Betrayal

Although the broad outline of the evidence against Charles Haughey was known from the media reports of the Moriarty tribunal proceedings, the impact of the report has been stunning. The scale of the secret funding is much larger than we had known: 171 times his average earnings as Taoiseach. The secretive, manipulative manner in which these funds were concealed from the public and tax authorities is breath-taking.

The exploitation of the near-fatal illness of his long-term friend and colleague, Brian Lenihan is shocking, as is the manner in which he set out deliberately to raise far more money than was required to fund his friend's medical expenses.

The misappropriation of party funds; the extent to which the Revenue Commissioners went to facilitate the Dunne family trust at a time when Ben Dunne was giving huge sums to Charles Haughey; the unambiguous corruption involved in the Fustok payment in return for passports.

The appreciation that right from the time he first became Taoiseach in December 1979, he was severely compromised by the receipt of funds from known and unknown quarters (unknown to the tribunal and the public). He did this two days after he was elected leader of Fianna Fáil and two days before he became Taoiseach. And his renewal of secret cash donations when he became Taoiseach again in 1987.

What has been exposed far exceeds any suspected wrong-doing on his part over the years.

In the pages that follow, we set out some of the evidence presented in the Moriarty tribunal report against him. We also devote space to an extraordinary side-show involving Bertie Ahern, the present Taoiseach. This concerns the donation of £75,000 made to Fianna Fáil by the property developer, Mark Kavanagh, in June 1989 and a controversy concerning that which occurred seven years later in 1996. This raises serious questions about the evidence given to the tribunal about that matter by a number of people involved, including Bertie Ahern.

We will be returning to this report repeatedly in the coming months.

The Brian Lenihan fund

Brian Lenihan became ill in 1987 and the illness became critical in 1989. He required urgent surgical treatment for a liver transplant at the Mayo Clinic in the US. It was determined that the total cost of the treatment and related matters would be in the region of £150,000. Charles Haughey sought funds from the VHI and otherwise to meet these expenses.

He obtained £50,000 from the VHI and sought to raise funds elsewhere with the help of Paul Kavanagh, who was the Fianna Fáil party fundraiser at the time. Although he knew that the funds required (in addition to the £50,000 obtained from the VHI) were of the order of £100,000, he advised Paul Kavanagh that between £150,000 and £200,000 was required.

He went on to misappropriate several donations made by people who wanted to help Brian Lenihan. Edmund Farrell, then head of the Irish Permanent Building Society, made a donation of £20,000. This money was channelled into Haughey's own funds, via a complicated arrangement involving the bank account of Celtic Helicopters, his son's firm. He also misappropriated £25,000 donated by the developer Matt Kavanagh and did this again through a complicate series of transactions designed, according to the tribunal, to confuse the final destination of the contribution.

The tribunal established that as much as £265,000 may have been collected for the benefit of Brian Lenihan and of these funds, no more than £70,283.06 was applied to meeting Brian Lenihan's expenses (the tentative nature of the estimation of the amount collected was because the funds were lodged in the Party Leader's Allowance account with AIB and it was not possible to decipher the source or the purpose of many of the lodgements made to that account for the years 1989 and 1990).

On 29 July 1999, arising from reports in the media that he had misappropriated funds intended for Brian Lenihan, Charles Haughey stated on a press release:
“Widespread media reports that the former Taoiseach, Charles Haughey, diverted for his own use monies subscribed to a fund raised to meet the medical expenses of the late Mr Brian Lenihan are untrue.

“These reports relate to two cheques dated 7 June, 1989, payable to Charles Haughey issued by Irish Permanent Building Society, one for £20,000 intended as a subscription to the Brian Lenihan fund and the other for £10,000 intended as a political donation. A general election was held on 15 June, 1989.

