Beating the System

McBrearty wins vindication O'Reilly wins delay of inquiry into questionable payment to Ray Burke. By Vincent Browne

The full and comprehensive vindication of Frank McBrearty in his settlement with the State over its abuse of his constitutional rights is in contrast with the conduct of Tony O' Reilly's Fitzwilton plc, which has succeeded in delaying its possible vindication over a curious payment of £30,000 to Ray Burke in June 1989.

The investigation of that £30,000 payment offered the prospect of the most intriguing insight into the interface between political power and big business/corporate media. Ray Burke at the time was Minister for Communications, and Tony O' Reilly's Fitzwilton had associations with media companies, one of whose interests Ray Burke had the ministerial capacity directly to affect.

Fitzwilton plc, which is controlled by Tony O Reilly, paid £30,000 to Ray Burke, on 7 June 1989. The payment was made by way of a cheque made payable to "cash", drawn on a subsidiary company of Fitzwilton plc, Rennicks.

Fitzwilton has acknowledged the payment of the £30,000 to Mr Burke, which, it said, was intended for the Fianna Fáil party. The cheque was handed to Mr Burke at his home in Swords by Paul Power, then a director of Fitzwilton, and Robin Rennicks, of Rennicks Ltd, which had been taken over by Fitzwilton. Mr Rennicks was uncomfortable about being drawn into this transaction and agreed to take part in the meeting with Ray Burke reluctantly, on being asked to do so by Fitzwilton. He was also unhappy that Fitzwilton chose to make the payment to Ray Burke through the company formerly owned by him.

Fitzwilton has said that Mr Power and Mr Rennicks asked Mr Burke to whom the cheque should be made payable and that Mr Burke said to make it payable to "cash". According to Fitzwilton, Mr Burke said he wished to defray some constituency expenses and that he would pay the balance to the Fianna Fáil party head office. In the event, Mr Burke did make a payment of £10,000 to the Fianna Fáil party.

Fitzwilton has stated that its chairman, Tony O' Reilly, was "absolutely not" aware of the £30,000 contribution intended for Fianna Fáil and that he was not aware that the payment had been made by way of a cheque payable to "cash".

The cheque (number 9922) was drawn on the account of a Fitzwilton subsidiary company (account number 72902038) at the Ballsbridge branch of the Bank of Ireland. It was dated 7 June 1989 and made payable to "cash". It was negotiated at the Dublin airport branch of the Ulster Bank on the following day, 8 June 1989.

Fitzwilton stated it believed that "the Fianna Fáil party head office was most probably informed that Fitzwilton and its subsidiaries would be contributing £30,000 to the party's general election expenses".

It has transpired that Fitzwilton regularly made payments at election time to Fianna Fáil and that this was done through a director and former associate of Mr Tony O' Reilly, James Cawley. However on this occasion, Mr Cawley was informed that the Fitzwilton payment would be made in another way, directly to Ray Burke. Ten thousand pounds of this was subsequently passed over to party headquarters by Ray Burke but this was done only after pressures were exerted on Ray Burke by the then party general secretary, Frank Wall, and the then party fundraiser, Paul Kavanagh.

We have been informed that Mr Burke specifically asked Mr Power and Mr Rennicks if he was free to dispose of the £30,000 cheque as he wished. He was told that was so and he responded by saying that he would give some of the £30,000 to the Fianna Fáil party headquarters and would retain the remainder in his constituency.

We understand that, within a few days of this payment being made, Fitzwilton reimbursed Rennicks Manufacturing through a payment of £30,000, but that this was subsequently falsely accounted for in the Fitzwilton company accounts – it was not acknowledged as a payment to Ray Burke.

As Minister for Energy and Communications in the late 1980s Ray Burke issued licences for the operation of the television transmission system, MMDS. Of the 29 licences he awarded in 1989, 19 were awarded to Princes Holdings, a company associated with Independent Newspapers plc, which is controlled by Tony O' Reilly, who was also the controlling shareholder in Fitzwilton. Nineteen of the 29 exclusive licences were issued to Princes Holdings, in apparent breach of the regulations which refer to "the desirability of not allowing any person to have control of an undue number of programme retransmission systems".

Following the 1989 general election, Ray Burke ceased to be Minister for Energy and Communications and became Minister for Justice. However in what was considered an unusual arrangement, he took with him responsibility for communications.

In February 1991, Ray Burke, the then Minister for Justice and Communications, wrote to Joe Hayes, then managing director of Independent Newspapers, a major shareholder in Princes Holdings, on the status of the MMDS franchises. He stated: "You were invited to apply for an exclusive franchise and it is accepted that no further licences for television programme retransmissions, wired broadcast, relay or other rebroadcast or relay within or to your franchise regions will be granted for the duration of your television programme retransmissions licences.

