County Tyrone BT 72 5QA Northern Ireland Dear Kevin Re: St Columba's Church FAX 01662 250 744 12th July 2000 I enclose copy letter and policy schedule relating to this property which has only just been sent to me. You will recall that this property was purchased I my name as Trustee for our client. I have only appreciated upon reading the policy schedule the conditions as to the property whilst it is unoccupied. Could you please let me know, as a matter of urgency, 1. Have you managed to find a purchaser 2. If not, is there now a tenant in the house as discussed with you recently ? 3. Can you please ensure that the conditions be complied with immediately as the policy could be null and void and I could personally be liable for losses? I seem to recall when the lending process was being completed that the lender was going to require a six monthly report on the marketing of the property. Can you please let me have details so I can deal with this ? I think the same will apply to Mansfield as well. Also at: The Old Rectory, Havcr*ham. Milton Ki"/no<< \(K I 'I "SIT Tel 'U'hih ?2r.XX| < o !o Kevin Phelan Esq 106 Gillygooley Road OMAGH Co Tyrone. BT72 5QA 5 September 2000 Dear Kevin % I faxed through to you on the 4fh September the letterfromThistlewood Estates that was waiting for me when I returnedfromholiday. This looks to be excellent news depending on whether the conditions can be satisfied. Could you therefore let me know :1. 2. 3. What is the current situation with regard to the grant of planning consent for the proposed residential scheme? Who is going to submit and pay for the planning application and when will it be done? Presumably the access will be dealt with at the same time as the planning application is submitted? Are Thistlewood undertaking a soil survey at the present time? Do you know the identity of Thistlewood estates clients? I have done a company search against Thistlewood, and 1 enclose a copy herewith which says very little. Do you know who their actual clients are? Kind regards. Yours sincerely C J VAUGHAN CHAPTER 8, APPENDIX (3) O l R I S T O P H E R \TAVGHAN ' ' " O ,, . A. V S O L I C I T O R & NIO T A R Y T-> U .B L, I C P . .. , Old Church Chambers Sindhill R o i d , Northampton NN5 5LH DX 15620 NORTHAMPTON 3 TeL-01604 758908 Fix: 01604 751960 i r Kevin Phelan Esq 106 Gillygooley Road OMAGH Co Tyrone. BT72 5QA u 5 September 2000 J Dear Kevin ' I faxed through to you on the 4th September the letter from Thistlewood Estates that was waiting for me when I returned from holiday. This looks to be excellent news depending on whether the conditions can be satisfied. ^ What I would like to do is to set up a timetable, bearing in mind that Michael wants to own the property in his own name for a month prior to the sale to Thistlewood Estates. Could you therefore let me know :1. 2. 3. What the current situation is with regard to the grant of planning consent for the proposed residential scheme. Who is going to submit and pay for the planning application and when will it be done. Presumably the access will be dealt with at the same time as the planning application is submitted. Are Thistlewood undertaking a soil survey at the present time? s y^PA Do you know the identity of Thistlewood Estates clients. I have done a company search against Thistelwood, and I enclose a copy herewith which says very little. Do we know who their actual clients are? I have not written to Michael about this as I get concerned about correspondence going to him, but a copy has been sent to Aiden as he needs to keep the mortgage lender happy as to the loan that Michael took out. Kind regards. Yours sincerely C J VAUGHAN CHAPTER 8, APPENDIX (4) Oimtopher V<>n >. regul.red by the L>>w Socitrv in (he Conduct of Investment Business Also <60 Kevin Phelan Esq 106 Gillygooley Road OMAGH Co. Tyrone BT72 5QA 27 August 1999 ^ f o e a r Kevin \ ST COLUMBA'S CHURCH I enclose copy faxes I have received in respect of this matter. I appreciate that we spoke when I went to Nottingham with you about this matter and you "indicated that you wanted the matter delayed for 10 days or so, with then an exchange and a completion within six weeks or so. \ It is up to Andrew Ward, who appears to be your Agent, to negotiate the exchange and completion terms etc. ^^However, what I need from you is o 1. .The identity ofthe purchaser. 2. The date when you wish the completion to take place. 3, A positive indication that funds are available. I can remind you ofthe Mansfield site where you spent several months telling me to exchange, which I did, only for no funds to be available on completion which resulted in Michael Low^fry having to pay ?380.00 worth of interest for being late on completion as the funds were not available. I It adds very substantially to my costs and the general stress of dealing with the matter if funds are not available when they should be. Again I only have to point to C H A P T E R 6 - A P P E N D I X (1) Christopher Vjut;h:ut : cv.uUiii-t I Iv, t|K. I _.lv.- s<<< U-TV M ILU- ' '. ..U|. > 1 > l ImvMinnii i > UUMIK-H.- Doncaster Rovers where because ofthe unavailability of funds Contracts were varied on two occasions. My own clear preference is for me to be in possession of the funds prior to exchange so that I am sure everything can go according to plan. With that in mind I enclose herewith a draft completion statement showing that I shall need a minimum of ?459,568.75 to complete this matter. suspect that there are also fees for John Eastham and Andrew Ward. When I am in funds I think that the matter can proceed. Yours sincerely CJVAUGHAN CHAPTER 6 - APPENDIX (1) r^HRlSTOPHER S O L I C I T O R & \?AUGHAN P U B L I C N O T A R Y Old Church Chambers Sandhill Road, Northampton NN5 5LH DX 1 5 6 2 0 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Mr Kevin Phelan 106 Gillygooley Road OMAGH County Tyrone BT72 5QA Fax 01662 250 744 12 th November 1999 Dear Kevin Site of St Columbas United Reform Church, Cheadle As you know completion of this matter is scheduled for the 30th November 1999. I am enclosing the Transfer which please arrange to have signed. I am also enclosing the Completion Statement, which shows that there is ?415,126.75 due on completion. Can you please arrange for this to be transferred to my Bank Account by Friday 26th November 1999. My bank details are The Co-operative Bank Pic Christopher Vaughan Solicitors Client Account A/C No. 70547674 Sort Code 08-90-73 I look forward to hearing from you as soon as possible. Yours sincerely Back to report C H A P T E R 8 , A P P E N D I X (10) f . h n s l o p h e r V a u g h a n 15 r e g u l a t e d by the L a w Society 111 the C o n d u c t o f I n v e s t m e n t B u s i n e s s A l s o at: T h e O l d Rectory, H a v e r s h a m , Milton K e y n e s M K 1 9 7 D T . Tel: 0 1 9 0 8 2 2 6 8 8 1 . By A p p o i n t m e n t only VAT Numlwr r,()H .isn<) " H > CHRISTOPHER \ZAUGHAN S o l i c i t o r & NOTARY P U IJ L I C: Old Church Chambers Sandhill Road, Northampton NN5 5LH DX 15620 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Mr. Kevin Phelan' 106 Gillygooly Road Oraagh County Tyrone BT72 5QA FAX 01662 250 744 12th November, 1999 ^ p e a r Kevin, Re: Site of St Columba's United Reform Church, Cheadle As you know completion of this matter is scheduled for the 30th November 1999. I am enclosing the Transfer which please arrange to have signed by you and Michael Lowry as Directors. I am also enclosing the Completion Statement, which shows that there is ?415,126.75p due on completion. Can you please arrange for this to be transferred to my Bank Account by Friday 26th November 1999. ^ ^ l y bank details are The Co-operative'Bank pic Christopher Vaughan Solicitors Client Account A/c No 70547674 Sort Code 08:90:73 I look forward to hearing from you as soon as possible, rours sincerely, CHAPTER 8, APPENDIX C h r i s t o p h e r V a d i u m is r c f > u b i << I h y the- I .aw S o c i e t y i n i l u : OMKIUCI ol" I n v e s t m e n t Business r^HRISTOPHER\?AUGHAN S o 1.1 e r r OR & N O T A R Y P I J H I . I C Old Church Chambers Sandhill Road, Northampton N N 5 5LH DX 15620 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Mr Kevin Phelan 106 Gillygooley Road Omagh County Tyrone BR72 5QA Fax 01662 250 744 1st December 1999 Dear Kevin Site of St Columbas United Reform Church, Cheadle As you are aware, completion of this should have taken place on the 30th November 1999. It was clear from my telephone conversations with the Solicitors acting for the Vendors that they had no knowledge of the funding problem that Michael Lowry was having. 1 know from our telephone conversation of the 30th November 1999, that you had spoken to Peter Townley of Dunlop Hayward, the Agents, and had apparently negotiated a two-week extension. When I mentioned this to the Solicitors for the Vendors, they had no knowledge of that extension and were "considering the position". I have done a Company Search against Catclause Limited, a copy of which is enclosed herewith, showing Michael and Lorraine Lowry to be the officers of the Company. C H A P T E R 8, A P P E N D I X ( 1 2 ) C h r i s t o p h e r V a u g h a n is regulated by the L a w Society in the C o n d u c t of I n v e s t m e n t B u s i n e s s Also at: T h e O l d Rectory, H a v e r s h a m , M i l t o n K e y n e s M K 1 9 7DT. Tel: 0 1 9 0 8 2 2 6 8 8 1 . By A p p o i n t m e n t only V A T N u m b e r : 6 0 8 4 8 0 9 28 I suspect that if I do not have any positive information to give the Vendor's Solicitors, they may well serve a Notice to Complete which will state that Completion must take place within 14 days otherwise they will forfeit the deposit, have the right to re-sell the Property to a third party and claim any losses from Catclause Limited. Because Catclause, the contracting purchasing party is a Limited Company, the Vendor cannot look behind that company to try and claim its losses from the Officers. So far as I am aware Catclause has no assets from which the Vendor could claim damages. However, it is possible that a prudent Solicitor acting for a Vendor, would not only serve a Notice to Complete on me as the Solicitor for Catclause and the site of Registered Office of Catclause, he may also serve one on the Company's Officers as well. There I think that Michael and Lorraine Lowry ought to be warned that they may have a Notice to Complete served upon them at some stage and what its significance is. Perhaps you will let me know what the current position is? Yours sincerely CHAPTER 6 - APPENDIX ( 1 ) CHRISTOPHER ^AUGHAN SOLICITOR & NOTARY PUBLIC Old Church Chambers Sandhill Road, Northampton NN5 5LH DX 15620 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 -751960 Mr. Kevin Phelan 106 Gillygooly Road L Omagh County Tyrone ^ B R 72 5QA FAX 01^62 250 744 1st December 1999 Dear Kevin Re: Site of St Columba's United Reform Church, Cheadle As you are aware, Completion of this should have taken place on the 30Cl November 1999. |It was clear from my telephone conversations with the Solicitors acting for the Vendors that they,had no knowledge of the funding problem that Michael Lowry was having. I know from our telephone conversation of the 30th November 1999, that you had spoken to Peter Townley of Dunlop Hayward, the Agents, and had apparently negotiated a two-week extension. When I mentioned this to the Solicitors for the Vendors, they had no knowledge of that extension and were "considering their position". I have done a Company Search against. Catclause Ltd, a copy of which is enclosed herewith, showing Michael and Lorraine Lowry to be the officers of ^ the Company. CHAPTER 8, APPENDIX (13) C h r i s t o n h e r Vauahun is r<>>ou]'.irfH hv tht* 1 .