“These two cheques were inadvertently lodged to the account of Celtic Helicopters on 13 June, 1989. On the same day a cheque for £30,000 was drawn on the Celtic Helicopters account in Bank of Ireland, Dublin Airport. An examination of the available bank records indicate that this cheque for £30,000 was in fact lodged to the Party Leader's Account on 20 June 1989 in Allied Irish Bank, Baggot Street. This was the same account to which the contributions to the Brian Lenihan fund were lodged. All of the above records are available to the Moriarty tribunal.''

Commenting on this claim, the tribunal states: “Mr Haughey's statement to the media on 29 July, 1999 was incorrect. There were no records available which established that the Celtic Helicopter's cheque for £30,000 was lodged to the Leader's Allowance Account in Allied Irish Banks, Baggot Street. On the contrary, it is clear from the banking records and the evidence of the relevant banking officials, that the cheque for £30,000 was not lodged to the Leader's Allowance Account but was cashed at Allied Irish Banks, Baggot Street, on 20 June, 1989. In his evidence to the tribunal, Mr Haughey, notwithstanding the evidence which had been heard by the tribunal, maintained that the proceeds of the Celtic Helicopters cheque had been lodged to the Leader's Allowance Account, and applied for the benefit of the Lenihan fund.

“The tribunal is satisfied that the Irish Permanent Building Society cheque for £20,000.00 intended as a donation to the Lenihan fund was lodged to the account of Celtic Helicopters at Dublin Airport Branch on 13 June, 1989, together with the cheque for £10,000.00 also payable to Mr Haughey in respect of his personal election expenses, and that both these cheques were first endorsed by Mr Haughey. The tribunal is also satisfied that the cheque for £30,000 drawn on the account of Celtic Helicopters on the same day and payable to cash was exchanged for cash at Allied Irish Bank, Baggot Street on 20 June, 1989. The tribunal does not accept that these transactions represented the cancellation of an advance payment nor that they arose from administrative inadvertence.

“Mr Haughey was extended every opportunity to explain these transactions to the tribunal both in advance of and in the course of his evidence, but did not do so, and insisted that the statement which he had issued to the media on 29 July, 1999 was correct. The tribunal considers that the only logical reason for the lodgement and withdrawal of these cheques from the Celtic Helicopters account was to substitute a Celtic Helicopters cheque for the Irish Permanent cheques, in order to obscure the source of this money which was cashed on the instructions of Mr Haughey, and in all probability applied for his own purposes.”

Charles Haughey and the Revenue Commissioners

Despite keeping a scrapbook of newspaper stories faithfully recording the Medici trappings of ocean-going yacht, island, Gandon mansion and objets d'art, the Revenue Commissioners were duped by Charles Haughey. The dreaded tax man, says the Report, “assumed that any such discrepancy was explained by borrowings undertaken by Mr Haughey”.

Even the then Taoiseach's own tax adviser, Pat Kenny, a Revenue official who had joined Haughey Boland as an accountant in 1975, got similarly fobbed off. “Insofar as any aspects of Mr Haughey's lifestyle may have seemed out of proportion to those state earnings, Mr Haughey had stated to him that this was by reason of borrowings; he was the Taoiseach, a qualified accountant and a qualified barrister, and having regard to the person he was dealing with, Mr Kenny took the view that Mr Haughey knew what he was doing.”

Charlie Haughey filed annual tax returns relating to his farming activities until the 1979/1980 tax year, when he became leader of Fianna Fáil and Taoiseach. The returns showed “large losses” and Haughey sought refunds from income tax paid on his politician's salary. Revenue declined. At the turn of 1980 , he informed Revenue that he had ceased farming and had transferred the business to his daughter Eimear.

From the 1980/81 tax year until Haughey left office in 1994 he filed no more tax returns, implying that his only source of income was his public service salary (£14,717 in 1979). At the end of 1991 the Chief Inspector of Taxes, Christopher Clayton, sought the outstanding returns but they were not furnished in full until November 1993. They disclosed no source of income other than Haughey's State entitlements. Revenue did not pursue it any further.

