The Senator and the Taoiseach

The Wealth and Connections of John Magnier. By Ursula Halligan

John Magnier is one of Ireland's spectacularly wealthy and successful business people. He has built his stud, Coolmore, in Co Tipperary, into the one of the most powerful and respected stud businesses in the world, causing envy as far away as Australia, as well as elsewhere.

He is a close social associate of Dermot Desmond and of another hugely wealthy figure connected with the racing world, J P McManus. Together, for instance, they purchased for an estimated $38m one of the most prestigious hotels in Barbados, where Magnier has a lavish home.

Inevitably,  for someone of such wealth and influence in Ireland, he has become innocently embroiled in some of the recent controversies. In keeping with his determination to preserve his personal privacy, he has refused to be drawn into controversy concerning them.

In striking exception to his desire to remain private, he accepted an appointment to the Senate by Mr Haughey in 1987 but over a period of almost three years he spoke on only three occasions in the Senate.
He is understood to have been deeply embarrassed by his tangential involvement in the controversy surrounding the granting of 11 passports to Sheik Mahfouz and his family - Mr Magnier was the largest shareholder in the company that was beneficiary of the investment that accrued from that.

He was further embarrassed by the claim of his involvement in the controversial purchase and sale of the Johnson, Mooney and O Brien site in Ballsbridge, Dublin, along with his friend, Dermot Desmond.
Mr Magnier did make substantial payments to Fianna Fail, while Mr Haughey was Taoiseach.

The Senator

One of the surprise appointments to the Senate in 1987, after Mr Haughey returned to office as Taoiseach, was that of John Magnier, the noted horse-breeder. Mr Magnier, a very private person, had not previously evinced an interest in political life and during his almost three years in the Senate he spoke on only three occasions.

The first was a contribution to the Companies (No 2) Bill 1987 where he spoke of unscrupulous business operators. 

‘ For too long it has been possible for people to trade without respect for liabilities due to others. Furthermore, unscrupulous people have been able to re-establish businesses which have previously failed without  having to meet liabilities previously incurred and flagrantly disregarded. There should be an absolute prohibition on a rogue trader being a director subsequently.' (27 May 1987)

In July 1988, he called for a cut in the off-course betting duty to make Irish racing more attractive to British punters and to reduce the incidence of illegal betting.

In May 1989, shortly after the visit of President Gorbachev and his wife to the country, he urged the encouragement of the non-thoroughbred sector in the following terms:

 `Many of us regret the passing of the Presidential Mounted Escort, founded in 1931 - I suggest we look at the possibility of re-establishing it under the auspices of the Equitation School. ....This would provide a spectacle which would give the industry worldwide attention ....(and be) more Irish than showing barefoot children in a make-believe Victorian school. In contrast, if one could imagine Mrs Haughey and Mrs Gorbachev going around Bunratty in something like we see on the television, the Budweiser shires, and the publicity that would have got around the world as opposed to the barefoot children.'

Senator Magnier, along with two close associates from the racing world, Robert Sangster and Vincent O Brien, were guests of Mr Haughey on the latter's private island, Inishvickillaun, off the Kerry coast. Speaking to Magill about the visit, Mr Sangster said they all had a most enjoyable day, that Mr Haughey was an excellent host. ‘It was purely a social visit, except no women were allowed. We were helicoptered there and back by Celtic Helicopters', he said.

Haughey and Magnier

Charles Haughey and John Magnier first came to know one another through race meetings and Fianna Fail connections during the early 1970s. John Magnier was a supporter of Fianna Fail and his close friend from schooldays, David Nagle, was a fundraiser for the party.

Since 1985, there has been a business connection between Mr Haughey and Mr Magnier. According to Weatherbys, the official keeper of the stud book, seven brood mares, five owned by Charles Haughey and two by Abbeville Stud, visited Coolmore stallions on 15 occasions in the 12 years between 1985 and 1997.  On two occasions, the mare remained barren.

That Mr Haughey sent a large portion of his mares to Coolmore is not surprising. Coolmore Stud is the largest stud in the country and boards the best stallions. Every year the vast majority of  Irish breeders send, on average, 50 per cent of their mares to Coolmore.

In Mr Haughey's case, the majority of his mares were covered by Coolmore stallions from the lower to medium end of the market fee range; i.e, commanding a fee of 10,000 guineas or less. (No fee is usually charged when the mare remains barren). We have been unable to establish what fee (if any) Mr Haughey paid for these services. 

Mr Haughey's daughter, Eimear Mulhern also has business links with John Magnier.  Mulhern acts as a consignor, or bloodstock agent, who prepares thoroughbred horses for sale and  has received business from Magnier over the years. She is a co-director with Brian Grassick (a brother of Christy Grassick, the manager of Coolmore) in a company called Nismes. She is the current chairperson of the Irish Throughbred Breeders Association.