<<<IM ^ S l O G 0 - Mr Kevin Phelan 106 Gillygooly Road Omagh County Tyrone 8T72 5QA Dear Kevin FAX 01662 250744 J 9th August 2000 Re: Hilltop Farm, Chesterfield Road, Glapwel! } 1 refer to our recent discussion, as to this and I confirm that this Property was purchased on the 26th March 1999 from B Jephson (Mansfield) Limited and is registered with Title Number DY315408 the total funds required to complete the purchase were?300,000.00. The Registered Proprietor is shown as Michael Anthony Lowry of Old Church Chambers, 23 Sandhill Road, St James, Northampton NN5 5LH. The Property is not mortgaged to any third party and I am not aware of any charges or incumbrances over the Property, and in my opinion, it has a good and marketable title, The Property docs have the benefit of an option to purchase the balancc of the ^ ^ land owned by B Jepson^Mansfield) Ltd being in Title Number DY200003. The Completion monies for this Property were sent to me by telegraphic transfer and there is no indication on my Client Account Bank statement as to the source of those funds. i Re: St Columba's Church Hansworth This property was purchased in December 1999 for ?445,000. It is registered with Title Number GM759030. The Registered Proprietors arc myself and another as Trustees for an unnamed beneficiary.The Property has a good and marketable title CHAPTER 6 - APPENDIX ( 1 ) f hcislr .;o>)o.<: . o , AKl. >>| Vtir I V:,| p.n-li.i", ! o : I hold the Land Certificate strictly to the order of G ? Capital Woodchester Bank Ltd of Dublin as they provided ?420,000.00"towards the purchase price, ofthe Property and that is indicated on my Client Account Bank statement.. The deposit and other monies came from M. If you recall originally, Catclausc Limited was a Limited Company set up for the acquisition of this Property. , Therefore although the Registered .Proprietors of the Property are shown to be Trustees if anyone ever managed to see a copy ofthe Banking documentation which I believe refers to Catclause, and then did a company scorch against Catclause they would find out a link with M. >> It was on the advice of A P that Catclause Limited was abandoned and the property put into the names of Trustees for reasons of secrecy. You have had all the above information in my letters and FAXES at the time of the events. Surely the over-riding fact in relation to both of these property transactions, and the reasons for the long delay before Completion days were fixed, was to enable the loans on both Mansfield and St Cotumba's Church to be no more than short term bridging loans, as purchasers had already been lined up before the properties were acquired ? I had certainly understood from my lengthy conversation with M. in a car journey on the way to Leicester that no properties would be acquired unless purchasers had been found, so that the purchase monies were borrowed for a minimum period No doubt y o u will let me have your further instructions as to purchasers as soon as possible. Ia particular I need to have the details of the neighbour at St Columba's Church for insurance purposes which is becoming urgent, if we do not wish the property to become uninsurable or for the insurance cover to be cancelled. Yours sincerely C H A P T E R 8, APPENDIX (CHRISTOPHER ^VAUGHAN S o I.ICITOR & N O T A R Y PUHI.I C Old Church Chambers Sandhill Road, Northampton NN5 5LH OX 15620 NORTHAMPTON 3 Tel: 0 1 6 0 4 7 5 8 9 0 8 Fax: 01604 751960 Kevin Phelan Esq.. 106 Gillygooly Road Omagh County Tyrone BT72 5QA FAX 01662 7.50.744 1 a*' A u g u s t 2 0 0 0 Dear Kevin, As no doubt Michael will have reported to you we had a very positive and useful meeting yesterday lunchlime. Michael felt that be knew where both these Properties were now going and a scheme has been devised to assist him financially and tax wise as well. Mansfield - Various documents have to be drawn up m respect of Mansfield and I will deal with this on my return from holiday, but a sale of the site is needed as soon as possible. No figure was actually discussed BUT I would imagine that to cover the outstanding loan and costs we are looking for a minimum of ?375,000. No doubt you will proceed with this a quickly as possible. St Cohimba's Church - Michael told us at the meeting that a firm offer had been received for ?1,100.000.00 for this Property, subject to the-obtaining of residential planning consent. Apparently the planning application is >>.o be made in the next two or three weeks, which I suspect will be a formality. My experience of all pianning matters nowadays is that because Planning Fees are so enormous people simply do not submit applications until they have been more or less guaranteed by the planning officer that consent will be granted C H A P T E R 8, A P P E N D I X (15) Christopher Vaughan is regulated by the L a ^ Society in the Conduct of Investment Business o <\ -tr- TKc PvW R^Mr^w Mr io *7rvr Toi- rnona T>aoai q.. A : The scheme will be that Michael will purchase this Property from the Trustees about two months before completion of the sale to the Developer. So that contracts can be prepared both for the sale by the Trustees to Michael and by Michael to the Developer can you please let me know the identity ofthe Developer and if possible their solicitors so that I can write to then and ensure that there are no delays on the sale of this site. On the sale by the Trustees of that site their borrowing will have to be repaid and replaced by the loan that Michael is taking out on the site for a couple of months before completion to the Developer. He told us that a loan had been agreed in principle through a Company that he does business with in Manchester. In order for the Trustees to transfer the site to Michael they will need to receive about ?450,000 plus the Deposit originally paid of ?44,500 from Michael We are going to meet again to discuss both these sites almost certainly in the week commencing the 2nd October 20000 by which time it is hoped that Contracts will have been exchanged. Michael told me that he had absolutely no idea that he was meant to be reimbursing me the insurance premium on the St Columba's site, as apparently you had not told him about this. He is arranging to repay me separately so there is no need for you to both about that issue any longer. However, what is vitally urgent and what you have still not come back to me about is the identity of the people who are inspecting the property on a weekly basis. I explained at the meeting that the property insurance on this site was dependent upon a number of conditions one of which was that someone had to visit the property at least once every seven days. I cannot stress the importance of this as of course it exposes me personally if there should be a claim on the insurance of the property. I look forward to hearing from you as soon as possible. Yours sincerely, C H A P T E R 8, APPENDIX (15) CHRISTOPHER \?\UGHAN SOMCITOR N o t a r y PUBLIC Old .Church Chambers Sandhill Road, Northampton NN5 5LH DX 1 5 6 2 0 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Aiden Phelan Esq A P Consulting Fax No. 00353 6761141 19 September 2000 Dear Aiden Kevin spoke to me on Monday 18th September and told me that you had had a meeting over various issues at the weekend. I enclose a copy of a tetter I have today sent to him with regard to St Columbas Church and the Mansfield's sites. DRFC Kevin said that this had been discussed and did not enlarge further. No doubt you will let me know if you wish me to do anything. Yours sincerely C J VAUGHAN HeetMCj it"" SBpX. C H A P T E R 8, A P P E N D I X (16) Christopher Vaugh-vi reguixttfd bv the i , i ,, So<-./-~ r o C H R I S T O P H E R \ A U G H AN S O L I C I T O R & N O T A R Y P U H M C Old Church Chambers Sandhill Road, Northampton NN5 5.LH O X 15620 N O R T H A M P T O N 3 Tel: 01604 758908 Fax: 01604 751960 -i Kevin Phelan Esq Fax N o . 02882 250744 19 September 2 0 0 0 Dear Kevin St Columbas Church, 377 Wiimslow Road, Cheadle And Mansfield You indicated to me on the telephone on Monday 18th September that a Purchaser had been found for both sites for 1.3 million pounds. You did not tell me who the Purchaser was but said that I would be hearing from other Solicitors "who would want the title deeds". As I explained to you I cannot hand over the title deeds in respect of both properties without the consent of M L. With regard to St Columbas Church I am on undertaking to the Bank and obviously cannot release the deeds without being released from that undertaking, which will only be done by an undertaking from Solicitors which would satisfy the Bank and release me, or by me paying the outstanding debts to the bank in. fullPerhaps you could let me have full instructions when they are available. I am sending a copy of this letter to Aiden Phelan. Yours sincerely C J VAUGHAN CHAPTER 8, APPENDIX (17) Christopher V a u g h a n is r e g u l a t e d b y t h e L a w S o o c i v o l . ^ s r m c n , B,Jf *W3:10 FROM: Gokismith W i l Hams S O L I <' I T O R S Please a- k for: J O H N J O N E S Christt:rr C . > 1_L 3 7htfj7f/n >.\ regulate*' by 'he i^rm .''uc.-rr -//o tf*r <>>/ hi>i-s.'m<"t ^o'M/i^jj C H R I S T O P H E R \ K U G H AN S O L I C I T O R & N O T A R Y P TJ B l i c: Old Church Chambers Sandhill Road, Northampton N N 5 5LH DX 1 5 6 2 0 NORTHAMPTON 3 Tel: 01604 758908 Fax: 01604 751960 Messrs Goldsmith Williams Solicitors DX 14186 Liverpool J JEJ/B4333001 4th October 2000 Dear Sirs. Re: Sale of Two Parcels of Land by Mr Lowry to B e r w o o d Park Associates Thank you for your letter of the 21SI September 2000. 1 confirm that { act on behalf of Mr Lowry in respect of this transaction. 1 enclose herewith Land Registry Office Copy entries relating to: 1. The Site at Mansfield '. and I also enclose Office Copies of the entries relating to the adjoining property over which Mr Lowry has an Option and a copy of the Option Agreement dated the 26th March 1999 and 2. St C o l u m b a ' s . 