In 1977, Haughey had sold Rath Stud, a farm in Ashbourne, county Meath, at a profit of £50,000. He did not declare it to Revenue. Nor did he declare the £300,000 paid to Charlie and Maureen Haughey as a “non-refundable deposit on a sale of lands” by the Gallagher Group in early 1980 and used to pay off Haughey's AIB debt. In 1986, Revenue assessed the tax owed on these two transactions at £102,330, of which £89,700 related to the Gallagher payment. It was paid in three instalments over three years and Revenue imposed no penalties or interest.

Between 1983 and 1996, while self-assessment applied to residential property tax, Haughey did make prompt returns but the tax he paid was confined to his Abbeville dwelling house and did not account for the extensive lands surrounding it. Revenue forms returned on Haughey's behalf did not answer detailed questions about the house, such as how many rooms it comprised. Letters from tax officials requesting the information went unanswered and there was a tardiness to responding to inquiries about who owned the island Inisvickaullane. Ultimately it transpired that the island was owned by Larchfield Securities, the family company, therefore, there was no personal tax liability.

Revenue called in the state-run Valuation Office to inspect Abbeville in an attempt to value the property but the amount assessed by Haughey was not modified after the inspection. Only after the McCracken Tribunal were the assessments up-graded for the years after 1987, culminating in a sum (£1.3m) for 1996 that quadrupled the valuation submitted on Haughey's behalf (£295,000).

When Maureen and Charlie Haughey gave 227 acres of their Abbeville lands to their four children as a gift in March 1989, they were valued at £3,304-per-acre. Nine years earlier, in the 1980 payment of £300,000 by the Gallagher Group, the same land had been valued for the purpose of a supposed deposit agreement at £35,000-per-acre. “The sheer discrepancy should have alerted Revenue to possible aspects of irregularity,” Judge Moriarty points out in the report. With the assistance of the Valuation Office, Revenue eventually settled the land value in 1989 at £5,586-per acre.

After the report of the McCracken Tribunal was published, Revenue began an assessment of the tax Haughey owed on the payments made to him by Ben Dunne to address “any question of criminal culpability”. Action was initiated on 28 August 1997 in a Revenue letter to Pat Kenny at Haughey Boland stating that his clients had paid no tax on substantial gifts he had received. In December, Haughey got a tax assessment of £1,164,739 on the Dunne payments. Haughey made a payment on account of £100,000 in June 1998 but he appealed the assessment to the Appeal Commissioners who found in his favour that December with a nil assessment.

Negotiations resumed between the two sides, with Haughey's advisers inquiring how likely it was that criminal charges would be brought against their client. They reached a settlement in April 2000 whereby Haughey undertook to pay £1,009,435 in capital acquisitions tax. It was paid in full and on time.

The next round of negotiations for a tax settlement on further payments unearthed during evidence-gathering by the Moriarty Tribunal began in July 2001. A letter from Revenue was delivered by hand to Abbeville in August requesting an up-to-date statement of affairs and enclosing a statutory form usually reserved for people under investigation. Haughey's tax advisers replied that they had expected Revenue to wait until the Moriarty Tribunal was completed and referred to Haughey's poor health. However, they agreed to furnish a statement of affairs.

In 2002 revenue officials produced an expenditure schedule, “a worse case scenario from Mr Haughey's viewpoint”, designed as an indication of the tax issues he faced. It computed Haughey's expenditures from 1977 to 1997 to be in excess of £9m. On 6 September 2002, Des Peelo, an accountant acting for Haughey, told Revenue he was prepared to settle the case for €2.539m as Haughey was dying and anxious to resolve matters. Estimating the “worse case scenario” tax liability at €8.25m and unattainable, Revenue readjusted the expenditure to €3.502m which, with interest capped at 100 per cent, would result in a tax liability of €6.98m.

