Secrets and lies: How CJ’s spending frenzy spiralled out of control

OVER a 20-year period, Charles J Haughey went through £8.5 million.

His living expenses ran at a yearly average of £125,000 between 1980 and 1984 — when a Taoiseach’s salary was less than £47,000.

Eventually run to ground by tax officials, Mr Haughey paid £3.94m (€5 million) to settle his affairs in March 2003. He had made an interim settlement of £1.2m (€1.5m) in August 2000.

Revenue Commissioners chairman Frank Daly told the tribunal Mr Haughey’s finances were “unique” in their level of secrecy and the structures that surrounded them.

On becoming Taoiseach in December 1979, Mr Haughey owed Allied Irish Banks £1.14m — a debt spiralling out of control for years, and the bank seemed helpless to confront.

As his debts soared and the bank threatened to take away his cheque book, Mr Haughey reminded senior managers he could be “a very troublesome adversary” if they tried to do so.

Ironically, he had gone on television in early 1980 to berate the public for living beyond their means and calling for people to tighten their belts. About this time his own financial drama was being secretly played by Des Traynor and AIB bankers to clear off Mr Haughey’s monumental personal debt.

Des Traynor, banker and long-time friend, had served under the former Taoiseach during their accountancy days. He had dedicated himself to looking after the politician’s finances from the early days.

Within weeks of Mr Haughey becoming Taoiseach, Mr Traynor convinced the bank to accept £750,000 in settlement.

Effectively, the bank had agreed to write-off more than £260,000.

The sum Mr Haughey agreed to pay was nearly 30 times his Taoiseach’s salary of £26,383.

Mr Haughey also promised the bank to meet a further interest-free £110,000 “debt of honour”, but the bank said this was never paid.

Mr Traynor used an elaborate financing system of Ansbacher offshore bank accounts through which funds were routed from third parties to maintain Mr Haughey in his lifestyle. This secretive system came to light during the earlier McCracken Tribunal.

By the late 1980s, Mr Haughey’s expenses were averaging £300,000 a year.

Revenue officials couldn’t believe it when Mr Haughey said he didn’t know who funded the payment of his AIB debt in 1980.

A number of noted businessmen contributed to maintaining Mr Haughey in luxury. Hotelier PV Doyle even took out bank loans to assist the strapped politician.

Former supermarket boss Ben Dunne gave Mr Haughey funds of up to £2m over the years.

The late Patrick Gallagher of the Gallagher construction group, gave him £300,000 around the time Mr Haughey cleared off his AIB debt.

Ostensibly it was a deposit for the purchase of parts of the Haughey lands surrounding his mansion at Kinsealy. But nothing came of the land purchase.

The identities of other donors of some £500,000 used to clear that bank debt remain unknown.

Mr Haughey had bought the Gandon-designed home with its 145 acres in north county Dublin in 1968/69 for £140,000. The money to purchase it came from the sale of the previous Haughey home, on 45 acres at Raheny, to the Gallagher building group.

By December 1973 he was able to recoup the cost of Abbeville by selling 17.5 acres at Kinsealy to Cement Roadstone Holdings.

Mr Haughey’s debts had reached £120,000 in 1971.

On July 30, 1974, while a backbench TD, he attended a meeting in AIB Dame Street on his ongoing failure to keep his accounts in order. During the meeting, according to an official’s memo, Mr Haughey announced: “I have no income.”

At the time Mr Haughey’s salary was about £7,000 (€8,888) and he was facing annual interest charges of £51,000.

Other bank documents put his total annual income at £20,000 when his farm and stud farm were included.

The bank knew, apart from the Gandon mansion, Mr Haughey was building a holiday house in Co Wexford and planning “an elaborate house” on his Innishvickillane island off the Co Kerry coast.

Even as Mr Haughey was promising to rein in his extravagance, the tribunal heard how he was planning to spend substantial money on an electricity supply to his island home.