377 Wilmslow Road, Cheadlc The total Consideration for this whole transaction is for your clients to pay my client the sum of ?1, 360,000 (One million three hundred and sixty thousand pounds) without any specific apportionment of the Purchase Price between the two properties (however, see below.) In addition, your clients are to make a contribution to my costs to be agreed, and to be paid on Completion Together with the Completion Monies to me. For various financial reasons the sale price of the site at Mansfield in the Contract is to be ?300.000 (Three hundred thousand pounds) and the sale price of the site at St Columba's is to be ?1,060,000 (One million and sixty thousand pounds) CHAPTER 8, APPENDIX (19) Christopher Vaughan is regulated by the Law Society in the Conduct of Investment B u s i e r The Old Rectory, Haversham, Milton Keynes MK.19 7DT. Tel: 01908 226881. Bv A l s o at: You will see from the Office Copy entries of St Columba's that currently that property is vested in the names of Trustees, who are in the process of transferring the property into the name of Michael Lowry. Following Mr Lowry's acquisition of the St.Columba's Property, your clients will complete the purchase of it from him at the agreed purchase price of ?1.060,000 (One million and sixty thousand pounds.) My instructions are that it will be necessary for two separate Contracts in respect of each of the properties to be prepared rather than one Contract in respect of both the Properties. I would be obliged if you couid let me have details of your clients' full name(s) and address(es) for inclusion in the contracts. Perhaps you could please confirm to me that this complies with your understanding of the Transaction - if so. I will let you have the two draft Contracts. / Yours faithfully. CHAPTER 6 - APPENDIX ( 1 ) (CHRISTOPHER ^VAUGHAN SOI.ICITOH & NOTARY PUBLIC Old Church Chambers Sandhill Road, Northampton N N 5 5LH DX 1 5 6 2 0 NORTHAMPTON J Tel: 01604 758908 Fax: 01604 751960 n Kevin Phelan Esq 106 Gillygoolev Road OMAGH Co Tyrone BT72 5QA Fax No. 0288 2250 744 18 January 2001 Dear Kevin St Columbas Church Site I have received a report from Chesterton, whom I instructed at the request of ML to appraise this site. They have had detailed discussions with the Local Planning Authority, and it is quite clear to them that because the site is in an area of land designated as "green belt" by Stockport Borough Council, no development can take place on the site other than > 1 2 The refurbishment and possible slight enlargement of the house, and The conversion of the existing church buildings to apartments, [JL'OOIOTJ LVT W UU R WC . Under the present planning policies no other development would be permitted on the site. Chesterton inform me that the planning authorities have received a number of enquiries as to this site, and this information has been given to all those enquiring which presumably is the reason why no-one wants to buy the site for development purposes. It seems to me, therefore, that ML is going to struggle to make any sort of profit on this site or, indeed, even get his money back. CHAPTER 8, APPENDIX (20) C h r i s t o p h e r V a u g h a n is r e g u l a t e d by the S o c i e t y m i h c C o n d u c t of I n v e s t m e n t Business \Un :,r rhf n n i R,v.,,rv. linvrrsh^m. M,h>iyr Tr-I: OI'KIH 2.?6KX1. Hi- \pjv.mtrm-nf '>nlv I had clearly understood that John Eastham of EBL had done a detailed site survey of this Property, which would have highlighted the planning problems. If those problems had been known then I am sure that the Property would not have been purchased. This poses the question as to whether John Eastham has been negligent in carrying out his investigations. If this is the case then there may well be claim against him for loss of profits because of the failure as to being able to develop the site. I also note from the accounts that have been sent to me by Messrs Peter Harrison Architects that they also did work on this site to a value of ?1,374.80. That work appeared to be done in December 1999 which was before the property was purchased. Had they been negligent as well? Perhaps you could let me have your thoughts on this. I note from the photographs that I have been sent from Chesterton appraisal of the Mansfield Site that the Gameplan telephone number is shown as 01604 230702. This is a discontinued telephone line and therefore if anybody did want to make contact with Gameplan they would fail, as there is no way of contacting them. Do you think you ought to put up a new board with a proper telephone number CHAPTER 6 - APPENDIX ( 1 ) Mr Kevin Phelan FAX 02 882 250 744 26th January 2001 Dear Kevin, Re: St Columba's Church/ Mansfield Sites I do not propose to write a long letter to you with regard to our telephone conversation of the 23rd January 2001. However, you seem to misunderstand the "chain of command". You are not my client, both you and I are Agents of the Landowner and therefore we both take instructions from him. There are two mortgage lenders 1. Investec in respect of St Columba's Church and 2. AP in respect of the Mansfield Site. Irrespective of what the Landowner, you or I might think, either Lender could exercise the powers of a mortgage lender and sell either property to repay the debt that is owed to them. There is no point in your saying "the only person who can sell these properties is me " because this is not correct. Both of us are in an identical position - we are employed professionals acting on behalf of our Principal. If he decides to give us instructions for whatever reason it is up to us to carry them out. Likewise if he decides to ask other professionals to advise him, it is his privilege and neither you nor I have any right to complain about that. CHAPTER11,APPENDIX (5A) You will appreciate from what I said to you on the telephone that Chestertons have completed reports on both St Columba's Church and Mansfield. Without our Principal's consent I cannot send you copies but you said that you did not want to see copies of them in any event as they would be a "load of rubbish". If you, as you stated on the telephone, are confident of selling St Columba's Church for between ?1.1 - ?1.2 million pounds you will have done a brilliant job and should be applauded for it. Please do not think that I am in any way trying to go behind your back or criticise your professional skills. I was asked by a Principal to do a particular job - namely to obtain an independent appraisal on these two properties from a firm of Agents and that is what I have done. Yours sincerely, CHAPTER 6 - APPENDIX ( 1 ) C-sTfl Canal Ouay D MIn I IS. Clsnw!1"!.-.- Tairaaa AP Consulting Tti; Kevin PliifS&.o From: ?>*ie: Aidan Phelan fvlarcn 17, 2 0 0 i QQ44 2882 250744 CC: CJ Utigtftti o For a<> Recycle i i>>j9j*(R)rt3! f l i s t a s d i s c u s s e d . 5 wMt csstf? yaw v n M o n d a y t o p l a n naxi w << << k . Yours <>fieidSite^( J Kevin Phclaji meTwi^h Aidan Phelan in lit; 97 early 9$ through Brian Phelan. Aidan f'bei&n had max Mic.ha.cl Lowry through Denis. ML Accountant) who asked Aidan to gee phone f < Michael Lowry following his resignation as Minister. o* u*^ in, Aidan introduced M L to KP b e c a u s e G a m e p l a n w a s operating in the U K a n d Michael w a s interested in b u y i n g properties i n the UK. b e c a u s e there w a s better opportunities thsre. AP Consulting did consultancy work for Michael and a fee was done for service* on This work included the proposed ii!e of Streamline and a meeting was held with David HammondfromMasscr Hammond. Another fee was dene in December 2001forthe following professional work on properties in UK and due deligencc. G a m e p l a n introduced property to M i c h a e l in M a n s f i e l d in July 199S (See Christopher V a u g h a n letter f r o m V e n d o r s L a w y e r s . Or. 10 ih August 1 9 9 3 M i c h t t l L o w r y g a v e a personal c h e q u a ia the s u m of ? 2 8 , 7 0 0 (Stg25j000) fo CV to cover deposit on si\<<. i Kevin Phdan has undemanding that he would share part o: the ptofita in the deal ie 20% 24 .introducer and project manager. Michael was to raise funds to cover tfw balance of the purchase price Stg?22S,000. However " y Fob 1999 he realized that ho would have difficulty raising the balance and b .5inc(C) the Vendors solicitors were putting pressure on to close (letters on file) Kevin .oiugg'isicd that they approach Aidan Phelan to help in the financing. Having reviewed the deal Ai-kn decided to invest. CHAPTER 8, APPENDIX (22) He was o w s c m o n e y b y D O B for w o r k carried cut en ? On 26* March 1999 he transferred money from att account operated m the UK by DOB tc Christopher Vaughan clisru account >;<>.$ be registered in i.ow\ys naate vvo Chr.stopher Vaughans U$c2u&e the could not have c-verses ac.v.vs'ss letter f m m address Christopher held a b a l a n c e of f u n d s in his clicru a c c o u n t and w r o t e to M L in M a r c h 1999 saving that he held the b a l a n c e and asked for instruction. See letter Tn N o v e m b e r 1999 the l a n d was regir-terciJ in M i c h a e l Lowrys n a m e b e c a u s e he had p a i d deposit his n a m e w a s o n o r i g i n a l c o n t r a c t . H o w e v e r Christopher a d v j << < i h i m that he needed t o discuss issued w i t h K << v i n a u d A i d a a in v i e w o f t h e agreement w h i c h was in place. Si Columbaa Church 13'" July 1999 letter from Tcvvn Needle tn C V saying that sice would be sold to Ga.mep!kn 2 v September 1999 letterfromC V saying Catclause would be company used "" 14* S e p t e m b e r 1999 d e p o s i t S t g 4 4 , 5 0 0 w a s paid f o l l o w i n g instruction f r o m Aidan b y p h o n e c o n f i r m e d b a c k by letter f r o m C h r i s t o p h e r to A i d a n See attached. i? 1 " D e c e m b e r 1999 f a x to I n v e s t e c ant-losing d o c u m e n t a t i o n of J o h n Daly ctc Aidan and Helen signed r e s o l u t i o n s and letters o n b e h a l f of Catclause because M i c h a e l L o w r y w a s not available. F o r m s 2 8 3 w e r e completed and signed by Aidan and Helen b u t w o u l d not be tiled Until after C h r i s t m a s . Christmas p o s t ctc. On 1l1*' January 2 0 0 0 w e decided that. Catclause was not suitable vehicle as G u a r a n t e e from D a l y w a s not acted on and w h e n h e w a s approached to re sign the guarantee he w a s not h a p p y . T h e r e f o r e 'since the b a n k w a s e x p o s e d A i d a n dccided to take over the loan arid the s c u i p a n y v/as w i t h d r a w n . C h r i s t o p h e r held tfie property in his n a m e for Aidan but to the order of l r , v << ? e c S e e C h r i s t o p h e r letters. Sii'.cs the C o m p a n y was not b e i n g used we did not file ;he F o r m s 288 and w e did not believe thai the bank w a s acting on the d o c u m e n t a t i o n that wc s i g n e d . vVb u n d e r s t o o d that n e w d o c u m e n t a t i o n would be d r a w n up in the n a m e o f Aidan P h e l a n . H e ixathcr oor-.00 ' for c o m p a n y so st w:>s requssctd that c o m p a n y be struck off August C H A P T E R 8, A P P E N D I X (22) Investec t h e n w r o t e to A i d a n Ph<<>>is<< t - - ^ - . . -- - Ii"i J a n u a r y M i c h a e l Cullen a s k e d to see A i d a n to clarify situation since h e h a d done s e a r c h on C a t c l a u s e and h a d seen that a request to strike off was filed. T h e y then asked C h r i s t o p h e r to e n s u r s that t h e p r o p e r t y b e trailsferred into the n a m e of C a t c l a u s e Limited since ib< * 'Ac X << >> T A * V OWi Church O i i m b r n PI'KI.K; S n d h i (UiMi, Nonh>>mjtti>n N N S SI J f m 15620 ivonrHAMrroM J Tal: 01604 75?W8 i"ix; 01604 7519G0 Mr Michael Lowry Abbey Road ^Thurles County Tippeiaiy 25th September, 1998 ! Dear Michael, DorssastOT Rovers Footb;r' o/o':>" TO M y a p o u ^ i e s f o r g e t t i n g yo* BXJPA, a p p o i n t m e n t I I i o p ^ sfc << -tV r e t u r n e d to I r e l a n d , i J I am enclosing o1 " r. } ., .,<< th ----- . . .-. . Pfe i Y o u Sici t a k e & c-ot>v o f u ; ,, ..oiler o f the 23/Q However, you will recall AM r w o f the figures C c m p f e t a Statem- n and these have ; ? been g.rw g m t e & l i f y o u w o u l d , detra-oy the mco.rr T :::t c o p y an 2, I hadftotfflTOrectoede vonf total m v i w ^ m r t b A A .... . .,,<<>o,,, e t , . .. *<<. . i: o .,1 W S J ik CamptetloxL Yom wiH sm ' -,- 1 ; '.-. j w Wastfewcf C H A P T E R 9, A P P E N D I X (2) i i & iy j(to") .- KOr RH TG; 3 i S 'HI 6SEI341 I t i s n o t m I s s u e t h a t ! s a i l d e a l w i t h as a S o l i c i t o r as ! t h i n k that there is a p o s s i b l e c o n f l i c t o f interest * H '-is.eru '^ifh Doncaster Rovers. * I t h i n k tfent I t w o u l d b(R) I b e dealt w i t h v i a A n g l o Theodore G o d d a r 4 or w i t h the o t h e r W e s t f e r r y m a r Doncaster Rovers. f * ' j i i H a * ' m f o r the m a t t e r t o o / >iors i n L o n d o n o >>e tan, w h o dealt v ^ o f the shares ki absolutely doubt m mir.r . i'> w h o was Lt i f M u m ^ U e r o f D i n a r d T r a d i n g <<<<.