At a long meeting on 8 October 2002, Haughey's representative offered €4.888m and a sum of €5m was finally reached in a formal agreement concluded in March 2003. It was paid on 1 September 2003 with the proceeds from the sale of Abbeville.

Haughey's name was not published in the list of tax defaulters because that only arises where the monetary penalties imposed on defaulters is more than 15 per cent of the tax due and capital acquisitions tax at the time did not allow for tax-geared penalties.

The Moriarty Report concludes that, while aspects of Revenue's dealings with Haughey were “unimpressive, the Tribunal is satisfied that Revenue neither sought to nor did in fact extend untowardly favourable treatment to Mr Haughey”. The Report notes “serious limitations in the statutory powers then vested in Revenue to obtain information” and “serious shortcomings in liaison and communication between different branches of Revenue.”

Bertie Ahern and the Mark Kavanagh donations

While the Moriarty report is of special import for the reputation of Charles Haughey, it also reflects on the reputations of others, including Bertie Ahern, and not just in relation to the signing of blank cheques on the Party Leader's Allowance account. By far the most significant aspect of the report concerning Bertie Ahern has to do with the property developer Mark Kavanagh, who made a donation to Charles Haughey on 15 June 1989 (election day) of £100,000. Kavanagh later complained that he never received a receipt from Fianna Fáil for the monies donated and had a conversation with Bertie Ahern concerning that, which involved, apparently, curious lapses.

In the course of that conversation it never emerged, apparently, what the scale of the contribution was, when it was made or the circumstances in which it came about.

Mark Kavanagh was managing director of Hardwick Enterprises Ltd which was part of a joint venture company, Custom House Docks Development Ltd, which had been awarded the contract to build the International Financial Services Centre (IFSC).

Mark Kavanagh told the tribunal he had been approached by the Fianna Fáil fundraiser, Paul Kavanagh, in May 1969, shortly before the general election of that year, and asked to make a substantial contribution to Fianna Fáil and to the Brian Lenihan fund. He said he made a donation to Fianna Fáil of £75,000 and to the Lenihan fund of £25,000 and gave these monies, by way of three bank drafts for £25,000 each and a cheque made out to Fianna Fáil for £25,000, the latter intended as the donation to the Lenihan fund. He said he was asked to make the payments in this way but he said he could not recall who had asked him to make the payments in this way.

Village is aware of the person who made this request of Mark Kavanagh and so too is the Moriarty tribunal. The tribunal, for reasons of its own, did not disclose the identity of this person. Village is refraining from disclosing the identity because of difficulties there may be in proving this to be so in the event of a libel action.

The monies were handed over to Mr Haughey at a meeting in the latter's home on the morning of the general election, 15 June 1989. Mr Haughey was adamant this could not have happened for he remembers clearly his movements of that day and he did not meet Matt Kavanagh that morning.

According to the report: "Mr Mark Kavanagh's recollection was that when he met Mr Haughey at Abbeville, he handed Mr Haughey an envelope containing the three drafts and the cheque. Mr Haughey opened the envelope and thanked Mr Kavanagh for the contributions, indicating that they would be of great assistance to the Fianna Fáil party and that they were very much appreciated. Mr Haughey asked Mr Kavanagh whether he wished to know how Mr Haughey intended to use the different amounts, to which Mr Kavanagh responded in the affirmative. Mr Haughey informed Mr Kavanagh that the cheque for £25,000.00 would be lodged to the Lenihan fund which he indicated was a Fianna Fáil party responsibility, and that two of the three drafts for £25,000.00 each – that is a total of £50,000.00 – would go directly to the party's central funds. He then inquired whether Mr Kavanagh would have any objection to the final draft for £25,000.00 being used by Mr Haughey, at his discretion, to assist with the election expenses of individual Fianna Fáil candidates and Mr Kavanagh signified that he had no objection to that proposal.”