Passports for Sale

John Magnier was the single largest shareholder in a company which benefited from a £4m investment from the controversial ‘passports for investment' scheme in 1990. The granting of 11 passports to Sheik Maffouz and his family in December 1990 was made in highly unusual circumstances and, apparently, in breach of statutory regulations.

A subsequent Department of Justice investigation found that the 11 passports were handed over to the Shiek, a day before the official certificates were signed by the Minister for Justice, Ray Burke. This was in breach of regulations. The passports were handed over personally by Mr Haughey, over lunch in Kinsealy.

Other standard procedures were also set aside including payment of fees and the requirement that the applicants should have been resident for 60 days in the state.
Mahfouz promised to invest £20m in job-creation projects in Ireland. Of this £20m, only £17m has been tracked as having been invested, and £4m of this was invested in Leisure Holdings, in which John Magnier was by far the largest shareholder.

However, instead of creating Irish jobs, the £4m investment made in Magnier's company ended up in a chain of British tennis clubs, contrary to the whole point of the ‘passports for investments' scheme. There has never been any suggestion of any impropriety on the part of Mr Magnier.

Charles Henry Wacker III

John Magnier was also linked distantly to another passports for investment case. This concerned Charles Henry Wacker III, a US millionaire and a longstanding client of Mr Magnier's stud, Coolmore. Mr Wacker III obtained an Irish passport in 1993, two months before he was charged with the biggest tax evasion scam in the history of Chicago involving $5m.

We are not aware if Mr Wacker returned to the US to face the charges against him. At the time of his indictment, it was reported he was living in London.

In August 1993, The Chicago Tribune reported that if convicted, Mr Wacker could be sentenced to 70 years in prison, fined up to $1.96m and forced to pay all back taxes. When telephoned by Magill, Mr Wacker's bloodstock agent, Tote Cherry Downes, said Mr Wacker was uncontactable. 

The certificate granting Irish citizenship to Charles Wacker was signed on 28 May 1993 and published in Iris Oifigiul on October 29th 1993. Up until 1994, Government policy for granting passports to wealthy foreigners was that a substantial investment - over £500,000 - should be made in an Irish company with the potential to create jobs. We have been unable to establish how much Mr Wacker invested or where the investment was made.
Mr Wacker (77) has had a long association with Mr Magnier's Coolmore, where his (Mr Wacker's) mares have boarded for years. Mr Wacker currently owns one of the best brood mares in the country, Ali Diva, who produced three group one winners, all by Coolmore stallions. After one of Ali Diva's colts, Ali Royal, won the Sussex Stakes, a prestigious group one race, Mr Wacker sold the racehorse to Coolmore to stand as a stallion. He was recently honoured with the 1997 Thoroughbred Breeders Award for best broodmare.

We emphasise that there is no suggestion of any impropriety in Mr Magnier's association with Mr Wacker.

Coolmore: the beginnings

The Magnier family has roots in the bloodstock business going back almost 150 years. John Magnier's father, Michael, ran a successful dairy and as a secondary enterprise had a stud farm based at Grange Stud in Fermoy, Co Cork. He was well known for standing the great steeple-chasing stallion Cottage at his stud.

The sudden death of Michael Magnier at a young age led to a huge upheaval in the life of the Magnier household. John who was 15 at the time, was taken out of school at Glenstal Abbey to run the family business.
Vincent O'Brien, the racehorse trainer and an old friend of the Magnier family, perceived Magnier's talent as a stallion breeder. A few years later in the early 1970s when he bought a 50% stake in Coolmore Stud, O'Brien brought Magnier on board as stud manager. Later, Magnier became his son-in-law when he married O'Brien's daughter, Susan.

Coolmore Stud, near Fethard in County Tipperary, was originally owned by Tim Vigors, a famous fighter pilot during the Battle of Britain. A few years later, Vigors sold the remainder of the stud to John Magnier and his friend Robert Sangster, the British pools millionaire. O'Brien reduced his 50% shareholding so that each of the three held an equal share.

The deal cemented a unique partnership between the three men that would make Coolmore the most powerful thoroughbred breeding operation in the world. It brought  together the training genius of O Brien, the business and breeding acumen of Magnier and the considerable cash of Robert Sangster, the British millionaire.  

Up until then, the bloodstock scene in Ireland was a small scale, predictable affair, almost an adjunct to farming.

Back then, there were two distinct groupings in the industry -  racehorse owners and trainers on one side, and a plethora of small-sized stallion masters and breeders on the other. The pattern was that stud farms would wait for racehorses to be a success on the track in Ireland or Britain and then go after them for stud purposes. More often than not many of the country's best racehorses were snapped up by big US stud farms and retired abroad. 