* ' V . t , , T r t v . ' . << s h a U ,, J o e s not " i h i s ?230,000 o n ' ' A . b t r 199 * a ' o t tf e x p e n s i v e i f "o y and emhi! ^ >- ..-ill ^ v f c l c h w i l l s o t b e to , .<> _ r.o 1 m?.ckrstmid ihiit y o u are try in Ai a t> A fc r a e c t i u g between, m y a s a a n d rl U " ' f* < " *I ' l u A n i i <<. r ? .nymj, 1 u f V v F I-J Silii* B I C l n d regard: ^ \ Ya^ns sincerely, F R V \ C H A P T E R 9, A P P E N D I X (2) N. I i \ 19:57 WOODCOCK & SON. BURY' 0035316395333 NO. 430 OH Gameplan International To: Mr'Aidan Phelan Fax: Phone: Re: o Urgent o For Review o From: K e v i n P h e l a n Pajos:2 Date: CC: Please Comment o Please Reply o Please Recyclo August 11, 1999 o Comments: Doncaster Project Following our meeting on Monday 9* August, this is a note to confirm our discussions and asfo detail the correspondence which has taken place to date between Mc Alpine (Stephen Barker. Andy White) a n d Westferry (Kevin Phelan). 1. Joint Venture Aidan Phelan will now deal directly with Andy White in all matters involving Asda, B & Q and the Council relating to the development at Bell Vue and additional land which will be made available by Doncaster Council Kevin Phelan will continue to correspond directly with the Board of the Football Club and in particular determine all grant aid available for the projcct Kevin Phelan will also endeavor to establish the stadium specification and the cost of the construction of the stadium. 2. Mc Alpine / Westferry List of Correspondence Mc Alpine to Westferry (Kevin Phelan) (a) Letter 14"1 June 1999, detailing way forward including stadium costings (b) Copy draft programme received from Stephen Barker 22"" June 1999 Westferry (Kevin Phelan) to Mc Alpine (Stephen Barker) (a) Fa* 16m June confirming meeting / agenda, copied to David Pritchard and Barry Needham (b) Fax 24m June minutes of meeting y C H A P T E R 11, A P P E N D I X (5A) 19:57 WOODCOCK S SON. BURY 0035316355333 NO.430 August 11, 1999 (c) Fax 9,h July regarding plan / appraisal preparations (d) Fax 24th July regarding minutes of meeting (a) Fax 2 4 J u l y regarding plans from David Lyons & Associates 3. Retention Fund Christopher Vaughan and Craig Tallants will meet with Reg Ashworth on Thursday 12tfl August to discuss the accounts which have been produced 4 Outstanding Expenses Aidan Phelan will make payment this week of the two invoices received All invoices received by Aidan Phelan will be for his records only. 5 Altrincham Kevin Phelan to prepare a report on this project for Aidan Phelan. 6. Luton Kevin Phelan to prepare a final report on this project. 7. ML Kevin Phelan to refer all queries regarding Doncaster to Aidan Pheian It i s agreed to continue holding regular meetings on the Doncaster Project It has been taken on board our shared concern regarding Mc Alpine and in particular the other site which Mc Alpine have in Doncaster and also conflicts regarding construction, costings and appointment of their own professional contacts. Regards Kevin o Page 2 CHAPTER11,APPENDIX (5A) M r A i d a n Phelan AP Consulting 16 C l a n w i l l i a m Terrace Grand C a n a l Quay Dublin 2 30th August 2000 Dear A i d a n Ref: D o n c a s t e r / Altrincham / Luton Projects Further t o o u r discussion with Christopher Vaughan and Michael Lowry following your 17 t h August 2000 meeting, we have n o w had time to reflect on those discussions and also consider the letter received from Christopher Vaughan dated 18th August 2000. We are extremely disappointed that you have failed to reply to our recent c o r r e s p o n d e n c e or m a k e any contact with Gameplan. You agreed to keep us informed on p r o g r e s s regarding the Doncaster Project. We are concerned but not surprised that our so called 'development partners' a r e describing the Doncaster property as a ' p u p ' which is w h a t is e x p e c t e d from p e o p l e w h o have a serious conflict of interest and have ulterior motives. A t a meeting in y o u r office on 11th April 2000, the C h a i r m a n of Stannifer, a reputable property d e v e l o p e r , described the site as the 'best site in D o n c a s t e r ' and G a m e p l a n agree with his assertion. In o u r o p i n i o n the D o n c a s t e r Project r e m a i n s an extremely g o o d opportunity, however since G a m e p l a n w e r e requested to allow others to manage the Project little progress has b e e n achieved. I n the period since o t h e r s have taken control Westferry have m a n a g e d to lose creditability by not continuing the m o m e n t u m which G a m e p l a n had established over the previous period. At this point we are unwilling to accept the current position and request p a y m e n t of o u r previously agreed fees and costs or alternatively allow G a m e p l a n to take b a c k the management of the Project. G a m e p l a n have w o r k e d extremely hard o n the P r o j e c t s listed above in g o o d faith and w e believe we h a v e been treated very unfairly. CHAPTER11,APPENDIX (5A) We enclo s e an invoice for the fees agreed for the Luton Project, at our meeting on 9 t h February 1999 together with a schedule of o u r involvement. We enclose an invoice for the A l t r i n c h a m Project and a schedule of o u r involvement, we believe the fee for this P r o j e c t is reasonable considering the time and effort involved. We trust y o u clearly understand our position. Yours sincerely Kevin Phelan G a m e p l a n International CHAPTER 6 - APPENDIX (1) ATTENDANCE NOTE Fee Earner: Date: Subject: Matter N o : Ruth Collard 10 September 2002 Doncaster Rovers Football Club - Contract Dispute 12027.1 R C attending meeting with Craig Tallents and Denis O'Connor. the litigation generally with C T prior to D O C ' s arrival. Discussing the position in D O C s a i d he would explain how he had become involved in the matter. He had been trying to sort out, on Denis O'Brien's behalf, the position with Kevin Phelan. D O C had represented s o m e o n e who had been in partnership with KP and KP had made trouble for him at the same time. In discussions with KP, he had mentioned the litigation and the position with the retention fund. At one point, KP had told him that he had spoken to Mark Weaver, who had said that he would drop the ?250,000 claim if Westferry handed over the retention fund and d r o p p e d the payroll claim. He would do this for an "uplift" of ?25,000 and in return for an opportunity to sell the stadium at Doncaster. R C asked what was meant by an "uplift" and D O C said he had no idea. D O C said he was also representing a member of the Irish Parliament, Michael Lowry. He was being investigated as part of the Moriarty Tribunal proceedings in Dublin. KP had made various threats to cause trouble for ML. D O C said he had discussed the position with D O B and learned about the mediation which was to take place. D O B had said to D O C that the mediator would impose a binding agreement on the parties. D O C said w h e n he had said this to KP, KP had said this was not correct and had telephoned M W w h o had sent a fax through of part of the mediation documents. D O C said it was clear from this that the mediator would not impose his decision R C said this was correct and w a s the essence of mediation. She w a s surprised that D O B had apparently not understood this, as it had been made clear to A i d e n Phelan on several occasions. D O C said the upshot of all his discussions with D O B and KP had been that he had been asked if he would be prepared to meet Ken Richardson and Mark W e a v e r and at D O B ' s request a meeting had been arranged, first in Manchester and then in Dublin. D O C said from all he had heard if his discussions with KR and M W to settle the matter were not successful and it went to mediation, the mediation would fail. He said that the other side were laughing at us and that they would ensure that the mediation did not succeed and would then take the matter to court. T h e y wanted to cause the m a x i m u m embarrassment for D O B and for others, including ML. R C asked how they could cause any embarrassment to ML, as, so far as she was aware, he had no connection to the proceedings. D O C said that ML did have a connection and that he had been in the room when discussions had taken place between KP and K R regarding the lease. R C said no one had ever suggested that to her previously. R C said that the position was that we had been trying to talk to them about a settlement for nearly a year. R C said that their legal advisors, Reg Ashworth and their Counsel, seemed keen to talk about a settlement but R A had always said to her that his clients would not settle. W e had seen their agreement to the mediation as a major step forward. R C said that D O C might say they were laughing at us in relation to this but her experience of mediations was that they often did achieve settlements and K R and M W would find that they came under PCR1-1 '5991.1 CHAPTER 9, APPENDIX (5) Page 1 a lot o f pressure from their lawyers and from the mediator to settle, if a reasonable deal was put to t h e m . If t h e y did not-settle, R C did not regard their threats to expose various matters in court particularly seriously. If the mediation failed and the case went forward, w e would be making a substantial payment into court at an early stage. If they wanted they could g o on after this but if o u r payment was well judged, it would put enormous pressure on them and it would be v e r y e x p e n s i v e if they failed to beat the sum paid in. R C said she was telling D O C this so that h e should not be too impressed by what KP w a s telling him. The fact was that there w e r e m e r i t s in their claim and vulnerabilities in our case, but they also had vulnerabilities and w e w e r e not without resources. R C said it was v e r y important that we did not appear d e s p e r a t e to settle. D O C s a i d he understood this. He said it would be helpful if he could have an outline of the factual matters. R C said she would ask C T to explain the background to the litigation as he could e x p l a i n the accountancy details. C T then ran through the background, dividing the matter into three issues, the retention fund, the claim in respect of the lease and our claim in respect of the payroll warranty. D O C said he now began to appreciate that the issues were e x t r e m e l y complex. He wondered how he would be futly briefed prior to the meeting taking place. Agreeing that D O C needed a further briefing and that R C would prepare a file for him consisting of C T ' s original briefing documents and the pleadings. At the conclusion of the meeting R C reiterated that D O C should not be too impressed by the threats he had heard. If the mediation did not work, then that would be a pity, but we would move o n . D O C said that one g o o d thing was that KP would now be a witness for us. R C said it might be helpful that he would not be available to the other side, but he would be a much discredited witness, and she was far from sure w e would want to use him. Finally impressing on D O C that it was essential that any meeting took prejudice". D O C said he understood that. R C said she could not emphasise important this was. Otherwise, D O C might make some concessions on behalf if the matter did not settle, would prove extremely difficult for us to cope with proceedings. place "without too highly how of D O B which, in the ongoing R C e n g a g e d 2 hours 12 minutes (including short meeting with C T afterwards going through the papers he required) H C R 1 - ! 