What happened in fact was that the Mark Kavanagh donations were intertwined with a £60,000 donation made by the businessman Michael Smurfit (a contribution intended for Fianna Fáil). Of this £160,000, £25,000 was forwarded to Fianna Fáil, £50,000 was converted into a bank draft and was sent to Fianna Fáil as a donation from Michael Smurfit, £85,000 went into Charles Haughey's personal funds.

There was an extraordinary sequel to this. The report states: "In the case of both of the donations attributed to Mr Mark Mr Kavanagh and Dr Smurfit, Fianna Fáil head office was instructed that receipts should be furnished anonymously to Mr Haughey's office. No receipt or written acknowledgement was received by either Dr Smurfit or Mr Mark Kavanagh. Some years later, in 1996, the matter of Mr Mark Kavanagh's donations arose when the late Mr Eoin Ryan, who had rejoined the Fianna Fáil Fundraising Committee on Mr Albert Reynolds' appointment as Taoiseach in 1992, approached Mr Mark Kavanagh to make a contribution to the Fianna Fáil party. Mr Mark Kavanagh indicated that he was disposed to consider making a donation but that he was annoyed that he had received no acknowledgment or receipt for the previous donation which he had made in 1989. It was Mr Ryan's recollection that Mr Mark Kavanagh did not quantify the actual donation which had been made, although it was his understanding from what Mr Kavanagh said that the donation was substantial. Mr Ryan was under the impression that any further donation by Mr Kavanagh was conditional on some explanation being forthcoming from the Fianna Fáil party. Mr Ryan indicated to Mr Kavanagh that he would refer the matter to Mr Ahern, who was then Leader of the Opposition.

“After his discussion with Mr Mark Kavanagh, Mr Ryan duly spoke to Mr Ahern and explained what had occurred, and Mr Ahern informed Mr Ryan that he would make the necessary inquiries. Mr Ryan then reverted to Mr Kavanagh to advise him as to the action which he had taken, but believed that Mr Kavanagh may not have been available and that he may have left a message for him. Mr Kavanagh recalled that he had received such a communication from Mr Ryan but he was also doubtful as to whether they had actually spoken to each other further.

“Having been informed of the matter, Mr Ahern made contact with Mr Sean Fleming, the then Financial Controller of the Fianna Fáil party, and explained what had occurred, and asked whether a donation from Mr Mark Kavanagh was recorded in Fianna Fáil head office records. Mr Ahern did not recall precisely what Mr Fleming reported to him, but accepted Mr Fleming's evidence that he had informed Mr Ahern that a donation of £25,000.00 was recorded, and that a receipt had been forwarded to Mr Haughey.

“Some short time later, Mr Ahern attended a function held at Mr Kavanagh's office in Wellington Road, in Dublin. There were a number of persons present from the construction industry, and Mr Ahern addressed the gathering about Fianna Fáil party policy. After he completed his address, Mr Ahern called Mr Mark Kavanagh aside, and apologised to Mr Kavanagh and expressed his regret for what had occurred, and assured Mr Kavanagh that his donation had been received and was appreciated by the Fianna Fáil party. Mr Mark Kavanagh was clearly mollified by Mr Ahern's words, as he made a subsequent donation by cheque payable to Fianna Fáil.

“What is extraordinary about these events is that it appears from the evidence of Mr Ryan, Mr Mark Kavanagh and Mr Ahern that in the course of all of the dealings between them, the discrepancy between the donation made and the donation recorded never arose. It appears that Mr Kavanagh never informed Mr Ryan or Mr Ahern that he had donated £75,000.00, or that he had made his donation personally to Mr Haughey. It appears that Mr Ryan never sought to ascertain from Mr Kavanagh what level of donation he had made and that Mr Ahern never mentioned to Mr Kavanagh that the donation recorded in Fianna Fáil headquarters was £25,000.00, or that a receipt had been sent to Mr Haughey on Mr Haughey's instructions. The only reasonable explanations for all of these omissions are that either those concerned were deeply embarrassed by what had occurred and chose to adopt a diplomatic approach to the issue or that there was a tacit understanding between them that the matter had arisen in a former era and that its details were best left undisturbed.”

