Idea for Anglo hotel fund raised at Stones concert

A US businessman has told the Commercial Court his proposal to Anglo Irish Bank to sponsor a New York hotels investment fund was first suggested at a Rolling Stones concert in New York in September 2005.

Anglo confirmed it would get involved when he was its guest at the Six Nations rugby tournament in Paris in February 2006, Timothy Haskin said.

Mr Haskin, general partner with Anglo in the Anglo Irish Hotels Fund, began evidence yesterday in proceedings by businessman Gerard McCaughey over the Anglo Irish New York Fund, a private equity investment in which 50 people invested an average $1 million each in 2006. Mr McCaughey’s action is a test case for 23 other investors in the fund.

Mr McCaughey, with addresses at Sandymount, Dublin and Manhattan Beach, California, alleges fraudulent and/or reckless concealment and/or misprepresentation concerning the fund, set up to purchase and renovate the Beekman Tower Hotel and Eastgate Tower Hotel in Manhattan.

Among various claims is that Anglo failed to disclose issues relating to zoning of the two hotels and issues relating to renovation costs.

A brochure distributed by Anglo to investors referred to $24.8m renovation costs for both hotels but final renovation costs were put at $103m, beyond the capacity of the fund, it is claimed.

The proceedings are against Anglo and the Anglo-owned Delaware-based Mainland Ventures Corporation (MVC) who deny the claims.

Mr Haskin has provided a 30-page witness statement to the court and was asked about aspects of that by Martin Hayden SC, for Mr McCaughey, yesterday.

Mr Haskin said he was “absolutely furious” about how Anglo representatives negotiated aspects of the 2006 deal for the purchase and renovation of the two hotels.

He said he had wanted a $8m reduction in the purchase price, as did Anglo, from the hotel vendors because of undisclosed zoning and compliance issues.

However, an Anglo representative had in April 2006 excluded him from a side meeting with the vendors and agreed to a $1m reduction and also agreed there would be no further physical due diligence carried out.

Mr Haskin said he raised the possibility of Anglo as an institutional sponsor which would provide capital for various real estate project, primary ‘value added hotels’ with a vice president of Anglo Irish New York, Garrett Thelander, after taking Mr Thelander and his fiancee to a Rolling Stones concert in New York.

He said Mr Thelander was “very receptive” to the idea and Mr Haskin in October 2005 made a formal presentation to the bank. While in Paris as guests of Anglo at the Six Nations, he said he was told by Tony Campbell [head of Anglo’s US operation] that ‘we [Anglo] are doing your fund’,” he said.

The case continues today.