75991. CHAPTER11,APPENDIX (5A) Chapter 11 Page | 611 A p p e n d i c e s to C h a p t e r 11 DELAYS, N O N - D I S C L O S U R E A N D LAWYERS Index 1. A t t e n d a n c e note d a t e d 27 th J a n u a r y , 2003, of M s . K a t e M a c m i l l a n of C a r t e r - R u c k , Solicitors, o n D e t e c t i v e I n s p e c t o r C i a r a n M c N i n c h of t h e C i t y of L o n d o n P o l i c e . 2. Letter d a t e d 12 th F e b r u a r y , 2003, f r o m M s . R u t h C o l l a r d of C a r t e r R u c k , S o l i c i t o r s , to Mr. J o h n R y a l l of W e s t f e r r y L i m i t e d . 3. Letter d a t e d 14 th F e b r u a r y , 2003, f r o m M s . R u t h C o l l a r d of C a r t e r R u c k , S o l i c i t o r s , to Mr. D e n i s O ' B r i e n S e n i o r . 4. Letter d a t e d 14 th F e b r u a r y , 2003, f r o m M s . R u t h C o l l a r d of C a r t e r R u c k , S o l i c i t o r s , to W i l l i a m F r y , S o l i c i t o r s . 5. Letter d a t e d 17 th F e b r u a r y , 2003, f r o m Mr. D e n i s O ' B r i e n S e n i o r to M s . R u t h C o l l a r d of C a r t e r - R u c k , S o l i c i t o r s , w i t h a t t a c h e d c o p i e s of h e r letters d a t e d 14 th F e b r u a r y , 2003, to W i l l i a m F r y , S o l i c i t o r s ( 5 A ) a n d to Mr. D e n i s O ' B r i e n S e n i o r ( 5 B ) , w i t h m a n u s c r i p t r e v i s i o n s . 6. F a x c o v e r s h e e t d a t e d 18 th F e b r u a r y , 2003, f r o m M s . R u t h C o l l a r d of C a r t e r - R u c k , S o l i c i t o r s , to Mr. D e n i s O ' B r i e n S e n i o r . 7. A l t e r e d letter d a t e d 18 th F e b r u a r y , 2003, f r o m M s . R u t h C o l l a r d of C a r t e r - R u c k , S o l i c i t o r s , to Mr. D e n i s O ' B r i e n S e n i o r . 8. A l t e r e d letter d a t e d 18 th F e b r u a r y , 2003 f r o m M s . R u t h C o l l a r d of C a r t e r - R u c k , S o l i c i t o r s , to W i l l i a m F r y , S o l i c i t o r s . 9. F a x dated 30 th S e p t e m b e r , 2003, f r o m Mr. O w e n O ' S u l l i v a n of W i l l i a m F r y , S o l i c i t o r s , to Mr. H u g h G a r v e y of L K S h i e l d s , S o l i c i t o r s . REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Chapter 11 Page | 612 10. Letter d a t e d 4 t h F e b r u a r y , 2004, f r o m L K S h i e l d s , S o l i c i t o r s , to t h e Tribunal. 11. Letter d a t e d 8 t h N o v e m b e r , 2004, f r o m t h e T r i b u n a l to t h e C i t y of London Police. 12. Letter d a t e d 9 t h D e c e m b e r , 2004, f r o m t h e C i t y of L o n d o n P o l i c e to the Tribunal. 13. F a x e d d o c u m e n t d a t e d 11 th A u g u s t , 1999, f r o m Mr. K e v i n P h e l a n to Mr. A i d a n P h e l a n . 14. Letter d a t e d 25 th J u l y , 2002, f r o m W i l l i a m F r y , S o l i c i t o r s , to Mr. D e n i s O'Brien Senior. REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 ATTENDANCE NOTE F e e Earner: Date: Subject: Matter No: Ruth Collard 27 January 2003 Doncaster Rovers Football Club Limited/Westferry 12027.2 KM attending Kieran McNinch ("KMc") on telephone (out). KM saying that she was calling to update KMc on recent developments regarding Denis O'Brien snr/Westferry's blackmail complaint. She explained that,. the Christopher Vaughan letter had been leaked to the Irish press. Consequently there had been a number of stories in the Irish media, in the Irish Times newspaper particularly, which had alleged that Mr Michael Lowry was involved in the Doncaster Rovers transaction. KM said that one article was headlined: "Lowry linked to ?4m deal by letter." sentence was: "Lawyer believed former minister was 'totally involved'." Its first KM said that the Moriarty Tribunal had become interested in the transaction and had asked PCR&P f o r a copy of its blackmail complaint file. KM wanted to know what the Police view was regarding the possibility of PCR&P releasing the file. KMc said that the police had no control over what happened to PCR& P's file. KMc said that he would have thought that very little would be at risk in releasing the file to the Moriarty Tribunal. He could not see any problem with disclosing anything to the Moriarty Tribunal. It was a matter for the O'Brien family. KMc said that it was not as if one had an ongoing situation where one had to act fast or something would be lost. KM said that PCR&P's principal concern was that nothing be done which might prejudice or jeopardise the police investigation. KMc said that he did not think the release of PCR&P's j file would jeopardise the investigation at all. KM said surely if the documents were put into the public domain the blackmail suspects would know they were being investigated and the nature of the enquiry. KM asked if the Police had approached the suspects yet? KMc said the Police had not approached the suspects yet, so they would not know from this source that they were under investigation. However, there was nothing in the statement of which the suspects would be unaware. They knew about everything in statement save for the fact that they were under investigation. The worst that could happen if the suspects knew that they were being investigated would be that they would flee the jurisdiction (which KMc thought was unlikely), or would have additional weeks or months to prepare a defence. If the case were to go to trial the suspects would have several months to prepare their defence anyway. PCR1-181324.1 Page 1 CHAPTER 11, APPENDIX (1) KM s u g g e s t e d to KMc that it would be helpful for him to see a copy of the articles in the Irish Times. K M C agreed and said that once he had received them he would do an addendum to the CPS. KM thanked KMc for his assistance. KMc has a new telephone number which is 020 7601 2417, his fax number is 020 7601 2467. PCR1-1B1824.1 CHAPTER 11, APPENDIX (5A) 0 9 : 0 0 FAX r00FAX(R) 0 0 4 / 0 0 4 Oirect Email: Cjirect F << . dur Djats : - RuUi.Collaid@carter-ruck.com 020 7583 6225 RC/ALP/12Q27 2 12 February 2003 f a x to: 00 353 1 432 5955 3hn Ryall jth F l o o r i r a n d Canal 2 Dublin 2 Iceland I I Carter-Ruck >irc GM i Con currants Martin Smnn Paul UAtcaiar C|ear John, vlfestferry Limited/Complaint to the Police "ijhanfc you for your email of yesterday's date. First o f all, so far as the police are concerned, we have not heard anything further s nee Kate spoke to them on 27 January. At that stage, the matter had gone to the C r o w n Prosecution Service, for it to consider a prosecution, and we are still waiting to hear regarding a decision, I have asked Kate to chase them again, this vyeek. I I jnow turn to the letter from William Fry in relation to the Moriarty Tribunal. I did telephone Owen Sullivan to speak about this, but we missed each other on a cpuple of occasions and the conversation has still not taken place. The position regarding our file is as follows: 1;. ! | : i j j | i. j I j i ! i Our file in relation to the complaint to the police consists of all the documents we hold in connection with our work on that matter. These Partnership Secretary include, for example, our letters and emails exchanged with you, the Michael Creator* invoices we have rendered to you, notes of our telephone conversations with you, print outs of our computerised time recording, internal Associais firm communications between Kate and 1 regarding the matter, as well as the 6 annatyne KirtiwooO France A Co Exchange House draft statements and our communications with the police, Christopher 1 Royal E>e*sng<< Square 9 Vaughan and Michel Kallipetis. GUeftow G SAG 1 I am not sure whether, when a request is made for our file, this is intended to encompass the whole File, down to our computerised time records, internal communications, notes and invoices etc. All of the material In the file is covered by legal professional privilege and would not, in an English context, be subject to disclosure. Having said that, the privilege belongs to Denis as the client and if he wishes to waive it, then he is able to do so. I am at a loss, however, to know what assistance the majority of our file (for example the administrative material etc) would be to the iVforiarty Tribunal and, indeed, it seems to me its time would be wasted by having to go through it. Aside from the above. I do not consider it helpful or right that our legal advice, as contained in letters to you and notes of conversations with you, should be disclosed to any third party. In particular, you will recall that our Ragulated by the Law Society Tfi 3 4 21 8 2 11 2 0 0 21 5 2 2 10 < HCR1-1 82963.1 CHAPTER 11, APPENDIX (2) r 00 FAX (R)004/004 c j u , f=tBf: ROALP/12027.2 Flag(R) 2 ^ I T L j advice about pursuing the complaint in blackmail was not entirely positive and that (very understandably) Denis took the view he wanted to proceed in any event in order to be seen to be taking action. 4. It seems to me that the documents that the Tribunal is really interested in are those relating to our communications with the police. These essentially encompass the witness statement of Denis we first presented to them, the same statement which was e mailed back incorporating the police's queries, the revised draft statement responding to those queries and various emails w e have subsequently exchanged with the police. Again, all of this material is subject to legal professional privilege If. however, it is felt that you wish to assist the Tribunal then this material I believe can be made available and in fact as I understand it the statement in its various drafts has already been handed over. Finally, so far as Christopher Vaughan's draft statements are concerned, y ou will recall that there are two drafts of this, neither of which have been signed by Mr Vaughan. Indeed, in relation to the first draft, he has specifically informed us that he is not happy with its terms and, accordingly, is not prepared to sign. In these circumstances, I be ieve It would be wrong to make those drafts available to any third party without Mr Vaughan's approval. ! i d. : 1 In summary. I believe the best way forward may be to make available to the Moriarty Tribunal the material I hold concerning our communications with the police. Alternatively, I would suggest I go tfirough our file with you or someone from William Fry to discuss the position further. I Hlook forward to hearing from you. i Hind regards, \[ours ftuth Collard F*S. I now have your e mail of today. I suggest that perhaps we discuss the above first, before I send any letter. | o i sincerely FtCRI-182963.1 CHAPTER 11, APPENDIX (2) Direct E m a i l : Direct F a x : RLilh.C0llard@cart9r.njck,com 020 7683 6225 RC/ALP/12027.2 14 February 2003 arid Our Reef: Data: By f a x to: 00 353 1 432 5955 Denis O'Brien Senior 6th F l o o r Grand Canal 2 Dublin 2 Ireland Carter-Ruck partner* Pitir Solleltara International Press Centre 79 Shoe Lane London EC4A SJB Tel 020 7353 5009 Fax 020 73S3 5963 Dear Denis, Westferry Limited/Complaint to ths Police Further to a r letter I sent to John ori Wednesday, .ha has new asked that I readdress my advice to'you In connection with'the above arid the request from the Moriarty