But in 1975 a revolution was afoot. Prompted by rising stallion prices, the triumvirate of O'Brien, Magnier and Sangster decided there had to be a better way of doing business and therein lay the seeds of the Coolmore success.

They devised a strategy to make their own baby stallions - identifying future champions when they were yearlings and cheaper to buy than successful racehorses; then train them into big race winners and ultimately valuable stallion stock. By doing this, they brought together a merger of the bloodstock and horseracing industries for the first time, introduced top American bloodlines into the Irish bloodstock industry and redressed the one-way exodus of Irish bloodstock abroad. It was to be the first of a number of innovations by the threesome that would transform the traditional face of the industry.

The key factor which made the enterprise a financial success was the realisation by the partners that if they were to make big money out of buying yearlings, they had to buy all the good ones. Pedigree charts and racing form can be useful for predicting future winners and good stallion stock but they can never eliminate the huge element of risk.
Magnier, Sangster and O'Brien knew that the bloodstock business was a numbers game and that the trick was to spread the risk over a number of racehorses. The more top racehorses of good pedigree that are produced or bought, the better the chances of hitting on a winner for breeding purposes

Along the way the three partners were joined in their yearling spending sprees by a string of rich businessmen including the American Danny Schwartz and the Greek shipowner, Stavros Niarchos. The influx of capital from these businessmen enabled the partners to bid not only against the rich Americans but also the wealthy Maktoums of Dubai.

In the mid 1980s the bloodstock business went into crisis when investor cash dried up following a world-wide collapse in bloodstock values. As a means of raising money Magnier, O'Brien and Sangster teamed up with Michael Smurfit to launch a public company called Classic Thoroughbreds. The plan was to raise enough money to buy more yearlings for O'Brien to train into champions.

The deal was put together by Dermot Desmond but proved unsuccessful and was closed down after a few years.
Meanwhile, Magnier was devising more strategies to expand his business and by the early 1990s had build up the greatest band of stallions standing in the world. They included Sadler's Wells, Caerleon, Woodman and Fairy King.

Magnier's Personal Wealth

Last year, The Sunday Times rich list estimated that John Magnier's personal wealth was £100m and Robert Sangster's was £95m. The fact that Magnier pipped Sangster in the money stakes marked an interesting turnabout. In 1975, when Sangster, Magnier and O'Brien first joined forces, it was Sangster's cash which fuelled the Coolmore dream.  Magnier and O'Brien needed his cash to get going.

Today, Magnier is one of the richest men in Ireland.
He owns thousands of acres, mostly in Tipperary and Cork, including the original Coolmore Stud in Fethard, Co Tipperary. He has homes in Tipperary, Barbados, Spain and Switzerland.

In Barbados, Magnier owns a magnificent coral stone mansion called ‘Laughing Waters' which he also uses to entertain guests and business associates. Every year in January, the Magnier family migrate en masse to their spectacular retreat. The property, which lies on the seafront, is ringed by a 12 foot wall and has a double set of white, iron gates at the entrance.

According to a source who was once a guest, the mansion has an indoor cinema, state of the art gym, swimming pool, tennis courts and 22 staff. It is known by some guests as ‘Gatwick', after the London airport, because of its enormous size and long corridors. All the bedrooms are luxuriously furnished and have individual satellite kitchens. ‘It is a stunning, absolutely amazing place,' the former guest said.

The Australian Operation

Inspired by an idea Sangster had about standing Irish stallions in the southern hemisphere, Magnier started the practice of `Shuttle Stallions' about ten years ago. When the stallion had completed the breeding season in the northern hemisphere, it was sent down under to do the same all over again.

It was a brainwave that doubled the earning capacity of Coolmore's stallion syndicates and forced studs all over the world to followed suit. The extra cash generated for Coolmore made considerable sums available for reinvestment and strengthened the stud's purchasing power.

Over the years, as the practice increased, fears grew in Australia about Coolmore's dominance of the local bloodstock market. In 1997, Coolmore sent 22 shuttle stallions to Australia, 12 of which were owned outright by Coolmore and the rest in partnership with studs in Australia.

According to Australian newspaper reports, Coolmore leases most of its stallions to Australia, and by doing so, avoids any tax liability. The Australian Financial Review explained this was because: ‘Stallion nominations are exempt from tax in Ireland and a recognised way of utilising a tax haven is to lease the asset into Australia with the rental equivalent to the estimated revenue being generated in Australia'.
Last October, Australia's former Prime Minister, Bob Hawke was quoted in the Australian Financial Review as saying that Coolmore was putting many Australian studs at risk because:  “it took £35m a year in stallion fees out of Australia to its home-based tax haven”. He stressed however that there was no suggestion of improper action involved.

