The man who bailed out Haughey

WHEN Charles Haughey was elected leader of Fianna Fáil on December 7, 1979, he had a dark secret.

He was over £1.1 million in debt to Allied Irish Bank, which had been putting intense pressure on him.

In talks with his accountant Des Traynor, it was agreed “that there was only one way to deal with the matter and that was to clear the debt totally”.

Traynor made a deal with AIB that Haughey would pay £750,000 by mid-February 1980 and that he would promise to pay £110,000 later, and the remainder of the debt would be written off.

The first figure amounted to all the money he had actually borrowed and a little of the interest, while the £110,000 covered only interest and that was to be cleared as a matter of honour without any further interest.

Traynor and Haughey set about trying to raise the £750,000. Haughey turned to Patrick Gallagher for help. Patrick’s father Matt, who had died in 1974, had been a staunch financial backer over the years and was largely responsible for Haughey’s seed capital.

In the late 1950s, Matt Gallagher had persuaded Haughey to buy a house and lands in Raheny for £13,000. He promised to buy the property from Haughey in some years when the value had appreciated.

Gallagher bought the Raheny property little over a decade later for over £200,000, which allowed Haughey to buy Abbeville in Kinsealy for £147,000. He sold a quarry on that land to Cement Roadstone for £140,000 little over a year later, and he sold the remainder recently for a reputed €45m!

In the four tense days between his election as Fianna Fáil leader and his confirmation as Taoiseach, Haughey called Patrick Gallagher for financial assistance. He invited the 26-year-old Gallagher to Kinsealy to help him out of a financial mess.

“What is the mess?”

Patrick asked.

“£750,000,” replied Haughey.

“Can you get someone to raise half of it?” said Patrick. Haughey agreed.

“Say no more,” Gallagher said, “I’ll sort it out with Des Traynor.”

Gallagher’s company provided £300,000 as a non-refundable deposit on 35 acres of land on the Kinsealy estate that he would buy for £1.225m.

Two years later, Merchant Banking and the Gallagher Group, worth an estimated £70m, went into liquidation and any claim on the lands at Kinsealy was deemed unrecoverable by the receiver.

Patrick Gallagher went to jail in the North for financial irregularities. He later admitted that he had a selfish motive in helping out the man who was about to become Taoiseach.

“I was naive enough when I was younger to think I could get a favour.

“But not a thing. You might be introduced to people who could help, but he was not slow to tell you to go and sort out your own business,” he said.

Patrick saw helping Haughey as the patriotic thing to do. He had been reared to think that way.

After amassing the family fortune in wartime Britain, Matt Gallagher returned to Ireland and began building houses in the public and private sector. In the 1950s, there was a great deal of housing deprivation in urban Ireland. The Gallaghers soon branched out into pubs, retailing and banking.

“Fianna Fáil was good for builders and builders were good for Fianna Fáil,” Patrick Gallagher noted. “There was nothing wrong with that.”

Matt and Patrick Gallagher supported Fianna Fáil as they believed the party was best for the construction industry, and thus best for their family. It so happened that Matt also believed that Haughey was the coming man in Fianna Fáil.

It was all part of a great effort to lift Ireland out of its depression so that he, his family, and the Irish people as a whole could enjoy a higher quality of life.

He recalled seeing Donogh O’Malley hugging his father in Cruise’s Hotel in Limerick when the bill establishing free secondary education was pushed through.

“O’Malley told my father it was a great victory, but could sound the death knell for Fianna Fáil as the younger people would now be educated and their expectations would rise.”

In the aftermath of the Arms Crisis, the Gallaghers provided Haughey with a V12 Jaguar in which Liam Lawlor, PJ Mara and others drove him around the country on the chicken- and-chip circuit he used to rehabilitate himself within Fianna Fáil. This was the groundwork for his successful assault on the leadership.

Following the collapse of Merchant Bank, owned by Patrick Gallagher, Labour leader Dick Spring confronted Haughey with details from the liquidator’s report.

There was a reference to a ‘gift of loans’ to Haughey of around £20,000 on which no effort had been made to pay any interest or repay the money. It had been given to Haughey’s sons and daughter who were the official owners of Haughey’s property, Larchfield Securities.

Spring put it all in a letter and delivered it personally to Haughey.

“He could not have been more courteous,” Spring recalled. “He glanced at my letter, and thanked me for having the courtesy to give it to him personally.”

The next day, he sent a messenger with a reply.

“I read your letter yesterday with disbelief,” Haughey wrote. “I categorically reject your outrageous suggestions and find it deeply offensive that you would write to me in this tone.”

RTÉ’s current affairs prepared a programme on the collapse of Merchant Bank.

“I gave an interview on the subject to an RTÉ reporter. I also gave the correspondence to him and to his producer,” said Spring.

This material was woven into the story, but then at the 11th hour the programme was completely re-edited and Spring’s material dropped.

“When I raised the matter with management in RTÉ, they assured me the programme would be shown in full in due course, when ‘certain legal difficulties’ were overcome.

“I’m still waiting!”