Tribunal for documents. The position regarding our file is as follows: 1. Our file in relation to the complaint to the police consists of all the documents we hold In connection with our work on that matter. These Include, for example; our letters and emails exchanged with you, the invoices we have rendered to you, notes of our telephone conversations with you, print outs of our computerised time recording, Internal communications between Kate and I regarding the matter, as well as ths draft statements and our communications with the police, Christopher Vaughan and Michel Kalllpetis. DX 333 cnsncsry lane Email lawyarsgcarferrjjck.cori Web site www.ci1tw-rvclc.c0n1 Andrew SWptfeinsoJi' Alasdalr Peppar Guy Martin Nigel Tail Barton Taylor Mai* Thomaon Ruth Collard Cameron Doley Clair* Gill Consultants Merlin Smith sootfiiri u w Paul Wi-icaler 2. Partnership Secretary I am not sure whether, when a request Is made for our file, this Is intended Meheal Croxford to encompass ths whole file, down to our computerised time records, Internal communications, notes and invoices etc. All of the material in the Aaaodate Finn file Is covered by legal professional privilege and would not, in an English fiannatyne Kirkwood Francs & Co Exchange Housa context, be subject to disclosure. Having said that, the privilege belongs 1 Royal Exchange Square 6 to you as ths client and if you wish to waive it, then you are able to do so. Glaigosv 0 JAO 1 I am at a loss, however, to know what assistance the majority of our file Tel 0 4 2 1 8 2 11 2 0 0 (for example the administrative material etc) would be to the Moriarty Fax 0141 221 6120 Tribunal and, Indeed, it seems to me its time would be wasted by having to go through it. Aside from the above, I do not consider it helpful or right that our legal advice, as contained in letters to you and notes of conversations with you, should be disclosed to any third part/. In particular, you will recall that our advice about pursuing the complaint In blackmail was not entirely positive and that (very understandably) you took the view you wanted to proceed In any event in order to bs seen to be taking action. It seems to me that the documents that the Tribunal is really interested in are those relating to our communications with the police. These essentially encompass your witness statement as we first presented It to 3. A. PCR1-183084.1 I 'd 5993 'ON Regulated by the Law Society SMNiHVd ? H318VD <<3i3d i S : M I 0 0' >I ' CHAPTER 11, APPENDIX (5A) f'aja 2 Our RC/ALP/12027.2 o them, the same statement which was 9 mailed back Incorporating the police's queries, tha revised draft statement responding to those queries and various emails we have subsequently exchanged with the police. Again, all of this material Is subject to legal professional privilege. If, however, it is felt that you wish to assist the Tribunal then this material I believe can be made available and in fact as I understand it the statement in Its various drafts has already been handed over. We have spoken to the police about their view of the statement being handed over and potentially being put into the public domain. As a result the suspects are likely to be alerted to the investigation and It is possible (although unlikely) that they could flee the jurisdiction. They will also have more time to prepare a defence and their response to an approach by the police than would have otherwise have been the case. Having said that, the police say that the disclosure of the statement Is very much a matter for you and that it Is unlikely to have a significant effect on any eventual prosecution. 5. Finally, so far as Christopher Vaughan's draft statements are concerned, you will recall that there are two drafts of this, neither of which have been signed by Mr Vaughan. Indeed, In relation to the first draft, he has specifically informed us that he is not happy with its terms and, accordingly, Is. not prepared to alga In these circumstances, I believe It would be .-.. wrong to make (hose drafts available to any third party without Mr Vaughan's approval. In summary, I believe the best way forward may be to make available to tHe Moriarty Tribunal the material I hold concerning our communications with the police. Alternatively, I would suggest I go through our file perhaps with someone from William Fry to discuss the position further. John has also asked me to advise you on your position in libel regarding disclosure of the statements. Complaints to the police are covered by privilege in England, so that no proceedings can be taken against you in respect of this. As the statement l9 being handed to the Moriarty Tribunal at that body's request, again, this publication is likely to be the subject of privilege, although I do not know what the position would be under Irish law. If the contents of the statement are leaked to the press and published in a newspaper in England, I do not believe you would be liable for that publication, as you have not authorised or intended it and it could not be foreseen by you as a consequence of handing over the statement to the Tribunal. If the contents of the statement are published as part of a fair and accurate report ofthe Tribunal's proceedings, again a form of privilege would apply. Again, however, you would have to check the position under Irish law. At John's request, I have also sent a letter to William Fry today, a copy of which follows. I hope the above is helpful. Kind regards, Yours sincerely Ruth Collard P R - 8 0 41 C 11 3 8 . ? d 6 9 9 8 ON si?3Nvd ? xony HBISM >n.i3J is : t>i s s o r a a j > i CHAPTER 11, APPENDIX (3) direct Email: Direct Fax; Our R e f ; 020 7 8 * 2 5 9382 Ruth.CoHard@oarler-rud(.cam Your Ref: Date: RC/PP/12027.2 0123fiO.OOS7.OOS 1 February 2003 4 Carter-Ruck anil pa r I n a r < P <>ni . Andraistepftensorv. AleaMt Pepptr Guy Martin Nlgm Tan Barton Taylor M r Thomson ak Rillh Collars Cameron Doley Claire GL I L Denis O'Briaitt J n f d n d benis O'Briari Snr We refer to your letter dated 24 February. We have been asked to write to you regarding the draft statements of Denis O'Brien Snr, which we understand you already hold. We further understand that it Is proposed that these are made available to the Moriarty Tribunal, As you know, these statements were produced in the context of a pending police investigation. W e have spoken to the pollca about the statements potentially coming to the attention of the suspects at this stage. The police have commented that it Is possible (although they regard this as unlikely) that as a result the suspects could flee the Jurisdiction. Additionally, they will have more time to prepare a defence and their response to an approach by tha police than would otherwise have been the case. Having said thie, the police regard the disclosure of the statements as a matter for the ellpnt Paul Vvfteelar Partnership 3acrstary Consultants Martin Smith T L TB Y F IF > W>> MAL R Michaal crexfcrtl Associate Finn In the circumstances, we believe that it would bs preferable for arty disclosure of Bannatype Kirkwood France A Co Exefiarifla M ue os tha statements to the Moriarty Tribunal to take place on the basis that they 3hould IB Royal Exchange Square be dealt with in private and not pubilc, so far as possible. Glasgow 6 SAG 1 Tel 04 2 1 aozo 11 2 We hope the above is helpful. F * 04 2 1 5 2 B ) 1 2 10 Yours faithfully Peter Carter-Ruck and Partners cc: Denis O'Brien Snr. PCRM630S2.1 > d 5998 'ON Regulated b y (hs Law Society SyBNIDVd-1? NOAH 8 3 W 3 H3i3d ?00r93J "H CHAPTER 11, APPENDIX (5A) DENIS O'BRIEN SNR. 6 lh Floor, One Grand Canal Quay, Dublin 2 URGENT Ms. Ruth Collard Partner Peter Carter-Ruck and Partners International Press Centre 76 Shoe Lane London EC4A 3JB United Kingdom Fax: 00 44 207 353 5553 (5 pages) 17th February 2003 Dear Ruth, Ref: Denis O'Brien Jnr. And Senior/ Westferry Limited Very many thanks for your comprehensive letter addressed to William Fry Solicitors, dated 14,h February, which I have read carefully. Could I possibly trouble you to send this letter again with the following omissions or amendments (see attached). Turning to the second letter addressed to me personally and which is quite comprehensive in detail, could I ask you please to arrange the following omissions and or additions (see attached). If you have any queries please contact Nicola in my office on +353 1 432 5902. Many thanks for all your help. Best regards to Kate. I look forward to hearing from you. CHAPTER 11, APPENDIX (5A) Direct E m a i l : OlweiFa*: Cur R e f : 020 738} 6255 Ruth.Coll jrd@cart>>''.(Ti=J<.cam Yaor Rs f o RC/PP/12027,2 0(2350.0057.003 Data : 1 February 2003 4 Carter-Ruck and PdrtntM riin By F a * : 00.353 1 539 5333 Solicitor* international P r v n Conirt 7 Shoe Line 1 London EC4A 3 J B Messrs William Fry Fitzwilton Houao Wilton Place Dublin 2 Ireland oear S i r s Denis O'Brien J n r and Denis O'Brien Snr We refer to your letter dated 24 February. We have been asked to write to you regarding the draft statements of Denis O'Brien Snr, which we understand you already hold. W e further understand that it is proposed that these are mada available to the Moriarty Tribunal, As y o u know, these statements were produced in the context of a pending police Investigation. W e have spoken to the police about the statements potentially coming to the attention of the suspects at this stage. The police have commented that it is posaible (although they regard II . ! >> unlikely) that as a result the suspects could flee the jurisdiction. Additionally, they will have mora time t o pre pare a defence and their response to an approach by the police than would otherwise have been the case. f_ .di-iirtrnnm of tho ataUiiiiuuta Jh a matter for the client.") Tel 9 0 7JJJ Mas 2 Fix 9 0 7 3 2 33 DX 3 3 Cmnc<><>od>>t>> Firm In the circumstances, we believe that It would be preferable for any disclosure of Sannstynt Kirltwoad Franca * Co Exeftanga Houaa the statements to the Moriarty Tribunal to take place on the basis that they should is Royal Sxcnang* 3<>'l o Oliecl Fa* ' OurRttf: Rulh.Callafd(R)earter-ryclt.ecin 020 7 5 8 3 6 2 2 5 RC/ALP/12027.2 Dsta: 1 February 2 0 4 03 By fax 00 353 1 432 5955 ~ Carter-Ruck *0>> ?iti.1iri r it ir Danis O'Brien Senior Sth Floor Grand Canal 2 Dublin 2 Ireland Solicitor* Iirtomatlonll P w i Centre n Slioe Lane London SC4AJJB Tel 02a 733) saoS Fax 020 7333 iS<3 Dear Denis, Westfarry Limited/Complaint to the Police OX 333 CHangwy I J M E al Uwym (Scute-ruck, c m mi o Web site wiwMrtsr.mcK.com Further to a letter I sent, to John on Wednesday, he has now asked that I readdress my advice to you in connection with the above and the request from the Mo riarty Tribunal for documents. The position regarding our file Is as follows: 1. Our file in relation to the complaint to the police consists of a>> tha documents we hold In connection with our work on that matter. These include, far example, our letters and emails exchanged with you, the Invoices we have rendered to you, notes of our telephone conversations with you, print outs of our computerised time recording, internal communications between .Kate and 1 regarding the matter, as well as the draft statements and our communications with the poiics, Christopher Vaughan and Michel Kailfpetis, More* 9sBh<>Q<< CortevilUra MerCfl Sml<>rni>n|p SiviUty I am not sura whether, when a request is made for our file, this is intended UichKl Croxfwd to encompass the whale file, down to our computerised time records, . internal