It is hard to interpret this later remark other than as a suspicion that those who gave evidence about the Mark Kavanagh affair, including Bertie Ahern, did not tell the full truth.

Charles Haughey and payments by Ben Dunne

The Moriarty tribunal found that Ben Dunne paid over €2m to Charles Haughey in return for the former Taoiseach's assistance in reducing the tax liabilities of the Dunnes family trust.

Within weeks of resuming power as Taoiseach in April 1987 Haughey contacted the chairman of the Revenue Commsisioners, Séamus Paircéir and asked him to meet Ben Dunne. At the same time Haughey was accepting large payments from Ben Dunne in order to assist him with his financial difficulties. Moriarty described Ben Dunne's negotiations with successive governments on his companys capital gains tax liability as “a game of two halves”.

Before Haughey had returned to power Dunne had been having difficulties in getting the Revenue commissioners to reduce their tax demand on his company from £35m to the £16m he  had to pay in 1985.

The liability arose following the dissolution of the trust created by Ben Dunne snr and his wife Nora Dunne for their children in 1964.

In 1985 Ben Dunne had met the previous Minister for Finance, Alan Dukes, who told him that his tax problems were a matter for the Revenue Commissioners although Dukes did agree to facilitiate a meeting between Dunnes and senior Revenue officials.

Séamus Paircéir, then chairman of the Revenue commisisoners, and his officials were not prepared to accept Dunne's offer of £16m in settlement.

Everything changed when Charles Haughey returned to power in March 1987.

Before the general election a close associate of Haughey's, the accountant Noel Fox, also a member of the Dunnes Trust, asked Ben Dunne to help out Haughey with his debts.

In January 1987, bearer cheques to the amount of £32,2000 were paid to Haughey by Dunne.

A further payment of £282,500stg, known as the Tripleplan payment, was paid to Haughey in May 1987. These payments and three further payments totalling over £400,000 were not disclosed to the McCracken tribunal which first investigated the Dunne payments to Haughey.

The McCracken tribunal was also mislead by Ben Dunne who told him that he first met the chairman of the Revenue Commissioners in 1988 to discuss the company's capital gains tax liability following the dissolution of the Dunne family trust.

In fact, Haughey arranged the first meeting between Dunne and Séamus Paircéir in April 1987 at a time when Haughey was in receipt of these first large payments from Ben Dunne.

At several meetings, also organised by Haughey, between the chairman of the Revenue Commissioners and Ben Dunne the company's tax liability was reduced from £38m to £16m. This was a saving of £22.8m on the original Revenue assessment of Dunnes' CGT liability.

Paircéir also agreed to waive interest of £62,450 owed by Dunnes following the settlement of a Discretionary Tax assessment on the company.

The tribunal established that the final meeting with Ben Dunne took place the day before Séamus Parcéir retired in September 1987.

Following his retirement, Parcéir was asked by Ben Dunne to assist with the preparation of his appeal of the tax demand to the Revenue Appeals Commissioners. The appeal was ultimately successful.

In 1988, Parcéir was personally paid £10,000, in advance, by Ben Dunne, to prepare a research paper on statute and case-law relating to taxation matters.

A similar payment was also given to Séamus Parcéir some months later.

“It appears sufficient for the tribunal to state clearly that the retention of Mr Paircéir was in the circumstances entirely inappopriate... and that this development serves to compound and confirm the infirmities and shortcomings in the requisite arms length relationship in Mr Pairceir's dealings with Mr Fox and Mr Dunne the previous year,” Judge Michael Moriarty stated.

He concluded that the terms of the tax settlement agreed between Séamus Paircéir and Ben Dunne, “constituted a real and tangible benefit to Mr Dunne.

