Accounting for Charles Haughey - Finances and Frozen Assets

In a continuing investigation into the finances of the former Taoiseach, Mr Charles Haughey, Magill has established that:

• Mr Haughey faced a personal financial crisis last summer, around the time that he conceded he had lied to the McCracken Tribunal. Irish Incontinental bank froze approximately £400,000 in Mr Haughey's Cayman Island account.

• The accountancy firm Haughey Boland (now merged to form Deloitte & Touche), which handled the payment of Mr Haughey's expenses over several years, also handled his tax affairs. Thus, corporately, Haughey Boland would have been aware of a discrepancy between Mr Haughey's known income and what he was declaring in his tax returns. However, it appears that no culpability attaches to Haughey Boland (or, by extension, to Deloitte & Touche) on that account or to any of its partners, for different partners handled the two elements of his financial affairs and would not have communicated information concerning Mr Haughey's finances between each other.

• The Deloitte & Touche partner, who handled Mr Haughey's tax affairs over several years, Mr Pat Kenny, played a role in the controversial acquisition of passports for the Sheik Mahfouz family in 1990.

• Mr Haughey personally received financial contributions in the late 1960's from the late Captain Tim Rogers, former owner of Airlie Stud in Lucan, Co Dublin, according to a reliable source in the bloodstock industry, who claims to have been present at several meetings between Mr Haughey and Captain Rogers. According to this source, it was Captain Rogers who persuaded Mr Haughey, as Minister for Finance, to introduce tax exemptions for the horse breeding industry. Mr Haughey himself appears to have been a beneficiary of this tax exemption, having himself bought a stud farm in Co Meath in 1968.

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I Haughey's Cash flow crisis

Last Summer Charles Haughey faced a serious cash flow crisis when  Irish Intercontinental bank froze approximately £400,000 in Mr Haughey's Cayman Island account. The bank froze the money on the basis that DIRT (deposit interest retention tax) might be due. It was from this account that Mr Haughey's expenses were being paid.

According to a source acquainted with the account, Mr Haughey contested this decision on the grounds that the source of the funds, the Hamilton Ross Bank in the Cayman Islands, was not resident in Ireland and was entitled to make payments to whoever it wished. In the circumstances Mr Haughey did not challenge the decision of Irish Intercontinental Bank and it is unclear what the source is of his current funding, other than his Dail and ministerial pensions.

II Deloitte & Touche

As was revealed by the McCracken Tribunal, up until 1991 Mr Haughey's old accountancy firm, Haughey Boland, dealt with the payment of his day to day expenses. Paul Carty, a partner in Haughey Boland told the McCracken Tribunal that between 1988 and 1991 a total of £708,850 was paid out on Mr Haughey's behalf.

When Haughey Boland became part of the much larger firm Deloitte &Touche in 1991, this function was transferred outside the firm to Jack Stakelum, a former partner in Haughey Boland.

It also emerges that Haughey Boland also looked after Mr Haughey's tax affairs while it was paying his bills. Pat Kenny, a partner in Deloitte & Touche, was the person responsible for the handling of the tax affairs of Mr Haughey. Mr Kenny continued this function when the firm became part of Deloitte and Touche and only ceased doing so six months ago, following the McCracken Tribunal. 

That Haughey Boland, corporately, would have been aware of the discrepancy there apparently was between Mr Haughey's expenditure and his declared income may be explained by the convention within accountancy firms of “Chinese walls,” whereby one partner would not communicate sensitive client information to another partner.

There is a further connection between Mr Haughey and Deloitte & Touche. Paul Carty now the managing partner of Deloitte & Touche, was a director for eight years of Celtic Helicopters, a company part-owned by Mr Haughey's son Ciaran.

III  Pat Kenny and C.J. Haughey

Mr Kenny, the Deloitte & Touche partner (and former Haughey Boland partner) who handled Mr Haughey's tax affairs until six months ago, was involved in the controversial granting of passports to the Sheik Mahfouz family in 1990. Mr Kenny  made representations to the Department of Justice in that connection (see below on the Mahfouz passports affair).

Mr Kenny was appointed to the board of Irish Life by the government led by Mr Haughey. He was also appointed to the board of Temple Bar Properties.

We wish to emphasise that there is no evidence of any impropriety on the part of Mr Kenny in any of his handling of Mr Haughey's tax affairs, nor any evidence that he was appointed to these boards other than on merit.

On an occasion when Mr Haughey was Taoiseach, the Department of the Taoiseach, error, put Mr Haughey through on the telephone to Pat Kenny of RTE. Before he realised the mistake, Mr Haughey had started to discuss a financial matter with the broadcaster. It was only when the latter queried the purpose of the call that the then Taoiseach realised the mistake.

Mr Kenny was one of the people interviewed by the legal team attached to the McCracken Tribunal. It was decided not to call him as a witness during the public hearings however because the legal team felt they were able to otherwise establish the evidence he would have been in a position to give.

IV Haughey and Captain Rogers

Mr Haughey bought his first racehorse, Miss Cosie, in 1962 when he was Minister for Justice and earning a salary of £3,700. He was the only member of the Government to own a racehorse and the purchase attracted a lot of public interest and comment. At the time horseracing and ownership were generally regarded as the pursuit of the idle rich.

Miss Cosie was to be the first in a long line of horses bought by the former Taoiseach.

It was not until the late 1960s that Mr Haughey ventured into the world of bloodstock breeding. The man credited with inspiring the move and persuading Haughey, then Minister for Finance, to bring in a tax break for stallion owners was Captain Tim Rogers, a former Aide de Camp to Winston Churchill and owner of Airlie Stud in Lucan, Co Dublin.

In the 1960s, Airlie Stud had the best stallions in the country. A well-placed source in the bloodstock community states that Mr Haughey frequently sent his mares to Airlie Stud and held shares in most of the stallions there, including Petingo, one of the  most popular stallions of his era.

According to this source, who claims to have been a direct witness, the conversion of Mr Haughey by Tim Rogers to the idea of a stallion owners tax exemption happened over dinners and social evenings at Airlie Stud during 1967 and 1968.

In 1968, Mr Haughey bought 130 acres of Rath Stud, in County Meath and the following year introduced the tax break in the 1969 Finance Act. As the owner of a stud himself, it appears Mr Haughey may have benefited personally from a measure he introduced as Minister for Finance. 

According to this source, the late Captain Rogers made significant financial contributions to Mr Haughey in the late 1960's, including a contribution made at a time when Mr Haughey was apparently in financial difficulty.
Investigations into financial contributions received from the late Captain Rogers and of any possible benefits obtained in return appear to be outside the remit of the Moriarty Tribunal.