communications, notes and invoices etc. All of the material in the Anocteta Firm file Is covered by legal professional privilege and would not, In an English Banrntync Kiifcwood F n t K I l Co SxcMKB'^OuM context, be subject to disclosure, p a v i n g aaid iheMhc. privilege- botongs^ Id Royal Qechnqe Squert to you as the client and if vuu wis.1 i tu waive it. then vau are able to do s o ^ i GUegmGIMa 1 am at a loss, however, to know what assistance the majority of our file' Tel 014t 221 8020 (for example the administrative material etc) would be to the Moriarty F << 0141 221 5120 Tribunal and, indeed, it seems to ma its time would be wasted by having to go through It. Aside from the above, ( do not consider it helpful or right that our legal advice, as contained in letters to you and notes of conversations with you, should be disclosed to any third party, in particular, you will recall that our advice about pursuing the complaint in blackmail was not entirely positive and that (very understandably) you took the view you wanted to proceed in any event in order to be seen to be taking action. It seems to me that the documents that the Tribunal is really interested in are those relating to cur communications with the police. These essentially encompass your witness statement as we first presented it to PCRJ -.1 03064.1 Regulated by uia Law S a d o t y CHAPTER 11, APPENDIX (5A) Page 3 Oof Rijl". RC/ALP/12027.2 'i ^J, ihem, the same statament which was 9 mailed back incorporating the police's queries, the revised draft statement responding to those queries and various emails we have subsequently exchanged with the police. Again, all of this material is subject to legal professional privilege. If, however, It is N t that you wish to assist the Tribunal then 1 HnHpr^andJt-fe^cijitarnftnt-ln-its... haliaw r i n frt>> W^HP available anH ^ f ^ >variouo drafts already bum 1 handed uverN wa. WAQ. vfc v o o ^ s l be eirA^^'Ji RPWIQA faX&sm. FLJZA/S We have spoken to the police about their view of the statement being handed over and potehtially being put Into the public domain. As a result the suspects are likely to be alerted to the Investigation and it is possible (attbnngfccaelifaely) that they could flee the jurisdiction. They will also have more time to prepare a defence and their response to an approach by the police than would have otherwise have been the >>h=*f. thf>> pgliflq "f>>V o that the disetesttfo of the statement is very much a indUwiTu yuu and llial it-te-ualikalyjo, Kawa ^significant affa.it nn any i>>\/pnfligl prnsffci itlrm Finally, so far as Christopher Vaughan's draft statements are concerned, you will recall that there are two drafts of this, neither of which have been signed by Mr Vaughan, Indeed, in relation to the first draft, he has specifically informed us that he Is not happy with Its terms and, accordingly, Is not prepared to sign. In these circumstances, I believe it would be wrong to make those drafts available to any third party without Mr Vaughan's approval. bellaxg the besj-Way forward jaay be to roajse-ayailable t o ; hold co^caVwjnq n r t r r ^ m u n i ^ f i i W j f l l t n t i a ^ i ^ l a ^ a r h a g g w i i h anmafenarffom WilliamTry todlscussTha pqsition 1 \ -CKrew^W. O A . "rvfijj, N* w\>>v iS uXrsi --JredbCeA fU^Uc^- 5. John nas also asked me to advise you on your position In libel regarding disclosure of the statements. Complaints to the police are covered by privilege in England, so that no proceedings can be taken against you in respect of this. As the statement is being handed to the Moriarty Tribunal at that body's request, again, this publication is likely to be the subject of privilege, although I do not know what the position would be under Irish law. If the contents of the statement are leaked to the press and published in a newspaper in England, I do not believe you would be liable for that publication, as you have not authorised or intended it and it could not be foreseen by you as a consequence of .handing over the statement to the Tribunal. If the contents of the statement are published as part of a fair and accurate report of the Tribunal's proceedings, again a form of privilege would apply. Again, however, you would have to check the position under Irish law. At John's request, I have also sent a letter to William Fry today, a copy of which follows. .1 hope the above is helpful. Kind regards, Yours sincerely Ruth Collard PCR.1-183044.1 CHAPTER 11, APPENDIX (5A) FEB. 2 0 0 3 14:53 PETER C A R T E R RUCK ^ P A R T N E R S NO. 8638 FAJX .t Our Ref: Your F*et Date: RC/ALP/12027.2 ing Carter-Ruck Pa rtna ra P at<> no; 123 4 February 2004 Re: Our clients: Denis O'Brien Senior Esq., and Westfen-y Limited Dear Mr. Heneghan, T refer to previous correspondence. I expect to be in receipt, shortly, of the waivers requested of m y clients with regard to the files of Messrs Peter Carter Ruclc & Partners, Solicitors. According to the draft letter to Messrs Peter Carter R u c k & Partners (enclosed with your letter of the 20*'1 January) among the materi al sought of them is any material relating to the making of any complaints to the police. As you are aware a complaint has been made to the police and the Tribunal has been furnished with a draft of that complaint. Messrs Peter Carter Ruck & Partners have expressed a concern (which w e understand is shared by the police) about that material potentially coming to the attention of the parties who are the subjcct matter of the complaint in question. M y clients share that concern. In Hie circumstances I would b e grateful if you would confirm that the material relating to the complaint made to the police (including the statements made to the police) will be treated confidentially b y the Tribunal and that in the event that the Tribunal ultimately determines that it is necessary to hear evidence in relation to those matters, that the Tribunal will do so in private in order to ensure that the relevant ongoing police investigation is not prejudiced in any way. I look forward to hearing from you. Yours sincerely, C H A P T E R 11, A P P E N D I X (10) L M NM KGS . MIC IsttMtlKAVANAOI-f; 1IV DM. WJaiAMS IT GH KJKMtON, NICOLA fALMF.l.M T SOU .IV. M L JD KAr jI C Y A U C H rn i 'lO A i F 5 L . B Al . 'C T JUSTINC CK. WUm. stHAJIl., NR MftUK,(HT1C HMcOOVSttJFUW 'ICARVF.VJMEWriM. GAVIN, lM flIIU* L AY OAiHCO W HtfNNT, AM 1 . AOirl'AN v Dl.W, JENIWF.N l E W K IENNIM.11M SN, T,O A OH E LJENNIWitl F V L U'HAI.l.OHAH.UBHAKtlUOIN ClINNIPH . MDlJL Y S W Lfc i W A JILL C1 AN/I IHUl OKLAIC SO X Y H I CLAAKE. S S N CONNOLI.Y, ft'llAIULON, A E T U R A ! Kt H M S A Y M E , 5 H A . . UA GILLI IHEJCtNi -TF.NNIM.'K 0'WF't.L. KATRIMA SMYTH, COHA CRAkfPTfiN (Financial CwMvUt'}. THOMAS IA&KSON ICunniluat). 0 4 - F E B - 2 0 0 4 15=53 0035316612379 98* P . 0 2 PRIVATE & CONFIDENTIAL STRICTLY ADDRESSEE ONLY 8 th November, 2004 Detective Constable Richard Gordon, Central Detective Unit, City of London Police, Wood Street Police Station, 37 Wood Street, London EC 2P 2NQ England. RE: T R I B U N A L OF INQUIRY (EVIDENCE) ACTS, 1921 AND 1979 (NO. 2) ORDER 1997 Dear Detective Constable Gordon, I am writing to you as the Solicitor to the above entitled Tribunal of Inquiry. For your reference I enclose a copy of the Tribunal's Terms of Reference. The Tribunal of Inquiry is presided over by a High Court Judge, The Honourable Mr. Justice Michael Moriarty. In the course o f t h e inquiries instituted by the Tribunal the attention o f t h e Tribunal has been drawn to a number of English property transactions, including a transaction involving the purchase, by a company known as Westferry Limited, of Doncaster Rovers Football Club's premises at Doncaster. My purpose in writing is to inquire concerning an investigation being carried out by you on behalf o f t h e City of London Police relating to a complaint of blackmail. From information made available to the Tribunal by Solicitors acting on behalf of Mr. Denis O'Brien Snr., Westferry Limited and a number of individuals associated with that company it would appear that a complaint of blackmail was lodged with your police force on the date of 12 th November, 2002, in which it was suggested that Mr. Denis O'Brien Snr. and members of the O'Brien family were being blackmailed by Mr. Ken Richardson and Mr. Mark Weaver. CHAPTER 11, APPENDIX (5A) In carrying out its inquiries in to the practice o f t h e Doncaster Rovers Football Club premises the Tribunal has been in contact with the purchasers and with a number of individuals associated with the purchasers. The Tribunal has also received communications from Messrs. Richardson and Weaver, two individuals associated with the vendors. The Tribunal has also been in contact with a number of individuals who appear to have been involved either in the purchase itself or in efforts to resolve a dispute between the vendors and the purchasers, notably Mr. Christopher Vaughan, Solicitor of Northampton, Ms. Ruth Collard Solicitor of the London firm of Carter Ruck & Partners, Solicitors, Mr. Denis O'Connor, Accountant of Dublin and Mr. Michael Lowry, of Dublin, a former Irish Government Minister. Mr. Michael Lowry is referred to in the Tribunal's Terms of Reference. In the ordinary way the Tribunal's inquiries take the form of preliminary private investigatory work. This work is almost invariably conducted through correspondence or in the course of private informal meetings with individuals from whom the Tribunal believes it may be able to obtain information. Where the Tribunal determines that the matters being investigated in the course of the private investigative stage warrant investigation in public it then proceeds to public hearings and evidence is taken from individuals identified by the Tribunal as having or likely to have information relevant to its Terms of Reference. In the course of carrying out its private investigations in relation to the Doncaster Rovers transaction the Tribunal has examined certain documentation which appears to relate to the police complaint made to the City of London police. This includes statements made to, or at least drafts of statements made to the police or documents containing material assembled in preparation for the making of statements or draft statements to the police. The Tribunal has been informed by Solicitors for Mr. Denis O'Brien Snr., (by whom the complaint was made to your police force) that your police force has a concern that material which the Solicitors may have been asked to provide to the Tribunal, material o f t h e kind mentioned above, may potentially come to the attention of parties who are the subject matter of the complaint in question. They have also indicated that the London firm acting for Mr. O'Brien Snr., Messrs. Peter Carter-Ruck & Partners have expressed a similar concern. It is true to say that the Tribunal's public hearings in relation to the English property transactions I mentioned above including the Doncaster Rovers transaction in particular will entail reference to some o f t h e material I have mentioned above which appears to be connected with your inquiry. I should say that some of this material has already been put into the public domain by the individual who is effectively the "owner" of Westferry Limited, Mr. Denis O'Brien, who is a son of Mr.Denis O'Brien Snr. In fact this material first came to the attention o f t h e Tribunal after it had been put into the public domain by Mr. Denis O'Brien in the course of High