“Before Mr Haughey's intervention there was only one course open to Mr Dunne, namely to proceed with the appeal by the Trustees against the assessment. After Mr Haughey's intervention, Mr Dunne had a choice either to allow the appeal to proceed or to settle the assessment by a payment of £16m pounds... a saving of £22.8m of the tax as assessed.

“Irrespective of how matters ultimately unfolded the tribunal is satisfied that such an option was, at the time, a valuable and substantial benefit conferred on Mr Dunne, directly consequent on Mr Haughey's actions.

“Again having regard to the totality of the evidence heard, the substanial payments made by Mr Dunne to Mr Haughey must be regarded as payments primarily motivated by his resumption of the office of taoiseach in 1987.”

The unorthodox party leader's fund

The Party Leader's Allowance is a payment made by the Exchequer to the leaders of political parties to fund the salaries of paid party employees and meet other legitimate political expenses, including office and administration costs. Before 2001 there were no statutory controls on the management of these accounts.

When Charles Haughey was leader of Fianna Fail the Party Leader's Lllowance had an account at AIB in Lower Baggot St, Dublin. Cheques on the account required two signatures and Charles Haughey, Bertie Ahern and Ray MacSharry were the authorised signatories. Ray MacSharry rarely signed such cheques and never did so after he was appointed EU Commissioner in 1989.

The Moriarty Tribunal's attention was drawn to this account by a lodgement of £20,000 made to a Guinness and Mahon bank account, used to pay personal expenses for Charles Haughey. The cheque was drawn on the AIB Party leader's Allowance fund, was dated 16 June 1989, the day after the general election of that year and it was signed by Haughey and Bertie Ahern.

The administrator of the Party Leader's Allowance was a conscientious woman working in Haughey's office, Eileen Foy. She had worked in a similar capacity within the party when Jack Lynch was leader. Over the years a practice developed whereby Bertie Ahern would pre-sign cheques on the account – this arose because he was regularly unavailable and uncontactable in the period 1989-1992, probably for personal reasons.

The following table shows the total sums lodged to the account by year, the Party Leader's Allowance, and the excess funds lodged.

               Total lodged       Allowance                Excess
1984     212,074.42         181,215.00             30,859.42
1985     189,940.79         189,950.00             -10.21
1986     330,530.32         196.612.00             133,918.32
1987     117,012.06         78,056.00               38,956.06
1988     89,468.41             90,666.00             - 1,197.59
1989     313,409.28         93,107.00                 220,302.28
1990     119,207.50             113,207.00             6,000.50
1991     223,560.84             112,137.00         111,423.84
1992     20,135.59             12,033.00             8,102.

All drawings on the account were by way of cheques drawn up by Eileen Foy. One category of these cheques was associated with payments to employees of Fianna Fáil. Another category was cheques to meet outstanding invoices and a third was cheques which Haughey decreed should be made payable to cash or left blank.

The Moriarty Tribunal report found that the intermingling of funds received for the liver transplant operation on Brian Lenihan in 1989 and funds received for Fianna Fáil, together with the unorthodox and unaccountable manner in which the fund was administered, on the instructions of Mr Haughey, enabled him to cipher monies from the fund for his personal use.

Charles Haughey, Dermot Desmond and ‘Celtic Mist'

A solicitor friend of the Haughey family, Liam McGonagle, first spotted ‘Celtic Mist' in Palma, Majorca. The yacht was called ‘La Tina of Hamble' at the time and was pronounced “suitable for the purposes of the family” – and an acceptable replacement for the converted trawler they previously owned – after the eldest Haughey son, Conor, went to inspect it.

The Haugheys secured it at a price of £145,790 plus £21,283 VAT, the money arranged by Des Traynor, and the three Haughey sons sailed it home from Gibraltar to Kinsale in the summer of 1988. A year later, in May 1989, ‘Celtic Mist' was transferred to the ownership of Larchfield Securities Limited, the Haughey family company, and the cost credited to Charles Haughey so that the company held the asset of the yacht and a debt to the then Taoiseach.

