AIB’s settlement deal with Haughey amounted to ‘indirect payment’

BY accepting £750,000 to settle his £1 million-plus debt, Allied Irish Bank (AIB) made an “indirect payment” to Charles J Haughey, the Moriarty Tribunal found.

An AIB spokesperson said last night that the bank had “no comment” to make on the findings.

The tribunal criticised AIB’s treatment of Mr Haughey when he held accounts during the 1970s.

When Mr Haughey was elected Taoiseach in December 1979 he owed the bank £1.143m — a debt solely related to his personal and household expenditure.

His debt rose from £188,844 in September 1975 to £1,143,839 in December 1979 when he became Taoiseach and settlement moves began. Moriarty said AIB took no action “to curb Mr Haughey’s mounting indebtedness, or to recover the debt”.

“The tribunal is of the opinion that the degree of forbearance shown by AIB in the settlement concluded with Mr Haughey in January 1980 constituted an indirect payment, or benefit equivalent to a payment,” said Moriarty.

AIB may have worried about the potential fallout on its business when settling Mr Haughey’s debt in 1980.

The bank took no action or never followed up on a £110,000 interest-free “debt of honour” that was never repaid.

“Concerns over upsetting a powerful new Taoiseach or affronting elements of the customer base who supported Mr Haughey may have played a significant role in the bank’s approach,” said Moriarty.

AIB’s press release, issued in 1983 — sharply denying as “outlandishly inaccurate” the Evening Press story of Mr Haughey’s £1m debt — was “misleading and inaccurate” and “disingenuous in the extreme”.

The article was only incorrect as to the relevant year.

The late property developer Patrick Gallagher funded £300,000 of the total AIB debt, after Mr Haughey told him he needed money. The tribunal said the clear probability was another donor or donors funded the remaining £450,000 balance.

Moriarty did not suggest the AIB benefit was motivated by a wish to influence the manner in which Mr Haughey discharged his office as Taoiseach. However, it could not be doubted “that the office attained by Mr Haughey impacted significantly upon the final terms of settlement”.

Mr Haughey gave evidence in 2000 relating to his AIB accounts.