Court proceedings in Ireland. I have described Mr. Denis O'Brien as the "owner" of Westferry Limited. Westferry Limited is an Isle of Man company which is owned by a Trust, the Wellington Trust. Mr. O'Brien has asserted that he is effectively the sole beneficiary of the Wellington Trust. CHAPTER 11, APPENDIX (5A) I would be obliged to know whether your police force has any concerns regarding information coming into the public domain in the course of this Tribunal's public hearings concerning the complaint made to your police force and including either statements or draft statements made to your police force or documents containing materials preliminary to the assembly or preparation of a draft statement (and including the information already put into the public domain by Mr. Denis O'Brien). I would also be obliged to know (assuming that you are at liberty so to inform the Tribunal) whether you have in fact expressed these concerns to either Messrs. Carter Ruck & Partners, Solicitors or to Messrs. L.K. Shields & Partners Solicitors either in general or specifically with respect to the workings of or public hearings of this Tribunal. I would be much obliged to hear from you at your earliest convenience and if you have any queries please do not hesitate to contact me at the above telephone number. Yours sincerely, M i c h a e l Heneghan S o l i c i t o r t o the T r i b u n a l CHAPTER 11, APPENDIX (5A) Telephone: Tcxtphone: Fax: Our Ref: Your Ref: 020-7001-2826 020-7601-2040 Burdock Central Detective Unit Police Headquarters 3 7 W o o d Street London EC2P 2NQ Email: R.ichard.gordon@city-of-london.pnn.police.uk 9 December 2004 Michael Heneghan. Solicitor to t h e Tribunal. Tribunal Office, State Apartments, The Upper Yard Dublin Castle, D u b l i n 2. Dear Sir W i t h r e s p e c t to y o u r letter d a t e d 8th N o v e m b e r 2 0 0 4 , I can c o n f i r m that an allegation of Blackmail w a s r e p o r t e d to t h e City o f L o n d o n P o l i c e b y M r D e n i s O ' Brien Snr. T h e alleged o f f e n c e o c c u r r e d d u r i n g a mitigation m e e t i n g in the T e m p l e , w h i c h w a s attended b y M r O ' B r i e n a n d his legal t e a m , and c o n c e r n e d the settlement f i g u r e f o l l o w i n g t h e s a l e o f D o n c a s t e r R o v e r s F o o t b a l l C l u b f r o m M e s s r s W e a v e r and R i c h a r d s o n . I c a n c o n f i r m that this o f f i c e is i n v e s t i g a t i n g that allegation, but o n l y in so far as to the events which a l l e g e d l y o c c u r r e d within that m e e t i n g . This o f f i c e is not currently investigating a n y o f those matters c o n c e r n i n g t h e sale, w h i c h o c c u r r e d in 1999, or a n y of the o t h e r a g r e e m e n t s or land transactions w h i c h m a y h a v e occurred d u r i n g the s a m e p e r i o d , a fact o f w h i c h M r O ' B r i e n a n d h i s legal t e a m are a w a r e . It is m y b e l i e f that these m a t t e r s are a l r e a d y currently u n d e r r e v i e w b y the T r i b u n a l . W i t h r e s p e c t to i n f o r m a t i o n c o n c e r n i n g this allegation, or a n y other i n f o r m a t i o n (including draft s t a t e m e n t s p r e p a r e d and p r e s e n t e d to the T r i b u n a l b y M r O ' B r i e n ) , w h i c h m a y b e required b y the T r i b u n a l in t h e c o u r s e o f its deliberations, this o f f i c e does not e x p r e s s c o n c e r n at this time, that this i n f o r m a t i o n m a y b e b r o u g h t into t h e p u b l i c d o m a i n b y the T r i b u n a l (with the o b v i o u s exception of a n y p e r s o n a l d e t a i l s o f w i t n e s s e s c o n t a c t e d b y Police). This fact h a s p r e v i o u s l y b e e n relayed to M r O ' B r i e n s legal representatives, M e s s r s . Carter R u c k & Ptns. T h i s o f f i c e d o e s not seek to obstruct the T r i b u n a l s deliberations in a n y w a y and I a m h a p p y to assist if I a m able. At this t i m e I do not anticipate that a n y enquires m a d e b y the T r i b u n a l , either previously or in f u t u r e , will h a m p e r or h i n d e r m a t t e s currently u n d e r investigation b y t h e C i t y o f L o n d o n Police. S h o u l d y o u h a v e a n y further e n q u i r e s p l e a s e d o not hesitate to c o n t a c t m e . Richard Gordon. CHAPTER 11, APPENDIX (5A) -'1-Xi SGM.BLRV HlffV-^iV: Gameplan international To.- Mr Aldan Phelan Pax; Pltonei Re; o Urgent o Cummentei Doncaster Project From: K e v i n Phelan Pages; 5 5 Clatei CC: August 11, 1999 o For Roviow o Heaso Contnuint o Please Reply o Ploasa Himyclo Following our meeting on Monday 9 m August, this is a note to confirm our discussions and asfo detail the correspondence which has taken place to date between Mc Alpine (Stephen Barker. Andy White) a n d Westferry (Kevin Phelan). 1. Joint Venture Aidan Phelan will now deal directly v/ith Aridy White in all matters involving Asda, B & Q and the Council relating to the development at Bell Vue and additions! land which will bo made available by Doncaster Council. Kevin Phelan will continue to correspond directly with the Board of the Football Club and in particular determine ail grant aid available for the project. Kevin Phelan will also endeavor to establish the stadium specification and the cost of the construction of the stadium. 2. Mc Alpine I Westferry List of Correspondence M c Alpine to Westferry (Kevin Phetan) (a) Letter 14m June 1999, detailing way forward including stadium costings (to) Copy draft programme received from Stephen Barker Westferry (Kevin Phelan) to Mc Alpine (Stephen Barker) (a) Fax 16"1 June confirming meeting/ agenda, copied to David Prrtchard and Barr/ Needham (b) Fax 24.,n June minutes of meeting June 1999 CHAPTER 11, APPENDIX (5A) August 11,1909 (c) F a x 9 ,n July regarding plan / appraisal preparations (d) F a x 24"1 July regarding minutes cjf meeting (e) F a x 24^ July regarding plans from Oavid Lyons S, Associates 3. Retention Fund Christopher Vaughan and Craig Tallarrts will rneet with Reg Ashworth on Thursday 1201 August to discuss the accounts which have been produced. 4. Outstanding Expenses A i d a n Phelan wltl maks payment this week of the two invoices received. All Invoices received by A i d a n Phelan will be for his records only. 5. AltrincTiam K e v i n Phelan to prepare a report on this project for Aidan Phelan. 6. Luton Kevin Phelan to prepare a final report on this project, 7. M L Kevin Phelan to refer all queries regarding Doncaster to Aidan Phetan. It is agreed to continue holding regular meetings on the Doncaster Project. It has been taken on board our shared concern regarding M c Alpine and in particular the other site which M c Alpine have In Doncaster and also conflicts regarding construction, costings and appointment of tfteir own professional contacts. Regards Kevin o Paga 2 CHAPTER 11, APPENDIX (5A) William Fry SOLICITORS Our Ref By Fax 015255.0002.OOS 25 July 2002 Mr Denis O'Brien Snr Sixth Floor 1 Grand Canal Quay Dublin 2 Westferry Limited Dear Denis I refer to ongoing efforts to settle Kevin Phelan's claims for costs and an entitlement to a share in any profits on the Doncaster project. As you know, it was agreed that we would require, as a condition of any settlement, a narrative from Kevin Phelan of his role in the project. Pursuant to that request, Woodcock & Sons Solicitors sent us copy correspondence between Kevin Phelan and Aidan Phelan which contains a reference to an " M L " in the context of the Doncaster project. I told you that that reference having been put on the record, we should make appropriate enquiries. We have allowed Woodcock & Son's preparation of a draft narrative to proceed and a copy of that draft narrative as received yesterday afternoon is enclosed for your comments. Clearly, it is not adequate in the context of what was sought, and you might consider what response should be made to it. It seems to us that at least three possible responses could be made:1. 2. 3. Accept the narrative, even though it is inadequate. Reject the narrative and demand (again) a comprehensive account of events. Accept the narrative subject to the correspondence being annexed to it and confirmed as a true account of events (i.e. effectively make the correspondence the narrative). The narrative would also have to explain the ""ML" reference (see below). I also agreed with you last week that 1 would review the "ML" reference issue with you and with Owen O'Connell when he and I both got back from our holidays. Having discussed the matter with Owen, we are satisfied that, having been put on notice of the reference, appropriate enquiries have to be made. Subject to anything else you feel should be done, we think that those enquiries should comprise: 1. Following up on our request to Woodcock & Sons of 11 July that they clarify the identity of the " M L " referred to in the correspondence. CHAPTER 11, APPENDIX (14) Fitzwilton T: +353-1-639 5000 F: H o u s e , W i l t o n Place, D u b l i n 2, I r e l a n d . D X 2 3 D u b l i n E: central.mail@williamfry.ie W: www.williamfry.ie +353-1-639 5333 A list of partners appears on the reverse I n association with T u c j h a n s , Northern I r e l a n d 2. Since Denis O ' C o n n o r understood the " M L " reference w a s to a Michael Lloyd with w h o m Kevin Phelan had had business dealings for a number of years, we should ask Denis O ' C o n n o r to f o l l o w up on what Michael Lloyd's role might have been in relation to Doncaster. I understand that Denis O ' C o n n o r is making further enquiries in this regard today. Having regard to evidence given to the Moriarty Tribunal, we should ask Denis O ' B r i e n Jnr to confirm that Michael Lowry does not have any interest in the Doncaster project, and ask him whether he knows anything about Michael Lloyd. Since the correspondence is between Aidan Phelan and Kevin Phelan, we should ask Aidan for his explanation o f t h e " M L " reference, and w h o he understands it to mean. 3. 4. I regret that we have all been put to this trouble but hope y o u appreciate that w e have no alternative in the circumstances. Yours sincerely I T O w e n O'Sullivan William Fry Solicitors Direct Dial: +353 -1- 639 5369 E-Mail: owen.osullivan@williamfry.ie 31204-vl 1 C H A P T E R 11, A P P E N D I X (14) C h a p t e r 11 Page | 638 A p p e n d i c e s to C h a p t e r 12 S H A R E S F O R F R I E N D S A N D FAMILY Index 1. Letter d a t e d 8 t h O c t o b e r , 1998 f r o m Mr. D a v i d A u s t i n to D o n a l d s o n Lufkin J e n r e t t e . 2. Letter d a t e d 1 3 th O c t o b e r , 1998, f r o m Mr. D a v i d A u s t i n to Mr. A i d a n Phelan. 3. Letter d a t e d 7th S e p t e m b e r , 2001 f r o m Mr. P e t e r M u l d o w n e y of D o n a l d s o n Lufkin J e n r e t t e to Mr. W a l t e r B e a t t y of V i n c e n t & B e a t t y , S o l i c i t o r s for the E s t a t e of Mr. D a v i d A u s t i n . REPORT OF T H E T R I B U N A L O N P A Y M E N T S T O POLITICIANS A N D R E L A T E D M A T T E R S - P A R T II V O L U M E 1 Donaldson, Lufkin & Jenrette, Securities Corporation, 277 Park Avenue, 22ud Floor, New York, New York 10172-0099. 8th October 1998 Dear Sirs, Please transfer 6,600 ADS's of Esat Telecom Group pic from my account 22^9,08238 to Maureen Austin's account at DLJ, 'XA. t^. >.3 9./1 I appreciate your prompt attention in this tnatter, Yours truly, David Austin C H A P T E R 12, A P P E N D I X (1) 0T/0T"d 99