In that same summer, ‘Celtic Mist' was brought to a boatyard in Crosshaven, Co Cork, for refurbishment and a refit costing £75,546. The payments were made by two companies, Dedier and Freezone, associated with stockbroker-turned-billionaire Dermot Desmond, a friend of the Haugheys since 1987. The refurbishment invoices were sent directly to Desmond at his company, National City Brokers.

In his evidence to the tribunal, Desmond said that, in the course of a general conversation about sailing, Conor Haughey had told him the yacht needed repairs but that he was not in a position to pay for it. According to Desmond, he offered to arrange a loan for Conor Haughey. On a later occasion the younger Haughey raised the subject again. Desmond “sought to save himself the time and trouble of organising a loan by inviting Mr Haughey to have the necessary works undertaken”, according to the Moriarty report, and the boat designer would invoice Desmond directly.

“To date,” the report records, “it is not apparent that any repayments whatsoever have been either sought or made.” The yacht's refurbishment costs are shown in the 1996 accounts of Larchfield Securities as an outstanding debt to Conor Haughey, giving rise to a corresponding liability to him.

“Even though the aggregate amount expended may have exceeded what Mr Desmond had contemplated in the first place, that sum [£75,546] was very far from being a trifling one,” the report remarks, “and it is worth noting, from figures supplied to the tribunal by the Department of Finance, that during the period of the payments, the gross salary of Mr Haughey as Taoiseach ranged between £69,764 and £72,354.”

The tribunal rejected the evidence that the refurbishment payments were loans. As for the purchase of the yacht, the report states: “The tribunal is driven to conclude that the discharge of both the purchase price of ‘Celtic Mist' and the resultant value added tax payment were funded by a payment or payments made to Mr Traynor from a source or sources that cannot be identified.”

The Saudi diplomat and the horse

In February 1985 a sum of £50,000 was lodged in an account controlled by Charles Haughey in Guinness and Mahon bank. The lodgement was made by way of a cheque provided by John O'Connell. John O'Connell had been given the money by Mahmoud Fustok, a Saudi diplomat and businessman, who asked him to pass it on to Haughey.

When the tribunal sought to establish the reason for the payment, Haughey and John O'Connell said that the cheque had been provided as payment for a yearling purchased by Fustok from Abbeville Stud.

Fustok, who died last year, refused to attend the tribunal hearings but sent a letter confirming that the money was in payment for a horse. The tribunal found the explanation advanced for the payment as “highly unconvincing and improbable.”

It found that the stated purchase price for a yearling was well over the odds, an amount that exceeded the annual salary of the Taoiseach at the time. It could find no passport or any other documentation for such a yearling and concluded that no sale in fact took place or, if it did, it did not amount to a transaction worth £50,000.

The tribunal found that the payment was in return for Haughey's assistance with the grant of certificates of naturalisation to a number of people known to Fustok. The tribunal found that fifteen Lebanese associates of Fustok were granted certificates of naturalisation between 1980 and 1990. It found that all the applications were supported by Haughey and John O'Connell. John O'Connell was close to Haughey and defected from the Labour Party to Fianna Fáil during the 1980s when he served  for a period as Ceann Comhairle and Minister for Health.

In particular the tribunal found that, from 1983, Haughey had made “direct and persistent” representations to secure a certificate of naturalisation for Faten Moubarak, the daughter of a man who had obtained naturalisation in September 1982.

In 1987 the Minister for Justice, Gerard Collins, resisted Haughey's representations on behalf of Faten Moubarak. However, following a direction given by Haughey to Cathal Crowley, an Assistant Secretary in the Department of Justice, Faten Moubarak was naturalised in May 1990.  

The tribunal found that the the payment of £50,000 by Fustok to Haughey, made through John O'Connell, was connected to the granting of naturalisation to a number of people, and in particular, Faten Moubarak.