The newspaper noted that Coolmore's head office declined to respond publicly to the report but that a local company spokesman denied that Coolmore stallions generated as much as £35m in Australia.

Magnier's empire

John Magnier always wanted to do everything bigger and better than anyone else according to his partner, the British multi-millionaire, Robert Sangster.

‘If we were going into a hotel and someone tipped the porter a £1, John would have to tip him £10. That's why he's such a success as a stallion master; he never gets outbid in the sales ring', says Sangster.

Today, John Magnier is bigger and better than anyone else. He is the single most powerful person in the throughbred breeding industry worldwide. His stud, Coolmore, dominates the international stallion market and has become a global empire with branches in the USA and Australia. Last year, Coolmore stood 46 stallions between its Irish and overseas operations including Japan where it leases stallions.

At home, it directly controls 16 studs in Ireland and generates over 70% of the entire country's stallion revenue (£23m out of a total £31.6m in 1996). The stud has grown from 350 acres 25 years ago, to 6,000 acres and employs up to 600 people.

Globally, Coolmore's turnover is estimated to be about one hundred million pounds, most of which comes from stallion nominations. All of the Irish stallion income is tax free due to a tax break brought in by Charles Haughey, as Minister for Finance, in 1969. A large slice of Coolmore's overseas operations are also tax free, because of clever lease-back arrangements.

In an interview with Magill, Robert Sangster commented on Magnier's secretiveness. ‘He plays his cards very close to his chest, he doesn't give anything away', he said.

Magnier is a member of the Horseracing Authority and the Irish Turf Club and is a close business associate of Denis Brosnan, chief executive of the Kerry Group and the Fine Gael TD Sean Barrett. 

Magnier does not give interviews as a matter of policy. His PR people say he prefers to let his horses do the talking. The way Coolmore horses talk is by winning big races and commanding high stallion fees

Coolmore owns the most valuable stallion in the world, Sadlers Wells, which has a nomination fee of £100,000 and generates millions of pounds every year. In 1997, Saddler's Wells covered 163 mares. If the traded fee was 90% of the advertised fee and assuming an 85% fertility rate, the income generated was £13.1m - tax-free.

Coolmore, the greatest thoroughbred stud in the world is listed as a ‘£2 company' with a nominal value of £1m. It's called a £2 company because it has only two shareholders (the stud manager and financial administrator) holding £1 each. The low nominal value of the company allows it to be classified as a small company without obligation to publish detailed returns. The names Magnier, O'Brien, Sangster do not appear on the list of directors or shareholders. 
The big money in Coolmore is held in its stallion syndicates, where there is also little public information. Journalists who have tried to get more details have been told that since the company is a private one, there is no obligation to divulge additional information.

However, Magill has learnt that John Magnier is now a tax exile and has been for at least two years. He has a residence in Switzerland. In making this move, Magnier follows in the footsteps of other eminent wealthy businessmen including Michael Smurfit and JP McManus.

An examination of Magnier's business interests shows that he controls a maze of inter-linked companies in Ireland, as well as off-shore companies including one in the Isle of Man (Linley Investments), and others in the Cayman Islands (Ten Sandy Lane), Switzerland (Calogo) and the Dutch Antilles (Bemak NV) where a number of his top financial managers at Coolmore sit as directors. 

A company search by Magill was unable to get behind the companies in the Cayman Islands or Dutch Antilles. In fact, there was no record of a company with the name Bemak NV in the Dutch Antilles and the registration number given for the company generated the name Tonina Inversiones, on which no information was available.

A search on the Isle of Man company, Linley Investments was more productive. Company records show that over a period of five years, since 1993, John Magnier transferred a considerable portion of his fixed assets, - over 1,600 acres in Counties Tipperary and Cork, to the Isle of Man company. The records also reveal that an Irish
resident Bank, AIB with an address at PO Box 452, Ballsbridge, Dublin 4 has a lien on these assets. They show that a facility agreement was made between AIB and Linley Investments in November 1993, extended in February 1996 and again in May 1997.

The Isle of Man records show that John Magnier is the largest shareholder in Linley Investments with over 3.1 million preference shares of £0.01. Swettenham Stud (Sangster's company) has 10,000 non-voting ordinary shares of  £1 each and Katom Ltd, (an Irish registered company controlled by Magnier) and Edward Irwin, the financial director at Coolmore hold one share each.

However, when Magill asked Robert Sangster about the Swettenham Stud shareholding in Linley Investments, he said he had never heard of the company before and that he would have to consult his accountant about it.