"Neither will the Minister during this time permit geographical extensions in any wired broadcast or relay (cable television) licences which now exist in the region.

"Immediately MMDS service is available in any of your franchise regions, my Department will apply the full rigours of the law to legal operations affecting the franchise region. My Department will use its best endeavours to ensure that there are no illegal rebroadcasting systems affecting that region within six months after commencement of MMDS transmissions."

Subsequently, in the Dáil on 28 May 1998, John Bruton, then leader of Fine Gael, asked: "Why did Mr Burke give such far reaching private assurances to a private company? Was he influenced by the donation he had received two years earlier? Those written assurances by Mr Burke to Mr Hayes tied the State's hand and opened it to huge legal claims if it changed its TV retransmission policy".

Mr Bruton said: "I want a full inquiry into these matters with powers to compel attendance of witnesses either by an appropriate committee of this House or otherwise".

In his contribution to that Dáil debate on 28 May 1998, Ruairi Quinn said: "My colleague and former party leader, Deputy Spring, received an anonymous note last autumn [ie, autumn 1997] to this effect: 'Re: Mr Ray Burke, TD, Rennicks Signs, members of the Fitzwilton Group. Prior to the 1989 general election, the Rennicks Company applied to the IDA for substantial grants for the manufacturing of road signs and went to see the then Minister for Industry with responsibility for the IDA, Ray Burke TD, to brief him on their application for IDA financial support. In attendance was Mr Robin Rennicks, Managing Director; Mr Paul Power, Director; Mr Ray McKenna, financial advisor to the Fitzwilton group and Rennicks companies. Having briefed Mr Burke, Mr Burke introduced the subject of financial support for himself and his party and bluntly requested £30,000. This caused amazement and embarrassment to the delegation. They requested the opportunity to consider the matter. Mr Rennicks paid over £30,000 to Ray Burke TD.'

"The letter went on to make further allegations regarding the Bovale controversy. Deputy Spring met the Taoiseach around this time to discuss his general concerns relating to the then unfolding Burke controversy. He conveyed the contents of this letter to the Taoiseach and said that as the letter was unsigned, he – Deputy Spring – would take no further action on the issue, but would leave it with the Taoiseach. We now know what the Taoiseach did with the information: precisely nothing."

There are further twists to this story.

It seems VAT was improperly reclaimed on the £30,000 payment to Ray Burke by Fitzwilton and, in making this improper claim on the exchequer, Fitzwilton was assisted by Fianna Fáil, which issued a bogus invoice for printing work. This would be a key part of the investigation into the £30,000 payment.

Furthermore, issues relating to the credibility of the Taoiseach, Bertie Ahern, arise in relation to what he knew, and when he knew it, concerning Ray Burke. He claimed on appointing Ray Burke to the cabinet in June 1997 that he had conducted a thorough investigation into allegations concerning Ray Burke. One of the issues that had arisen then was the £30,000 payment made by JMSE to Ray Burke, also in June 1989. Ray Burke informed Bertie Ahern in 1997 that he had indeed received such a payment, but had transferred £10,000 of this to the Fianna F´áil party headquarters.

Had Bertie Ahern checked this at the time he would have discovered that Ray Burke did not transfer any of the £30,000 he obtained from JMSE, but had transferred £10,000 from another £30,000 he had received in June 1989, from Fitzwilton. Bertie Ahern would thereby have known that Ray Burke did not just receive one £30,000 sum in June 1989, but two (in fact he also received in May 1989 a further £35,000 from Oliver Barry on behalf of Century Radio).

There is the further point that when Ray Burke falsely told the Dail in September 1997 that he had transferred £10,000 of the monies he had received from JMSE to party headquarters, several people in the party were in a position to know this was false, including the then general secretary Pat Farrelly and the former financial director of the party and then (and now) Fianna Fáil TD for Laois -Offaly, Sean Fleming, but apparently nobody informed Bertie Ahern.

The Planning Tribunal will be discommoded by this further delay to its proceedings. It is already held up in its investigations into the module known as "Quarryvale II", which will enquire into allegations of further corruption on the part of local councillors. Now the delay on the Fitzwilton module will mean that it won't get around to investigating this £30,000 payment to Ray Burke until some time in 2006, at the earliest. The High Court hearing of the application to bar the investigation entirely is unlikely to take place until late October at the earliest, maybe into November/December. There is certain to began appeal to the Supreme Court, whichever side wins in the High Court, and this will delay proceedings by a further three or four months at the earliest.

Since the Tribunal seemed reluctant to take on the Fitzwilton module all along – in its outline of a year ago of its further hearings, the Fitzwilton module was not even mentioned – it is possible the Tribunal will abandon the investigation. p

(See editorial on the Frank McBrearty settlement)