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Thursday, April 03, 2008
AIB Bank took a hard line against businessman Tom Gilmartin after it lost confidence in his ability to bring the Quarryvale project in west Dublin to fruition, the Mahon Tribunal heard yesterday.
Former senior corporate banking manager Eddie Kay rejected Mr Gilmartin’s allegation that the bank was against him from the outset of the 1990 negotiations and had colluded with Cork-based developer Owen O’Callaghan to wrest control of his project.
In late November 1990, Mr Kay told tribunal lawyer Patricia Dillon SC, the bank felt "it would not be helpful" to have Mr Gilmartin in charge of the potential large-scale retail development. By then Mr Gilmartin’s Barkhill company had run up IR£9 million bank debts.
File notes on the state of the negotiations, as Mr Gilmartin failed to meet repayment of short-term bank financing or bring in a substantial investor to advance the project, reflected the bank’s growing impatience.
Mr Kay noted that Mr O’Callaghan had carried out a large number of developments, which would have involved rezoning and planning, and the bank believed the British-based Mr Gilmartin lacked this experience.
Acknowledging the bank’s interest in having Mr O’Callaghan involved in Quarryvale, Mr Kay said: "He was, and is, a very capable businessman."
He went on to suggest, however, that if Mr Gilmartin had come forward with a substantial partner the bank would have grabbed that opportunity "with both hands".
On November 27, 1990 Mr Gilmartin gave written authorisation to AIB to talk to Mr O’Callaghan and his business associate John Deane "with a view to exploring the possibility of finding common ground to progress negotiations further".
Mr Kay said the documents showed that Mr Gilmartin’s allegation that collusion between the bank and Mr O’Callaghan started from the very beginning was "utterly incorrect. I am certain there wasn’t collusion", he insisted.
Senior bank officials noted they had received advice that Mr Gilmartin’s equity in the Quarryvale site was "now totally eroded and that the bank is now stepping into the driving seat" and was seeking Mr Gilmartin’s co-operation to this approach.
On December 4 the bank recorded a phone call from Mr O’Callaghan and Mr Deane that proposed the bank and Mr O’Callaghan be in charge of "daily decisions" relating to the Quarryvale project, with "Tom Gilmartin still fronting the development".
The file notes quoted Messrs O’Callaghan and Deane saying they believed they could deliver on site rezoning, planning and designation. However, they did not want to be exposed to the principal debt of IR£9m incurred by Mr Gilmartin, plus interest roll-up.
Asked about the proposed arrangement, Mr Kay said it seemed a much more attractive proposition than what was being offered by Mr Gilmartin. The bank did not see how Mr Gilmartin could afford to run the project as his financial situation was "extremely strained" at this time.
Mr Kay felt Mr Gilmartin was reasonably satisfied after heads of agreement were signed on December 14, 1990 effectively giving control of Mr Gilmartin’s Barkhill company to the bank and Mr O’Callaghan — as the document contained a clause that the agreement could be set aside if Mr Gilmartin achieved refinancing of the Quarryvale project.
By mid-February 1991 the bank decided to call in Mr Gilmartin’s loan, feeling it was necessary to make it clear to the developer the bank "meant business".
About this time an agreement was proposed by Mr O’Callaghan increasing his share in the equity of Barkhill. Mr Gilmartin was told he must agree, if a rezoning motion was to be lodged with Dublin Co Council. Mr Gilmartin agreed and on February 15, 1991 a rezoning motion was lodged. Mr Kay accepted this represented pressure on Mr Gilmartin by the bank.
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